A recent court ruling against the validity of the Affordable Care Act (ACA) is likely to be overturned by higher courts, but that’s far from certain. What does seem certain is that the ruling will create much more debate in Wisconsin about the steps that state and federal policymakers should take to protect health insurance coverage for people with pre-existing conditions.

If the conservative judge’s December 14 ruling is not overturned by higher courts, it will mean that all of the ACA has essentially been repealed without a replacement plan. That would cause turmoil in the health care industry and would eliminate a broad range of ACA measures that enjoy strong support among both Republican and Democratic voters.  (See today’s Wisconsin Budget Project blog post about the recent polling data, and regarding the difficult situation that ACA opponents find themselves in.)

Most of the ACA debate in Wisconsin in recent months has focused on protecting the provisions guaranteeing coverage of pre-existing medical conditions. Although legislators in both parties have expressed support for ensuring that people with prior conditions can get the health services they need, accomplishing what the ACA has done in that respect requires a number of interlocking measures, and not all of the pieces can be put into place at the state level.

These are the key components for ensuring coverage of pre-existing conditions:

• 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.
• 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.
• 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 their insurance plan benefits. If those caps are allowed to resume, someone could find that although they are entitled to insurance coverage for their cancer treatment, they quickly reach a cap on the extent of that coverage.
• Substantial 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.
• Explicit federal requirements that apply the ACA’s consumer protections to private 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 roughly half of plans offered by private employers are exempt from the law’s consumer protections.

The bill that Governor Walker and many Republican legislators wanted to pass during the recent lame duck session, AB 365, included only the first of those pieces. It would not have ensured that insurance plans cover essential benefits and would not have precluded insurers from capping benefits.

A larger and more fundamental problem with AB 365 and other state-level attempts to replace parts of the ACA is that state legislation would not provide meaningful access to consumers because quality coverage sold in the individual market wouldn’t be affordable. More than eight out of ten Wisconsinites who purchase 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.

Another fundamental problem, which I referenced previously, is that a separate federal statute 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, state legislation should be a last resort if the ACA is repealed or invalidated by the courts. In the meantime, here’s what state lawmakers can and should do:

• Enable the Attorney General-elect to either drop out of the ongoing litigation challenging the constitutionality of the ACA, or—better yet—to join the Democratic AGs who are defending the law;
• Urge our Congressional delegation to support federal legislation that contains all of the components essential for ensuring that Wisconsinites with pre-existing conditions can get quality, affordable insurance coverage, and encourage the U.S. Justice Department to defend the law;
• Stop creating the misleading impression that there’s a quick fix that can be achieved by putting one small piece of the ACA into state statutes; and
• Direct the state Commissioner of Insurance 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.

ACA supporters should only endorse state-level legislation if there has been a concerted but unsuccessful effort to get a more effective and comprehensive solution approved by Congress.

Jon Peacock