In the closely contested Missouri senatorial election, an important issue differentiates the two candidates: banning discrimination in insurance markets. Republican Josh Hawley supports a return to the bad old days when insurers could discriminate against the sick in favor of the healthy. This isn’t just my opinion: He is one of the 20 Republican attorneys general suing to overturn the Affordable Care Act and its protections for sick patients.
Hawley has begun to run a commercial that touts his support for insurance that covers pre-existing conditions — even drawing on the fact that his own child was recently diagnosed with a pre-existing condition.
This is an important issue. The ability of insurers to offer coverage that excluded financial protection for previous illness undercut the entire notion of insurance. How is a child born with cystic fibrosis for example, meaningfully insured if any costs associated with cystic fibrosis, expenses that could run into the millions of dollars, are not covered? And this is not a small issue either: Using government data, the Center for American Progress calculates that 2.5 million Missourians have pre-existing conditions.
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But Hawley’s ad is misleading because it implies that covering pre-existing conditions would solve the problems faced by families if the ACA were to be repealed. Simply covering pre-existing conditions is a largely useless change. This is because such a reform in a vacuum is a kind-sounding but toothless change that is easily undone by insurance companies.
Consider life in Missouri before Jan. 1, 2014. The primary source of profit for insurers before that date was not better care management or better insurer price negotiation. It was “medical underwriting” — the practice of trying to determine sick and healthy populations based on their characteristics and their past medical spending. By enrolling the healthy, and avoiding the sick, insurers could maximize their profits. And insurers had three tools for doing so: denying insurance coverage to the insured for any costs associated with pre-existing conditions; denying the issuance of insurance based on enrollee health; and charging the sick much higher prices than the healthy.
It is hard to overstate the perverse nature of an insurance market that allowed this kind of discrimination. After all, the whole idea of insurance is that we pay in when healthy, so that we get covered when we are sick. If insurers can enroll us when we are healthy, but avoid us when we are sick, or charge us much more just because we are sick, then it undercuts the entire reason to buy insurance. It is discrimination, plain and simple.
The ACA ended insurer discrimination completely. It denied the ability of insurers to use any of these three tools to reduce the financial protection of less healthy individuals. No more pre-existing conditions exclusions; guaranteed issue of insurance to anyone who wanted it; and prices that were the same for the sick and healthy.
If Hawley were to win and he joined his Republican colleagues in repealing the ACA, while maintaining just the ban on pre-existing conditions exclusions, nothing will have been accomplished. Without the full set of protections provided by the ACA, any insurer can simply use the other tools to accomplish the same goals as they could with excluding pre-existing conditions.
Suppose that a family with a child who has cystic fibrosis applies for insurance in a world where the ACA is repealed, but there are protections for pre-existing conditions. It’s true that the insurer could not sell them coverage that didn’t include cystic fibrosis. But the insurer could also just not sell them coverage. Alternatively, they could offer coverage, but say that any family including a member with cystic fibrosis has to pay 10 times as much as everyone else.
Both would be perfectly legal if the ACA is repealed, as Hawley clearly supports through his lawsuit. And we know insurers would use the tools if they could — after all, they did so readily in Missouri before the ACA was passed. If we tell insurers that they have to cover the costs of cystic fibrosis, but allow insurers to deny individuals with cystic fibrosis coverage altogether or charge them a fortune, how does that protect people with pre-existing conditions?
The bottom line is that there is no way to protect Missourians from insurance market discrimination other than the full set of protections included in the ACA. Hawley would like to have it both ways, allowing insurers to discriminate while pretending to care about the sick. Don’t fall for it.
Jonathan Gruber is a professor of economics at the Massachusetts Institute of Technology. He worked closely with President Barack Obama and Congress to develop the Affordable Care Act.
