As Republicans gear up to repeal the Affordable Care Act, the Kaiser Family Foundation is out with a report finding that 27 percent of adult Americans under age 65 have pre-existing medical conditions that would likely leave them uninsurable in the individual market under pre-ACA rules. In most states, those rules allowed for medical underwriting – that is, denying coverage or charging more for it on the basis of the applicant’s medical condition and history.
While the Kaiser analysts’ primary purpose is to demonstrate that many millions would be denied any sort of coverage if the ACA’s ban on medical underwriting is repealed*, the report also highlights the extent to which the ACA’s current beneficiaries – most of whom are in the lower third of the country’s income distribution – would be left out in the cold by repeal. Not only would some be rendered ineligible for coverage, but millions would lose current coverage that’s relatively well-suited to their incomes and health status.
Here is the passage that indicates as much:
The rates of declinable pre-existing conditions vary from state to state. On the low end, in Colorado and Minnesota, at least 22% of non-elderly adults have conditions that would likely be declinable if they were to seek coverage in the individual market under pre-ACA underwriting practices. Rates are higher in other states – particularly in the South – such as Tennessee (32%), Arkansas (32%), Alabama (33%), Kentucky (33%), Mississippi (34%), and West Virginia (36%), where at least a third of the non-elderly population would have declinable conditions.
A few observations:
- Health correlates with income. The states with the highest rates of disqualifying pre-existing conditions are also the poorest states. Of the six states with the highest “declinable pre-existing conditions” above, as of 2015, Mississippi ranks last among the 50 states in median household income, Kentucky 49th, Arkansas 48th, West Virginia 47th, Alabama 46th and Tennessee 40th, according to the Census Bureau. On the other end of the spectrum, Minnesota ranks 6th, and Colorado, 10th.
Median Household Income 2015 State rank State Median household income, 2015 50 Mississippi $40,037 49 Kentucky $42,387 48 Arkansas $42,798 47 W. Virginia $42,824 46 Alabama $44,509 40 Tennessee $47,330 10 Colorado $66,596 6 Minnesota $68,730
- Poor and near-poor people are likelier to need sustained medical care (e.g. chronic condition management), and even small out-of-pocket payments often deter them from seeking needed care. They belong in Medicaid. Of the six states with the highest rates of “declinable pre-existing conditions” flagged above, three – Arkansas, Kentucky and West Virginia – have enacted the ACA Medicaid expansion, which the Supreme Court rendered optional for states in 2012. Between them, those three states have added nearly a million people to their Medicaid rolls and cut their uninsured rate by more than half since ACE enactment, from over 20 percent to under 9 percent.
- In the other three states – Tennessee, Alabama and Mississippi – fully 41 percent of ACA marketplace enrollees have incomes that would have qualified them for Medicaid had their state accepted the expansion. In these nonexpansion states, 37.7 percent of marketplace enrollees have incomes between 100 and 138% of the Federal Poverty Level (FPL); another 3.8 percent are under 100% FPL.** In states that have expanded Medicaid, eligibility for ACA marketplace subsidies begins at 139% FPL; those below that income level get Medicaid. In nonexpansion states, eligibility for marketplace subsidies begins at 100% FPL; those below that threshold get nothing.
- While almost any level of cost-sharing at low income levels inhibits access to care, Cost Sharing Reduction (CSR) subsidies available to low-income ACA marketplace enrollees mitigate the damage for most enrollees who “should have” been eligible for Medicaid.
- Almost all of these enrollees qualify for the highest level of CSR if they buy Silver plans, as 85-90 percent of enrollees at this income level do.*** CSR raises the actuarial value of a Silver plan to 94 percent for enrollees with incomes up to 150% FPL. That usually translates to a deductible in the $0-250 range. CSR caps enrollees’ annual out-of-pocket costs at this income level at $2,350, and in most markets, Silver plans with lower OOP maximums than that are available to enrollees with incomes up to 150% FPL.
- Fully 70 percent of marketplace enrollees in these three states have incomes under 201% FPL, qualifying almost all of them for strong CSR (AV 94% or 87%). Weaker CSR (AV 73%) is available to those in the 200-250% FPL range. In these three states, 66 percent of all marketplace enrollees have CSR-enhanced policies: 73 percent in Alabama, 74 percent in Mississippi and 58 percent in Tennessee. (Tennessee, the wealthiest of the three, has lower levels of CSR eligibility and CSR takeup among the eligible.)
- These three states are in many ways representative of the 19 states that have refused the Medicaid expansion. As Charles Gaba noted last July, 36 percent of marketplace enrollees in those states are in the 100-138% FPL income range and so would be eligible for Medicaid had the states accepted the expansion.
- Since lower-income people are likelier than the more affluent to a) have pre-existing conditions and b) lack access to employer-sponsored health insurance, the percentage of those seeking insurance in the individual market at any given time who have a “declinable pre-existing condition” is likely to be higher than Kaiser’s estimate of 27 percent for the population as a whole – an estimate that Kaiser emphasizes is conservative. At least, that is likely to be the case in a market offering subsidies substantial enough to attract the interest of lower income people in need of insurance.
The ACA not only makes individual market health insurance available to people without regard to medical condition, it also provides relatively income-appropriate coverage to the 32 percent of the population living in households with incomes under 200% FPL – compared at least to Republican replacement alternatives, which will do most harm if they repeal or radically scale back the ACA Medicaid expansion. (See, for example, how Tom Price’s skimpy ACA replacement bill plays out for low-income people.) The populations in states with the worst health will suffer most under ACA repeal.
* Some Republican ACA replacement plans call for “continuous coverage” protection, which would shield those seeking coverage in the individual market from medical underwriting if they don’t go uninsured for more than a very brief period. Such protection is only effective if coverage is affordable to all seekers – which is unlikely in the scantily subsidized Republican plans.
** Legally present noncitizens who are time-barred from Medicaid enrollment are eligible for subsidized marketplace coverage if their income is below their state’s eligibility threshold (100% FPL in nonexpansion states and 138% FPL in expansion states).
*** A small percentage of enrollees at every income level qualify for no subsidy at all (neither premium subsidies nor CSR), mostly because they have an offer of insurance from an employer, which disqualifies a marketplace applicant from subsidies.