The following testimony was presented before the Assembly Committee on Health by Kids Forward Research Director Jon Peacock on January 15, 2019.
On behalf of Kids Forward, I want to thank you for holding a hearing on the important topic of providing health insurance for people with pre-existing medical conditions. I also want to thank all of the legislators who are truly committed to protecting the gains that have been made in covering pre-existing conditions.
Although Kids Forward strongly backs that goal, we are not endorsing Assembly Bill 1 because it falls far short of ensuring the continued coverage of pre-existing conditions that is provided by the Affordable Care Act (ACA). The proposal before you today would only help a very small portion of the people who have benefited from the ACA. It could actually do more harm than good if it serves as an excuse for Congressional repeal of the ACA or for continuation of the litigation that is challenging the constitutionality of the federal law.
Ensuring that people with pre-existing medical conditions can get quality, affordable insurance for those conditions requires a number of interlocking measures. Each of the following five components is a critical part of the ACA for Wisconsinites with pre-existing conditions, but only the first of these parts of the ACA is included in Assembly Bill 1:
- Preventing insurers from discriminating against people with pre-existing conditions – An effective bill must prevent insurance plans from denying coverage to people who have pre-existing conditions or from charging them more because of those conditions. This is included in both the ACA and AB1.
- Requiring insurance plans to cover a set of essential health benefits – A workable bill must also require that all plans cover essential benefits, such as prescriptions drugs, hospitalizations, and mental health services. Without that protection, insurers could drop broad categories of coverage needed by people who have pre-existing medical conditions. This is accomplished by the ACA, but not by AB 1.
- Precluding insurers from imposing caps on the benefits someone can receive from their insurance coverage – Another way that insurers formerly made it impractical for someone with an existing condition to get the coverage they needed was by putting annual and lifetime caps on insurance plan benefits. If those caps are allowed to resume, someone could find that although they are entitled to insurance coverage for an expensive treatment, such as chemotherapy, they quickly reach a cap on the extent of that coverage. This is accomplished by the ACA, but is not part of AB 1.
- Providing subsidies to ensure that quality insurance plans are affordable – Protecting coverage of pre-existing conditions requires having substantial subsidies like those provided by the ACA. Without those subsidies, the people with existing conditions will not be able to get quality coverage that they can afford. This is accomplished by the ACA, but not by AB 1.
- Explicit federal requirements that apply the ACA’s consumer protections to employer-sponsored insurance – A separate federal law precludes states from regulating insurance plans offered by businesses that “self-insure.” The ACA closed that loophole, but repealing or invalidating the ACA would mean that a large portion of plans offered by private employers are exempt from the law’s consumer protections. Although this problem is addressed by the ACA, it is not and cannot be resolved in AB 1.
The most fundamental problem with AB 1 and similar bills is that state legislation would not provide meaningful access to consumers because quality coverage sold in the individual market won’t be affordable. In our state, nearly nine out of ten purchasers of insurance through the federal Marketplace receive federal support that significantly lowers their insurance costs. To protect pre-existing conditions requires having substantial subsidies like those provided by the ACA, coupled with a framework like the federal Marketplace that creates large enough pools of consumers to help hold down premiums.
Without a mandate or substantial subsidies, younger and healthier people will either go uninsured or will purchase bare bones or “junk” insurance plans that are largely exempt from regulation. That will drive up the premiums and cost-sharing for quality plans, which will leave many people who have pre-existing conditions with no affordable option.
Another inherent problem with trying to use state law to accomplish the goal of providing coverage of pre-existing conditions is that a federal statute (ERISA) precludes states from regulating roughly half of the plans offered by private sector employers – i.e., insurance plans offered by businesses that self-insure. It takes a federal law like the ACA to apply consumer protection requirements to those self-insured plans
In light of those limitations, passing a narrow piece of state legislation should not be your primary focus if you truly want to protect coverage of pre-existing conditions. Instead, we urge state lawmakers to:
- Enable the Attorney General to either drop out of the ongoing litigation challenging the validity of the ACA, or—better yet—to join the AGs who are defending the law;
- Urge our Congressional delegation to support federal legislation that includes all of the key components that are essential for ensuring that Wisconsinites with pre-existing conditions can get quality, affordable insurance coverage, and
- Direct the Insurance Commissioner to adopt rules that limit the duration of short-term plans sold in the individual insurance market that are exempt from the requirement to cover pre-existing conditions.
To sum up, AB 1 could help a small number of Wisconsinites, but it falls woefully short of ensuring that quality coverage of pre-existing medical conditions will be accessible and affordable. AB 1 fails to include some of the key consumer protections provided by the ACA for people with pre-existing conditions, it doesn’t apply to plans offered by private employers who self-insure, and it won’t prevent quality plans from becoming unaffordable.
AB 1 could have a net negative effect if its enactment creates a false perception among politicians and the public that the ACA is not necessary to protect people with pre-existing medical conditions. We urge you not to pass this bill unless there has been a concerted but unsuccessful effort to get a more effective and comprehensive solution approved by Congress.
