Efforts to Protect Workers with Pre-existing Conditions

Testimony of Sabrina Corlette, J.D. before the U.S. House of Representatives’ Education & Labor Committee, February 6, 2019

Good morning Mr. Chairman, Ranking Member Foxx, and members of this committee. It is an honor to be here with you today, and to discuss the need for affordable, adequate insurance coverage, particularly for those with pre-existing conditions.

In my testimony, I will focus on some of the challenges faced by people with pre-existing conditions, before the ACA was enacted, and how current threats to the ACA could have disproportionately harmful effects on these individuals and workers.

The ACA Corrected Many Problems in a Dysfunctional Insurance Market

  • Before the ACA was enacted, approximately 48 million people lacked health insurance. And an estimated 22,000 people died prematurely each year due to being uninsured.
  • 60% of the uninsured reported having problems with medical debt.
  • The high number of uninsured was costing providers an estimated $1000 per person in uncompensated care costs.
  • Lack of affordable, adequate coverage also led to a phenomenon called “job lock”, where workers are reluctant to leave the guarantee of subsidized employer-based coverage for the uncertainty of the individual market.
  • For many people with health issues, job-based coverage could also be spotty or include barriers to enrolling.

Prior to the ACA, in most states, people seeking health insurance could be denied a policy or charged more because of their health status, age or gender, or had the services needed to treat their condition excluded from their benefit package. Indeed, a 2011 GAO study found that insurance companies denied applicants a policy close to 20% of the time.

Under the ACA, these practices are prohibited.

Prior to the ACA, coverage also could come with significant gaps, such as for prescription drugs, mental health and substance use services, and maternity care. Under the ACA, insurers must cover a basic set of essential health benefits.

Extremely high deductibles and annual or lifetime limits on benefits were also common, before the ACA. The law protects people from both, by capping the annual amount paid out of pocket each year and prohibiting insurers from placing arbitrary caps on coverage.

Overturning or Rolling Back the ACA Would Have Significant Negative Consequences

Members of this committee are no doubt aware that the ACA is under threat of being overturned due to litigation pending in federal court.  If the plaintiffs’ argument prevails, it would be tantamount to repealing the ACA without any clear public policy to replace it. A scenario that Congress rejected in a series of votes in 2017.

Congress rejected it because repealing the ACA without replacing it would:

  • Result in 32 million Americans losing their insurance.
  • Double premiums for people in the individual insurance market.
  • Leave an estimated ¾ of the nation’s population in areas without an insurer.
  • Cause significant financial harm for hospitals and other providers due to uncompensated care costs
  • Cause the loss of an estimated 2.6 million jobs around the country.
  • And, importantly for this committee, result in harm to people with job-based coverage, including:
    • Loss of coverage of preventive services without cost-sharing (such as vaccines, well-visits, and contraception)
    • The return of pre-existing condition exclusions
    • Young adults no longer allowed to stay on their parents’ health plans and
    • Insecurity due to crippling out of pocket costs, for people with high-cost conditions.

The Trump administration has also instituted regulatory changes that have resulted in higher premiums. These include a decision to cut off a key ACA subsidy, the dramatic reduction in outreach and consumer enrollment assistance, and the introduction of junk insurance policies that are permitted to discriminate against people with pre-existing conditions. The zeroing out of the mandate penalty has also increased premiums. While the bulk of the negative effects of these policies are felt by people in the individual market, these negative effects spill over into the job-based market.

The ACA is by no means perfect. Even its most ardent supporters argue that more could be done towards Medicaid expansion and affordability for middle-class families. There are a range of policy options that this committee and others in Congress can explore to strengthen the law’s foundation while also building on its remarkable achievements.

Thank you for providing this forum. I look forward to the discussion.

A webcast of the hearing and Ms. Corlette’s full written testimony are available for viewing/download here.

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