The following article by Margot Sanger-Katz was posted on the New York Times website June 12, 2018:
Removing two rules from the individual market could very easily disrupt many others.
A new Trump administration court challenge is explicitly aiming to remove a central promise of Obamacare — its protections for people with pre-existing health conditions. But it could also make it much harder for any individual to obtain health insurance on the open market.
The administration’s brief, filed in Federal District Court in Texas on Thursday, focuses on the core Obamacare provisions that make insurance available to people with prior illnesses. Those protections — which President Trump once praised and Republicans in Congress vowed not to disrupt last year — don’t exist in a vacuum.
Undoing them could also undo other programs in the health law, making insurance harder to obtain for people who buy their own insurance or get it through a small company, and possibly making it unaffordable for many middle-income people who receive financial assistance with their health insurance premiums under the law.
The Justice Department’s brief argues that last year’s tax reform bill has rendered Obamacare’s individual mandate — the requirement that a vast majority of Americans buy health insurance — unconstitutional. If the individual mandate is stripped away, it argues, two other key parts of Obamacare should necessarily fall with it.
Those provisions are called guaranteed issue and community rating. Guaranteed issue means that insurance companies need to sell insurance to any customer who wants to buy it, regardless of age, gender, health history, profession or any other individual factor. Community rating means that everyone who buys similar insurance should pay similar prices; under the health law, premiums can vary based only on the age of customers and the place they live, and, in some states, whether they smoke.
Those two provisions are what make it possible for people to buy insurance if they have pre-existing health conditions. Without guaranteed issue, a customer with multiple sclerosis could be denied health insurance. Without community rating, a customer with acne could be charged a much higher price than one without.
Before the Affordable Care Act established Obamacare, few states had guaranteed issue or community rating, which means we know how such a market would work. Many people with serious health problems would be unable to buy insurance. People with more minor ones could face high prices if they wanted coverage. In the years before Obamacare, people were routinely turned down for coverage if they worked in a risky job like roofing, had a blood cholesterol level above 260, or had a history of asthma.
Because of Obamacare’s design, community rating is important in making sure lots of other parts of the health law work. The subsidies to help middle-income Americans buy health insurance, for example, are calculated based on the assumption that there is a standard price for insurance that everyone is charged.
The Trump administration brief doesn’t speculate on what would happen to such subsidies if it won the case.
It is possible that regulators could devise a new way to calculate the subsidies. But in my conversations with several experts on the law, no one was quite sure how. When Congress considered repealing the Affordable Care Act last year, most of the plans changed rather than eliminated those subsidies. Taking them away altogether would mean millions fewer people would have health insurance, according to estimates from the Congressional Budget Office.
(Even if regulators found a way to preserve the subsidies, the subsidies would be useful only for Americans healthy enough to qualify for insurance. For the sick, “it’s a Groupon that’s expired,” said Mark Hall, the director of the health law and policy program at Wake Forest University.)
Community rating is also important for Obamacare’s online insurance marketplaces. Now, people who want health insurance can go to one website and shop for plans, comparing benefits, deductibles and prices. They can choose a plan and sign up within hours.
But with no guaranteed coverage and no standard premiums, it would be impossible to know whether you could buy any particular plan, or at what price. Customers would need to apply to each plan separately, filling out detailed medical histories — and in some cases submitting blood and urine samples — to find out what they would be allowed to buy. Those steps would make shopping much more difficult. Obamacare currently limits the period during the year when people are allowed to shop for insurance, meaning that customers might have to submit multiple applications at once in order to be able to buy insurance before the shopping period closed.
There’s also reason to think that, in a world where community rating and guaranteed issue disappear but the rest of Obamacare remains, many more people would be turned down for insurance than in the pre-A.C.A. days. That’s because the Trump administration wants to leave other insurance regulations in place that didn’t exist before the health law. Obamacare says that all health plans need to cover a standard set of health benefits and can’t limit the amount they will pay in a year. In the old days, plans often didn’t cover prescription drugs or treatment for mental illness. Those strategies helped weed out customers who had expensive health needs and limited the companies’ risk.
In a system where the plans would need to cover expensive drugs for H.I.V. or inpatient treatment for schizophrenia, they might be more leery of taking on any customers at risk of needing such services. “I would think that insurers would end up being stricter in their exclusions of people because they couldn’t limit benefits,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation, a health research group.
There is no guarantee that the lawsuit will turn out the way the Trump administration wants, of course. And any final answer is probably a long way away, since the case is likely to be appealed once it is decided. A group of Republican states that brought the lawsuit initially argued that the entirety of Obamacare should be invalidated. A decision for those litigants would mean changes not just to the individual market but to Medicare, Medicaid and a broad array of other health programs.
But if the court rules in the way the Justice Department has requested, the result will be a world in which it is much more difficult for individuals and small businesses to buy health insurance. The health law is complicated, with interlocking parts. It will be hard to remove just two rules from the individual market without disrupting many others.