Trump Wants to Ditch Obamacare Pre-Existing Conditions

I often select the topics for my weekly E-Letter and Blog based on what I find most interesting, and that sometimes means stories that don’t get much attention in the mainstream media. Today’s topic is one such example.

As a presidential candidate, Donald Trump made it clear that he wanted to get rid of Obamacare, but he repeatedly promised that he would never eliminate the Affordable Care Act’s protections for people with pre-existing medical conditions.

Those protections prohibit insurance companies from denying coverage, or raising premiums way up, for folks with pre-existing medical problems. This protection is by far and away the most popular provision of Obamacare, since at least 130 million adults have pre-existing medical conditions, according to the Department of Health and Human Services.

A Kaiser Family Foundation tracking poll in June 2017 showed that 70% of adults want Congress to keep pre-existing condition protections.

Before the Affordable Care Act (ACA) became law, insurance companies routinely declined health insurance coverage to people who had ongoing medical conditions or recent illnesses. Even when insurers offered policies to those with health problems, they often excluded those illnesses. And insurance companies could cancel coverage for people who became ill once the policy year ended. The ACA made all those practices illegal.

Yet on June 7, the Trump administration declared Obamacare’s protections for people with pre-existing conditions unconstitutional. The announcement came in a letter from Attorney General Jeff Sessions of the Justice Department and a filing in a federal court in Texas.

Let that sink in. The Justice Department is saying that it will no longer defend the pre-existing medical provisions of Obamacare. While there is little doubt it will be challenged in the courts for months or years, it represents a major break from repeated promises from Trump and congressional Republicans to preserve the protections for pre-existing conditions.

It is unusual for the Justice Department to refuse to defend existing law in court challenges. Normally, the Justice Department’s job is to defend existing law.  If the latest decision on pre-existing conditions becomes law, this is huge!

I am shocked that this major reversal on the part of the president has not received more criticism in the mainstream media. I expect tens of millions of Americans would be outraged about it, if only they knew. But as I said above, this reversal has not become law yet, and it is certain to face stiff challenges in the courts.

In this case, 20 states sued the federal government in February claiming that Obamacare’s “individual mandate” requiring people to buy health insurance is unconstitutional after Congress eliminated the tax penalty for not having health insurance in its 2017 tax cut law.

As of 2019, the individual mandate will be unconstitutional under controlling Supreme Court precedent holding that “the federal government does not have the power to order people to buy health insurance.” The lawsuit, led by Texas Attorney General Ken Paxton, contends that without an individual mandate, the entirety of the Affordable Care Act is unconstitutional.

If that argument prevails in the courts, it would render all Obamacare provisions, including those that ban insurance companies from denying coverage to people with pre-existing conditions, null and void.

By withdrawing from defending the law in court, the Trump administration is saying it no longer supports those consumer protections, which are so popular with voters. The move could upend insurance markets for next year and change the dynamic of this fall’s elections. Larry Levitt, a senior vice president at the Kaiser Family Foundation, warned:

“This suit comes as insurers are proposing individual market premiums for 2019. The lawsuit injects more uncertainty into what is already an uncertain environment for insurers. Insurers hate uncertainty, and they respond to it by hedging their bets and increasing premiums.”

Nicholas Bagley, a professor at the University of Michigan Law School who had been a Justice Department lawyer, says the DOJ’s move is very troubling:

“The Justice Department has a long-standing, durable, bipartisan commitment to defend acts of Congress. It’s a cornerstone of what they do. For the Trump administration to crumple that up and throw it out the window is galling.”

Bagley added that just hours before the Justice Department officially withdrew from the case, three of the staff attorneys who had been working on it withdrew. “These are civil servants. They’re not political. They are good soldiers. Their job is to defend federal programs. They believed they could not in good conscience, consistent with their professional obligations, sign the brief. These are people who defend programs they disagree with all the time.”

The Justice Department has opted not to defend existing law in the courts in other matters. For instance, in 2012 the Obama Justice Department said it would not defend the Defense of Marriage Act, which legally defined marriage as a union between a man and a woman for federal purposes.

America’s Health Insurance Plans (AHIP), the trade association for health insurance companies, supports the pre-existing condition protections under the ACA. “Removing those provisions will result in renewed uncertainty in the individual market, create a patchwork of requirements in the states, cause rates to go even higher for older Americans and sicker patients, and make it challenging to introduce products and rates for 2019,” AHIP said in a statement.

AHIP said it will file an amicus brief in support of the current law that “provides more detail about the harm that would come to millions of Americans if the request to invalidate the ACA is granted in whole or in part.”

In a blistering statement, the American Psychiatric Association is calling on the administration to reverse its decision: “We strongly condemn the Administration’s decision not to defend the patient protections provided in the Affordable Care Act, an established law of the land,” APA President Altha Stewart, M.D. said.

On Capitol Hill, congressional Republicans’ reaction to the Trump administration’s decision was muted, with many lawmakers voicing skepticism that the courts would ultimately rule against the current law that has already been upheld by the Supreme Court.

So, it remains to be seen if there will be any significant change to the pre-existing medical protections. Frankly, I doubt that anything will be done this year, especially with the midterm elections coming up. In my opinion, it would be political suicide for President Trump or the Republicans to even suggest removing the pre-existing conditions provisions this year.

Maybe that explains why it has not gotten more attention in the mainstream media. Apparently, the media is confident that nothing is going to change. But I thought my clients and readers at least ought to know about it. Healthcare is already a dominant issue in this year’s elections, with voters regularly citing it as a leading determinant for how they will vote.

More Americans Getting Priced Out of Healthcare

More and more Americans, especially middle-class families, are dropping their healthcare insurance coverage according to the government. While more families actually purchased healthcare insurance early last year, the number still paying their premiums by the end of the year dropped significantly.

There are two main reasons this is happening. First, the premiums for health insurance on the Obamacare exchanges continue to rise significantly, and more families simply can’t afford to keep the coverage. Second, Affordable Care Act funding to grass-roots groups that help consumers sign up for healthcare coverage fell significantly last year.

A new report from the government’s Centers for Medicare and Medicade Services (CMS) found that a “significant number” of Americans dropped their coverage last year even after making their initial payments. According to the CMS, health insurance prices rose by an average of 21% last year alone. As a result, more and more families – especially those who don’t qualify for government subsidies – are choosing to let their policies lapse.

The bottom line is that Obamacare, as it currently exists, is unsustainable. It has to be changed. I think virtually everyone knows that. Premium increases are out of control. The challenge is, how to keep protections for people with pre-existing conditions and keep prices under control.

Unfortunately, there are no simple answers. I’ll stay on it.