In a recent JAMA Forum post, I compared President Obama’s and Governor Romney’s approaches to health insurance tax policy. In this post, I will contrast their vision on health insurance “portability.”
Austin Frakt, PhD
A health insurance plan is truly portable if you can retain it despite changes in employment and health status. Almost no health insurance for working-age individuals and their families in America is portable in this sense. If you are insured through your employer and you change jobs, you have to change plans too. If you drop or are dropped from employer-based coverage and you wait longer than 2 months to seek new coverage in the individual market, plans can deny you because of preexisting conditions.
There’s another sense of portability that is partially addressed in current law and would be further addressed, though in different ways, by President Obama and Governor Romney. Health insurance coverage is portable if you are able to maintain it despite changes in employment and health status. Notice that this differs from the notion of portability described above: portability of coverage does not imply retaining the exact same health plan.
Right now, Americans enjoy some coverage portability protections through the 1996 Health Insurance Portability and Accountability Act (HIPAA). HIPAA requires that both group-based (employer-based) and non–group-based (ie, individually purchased) plans be guaranteed renewable. If a plan agreed to cover you this year, it must offer you that option the following year. Setting aside some details, HIPAA generally makes it illegal for group-market plans that refuse to cover preexisting conditions to do so for longer than 12 months. Also, for people who have had 18 months of coverage and are transitioning from the group to the individual market, individual market plans cannot impose any preexisting condition exclusions. These protections only apply to those without a gap in coverage longer than 2 months.
But notice what HIPAA does not do. It does not ban or limit exclusions for preexisting conditions within the individual market, just for those transitioning to the individual market from the group market. It also does not address affordability of coverage. Even if you can’t be kicked off or denied coverage because of a preexisting condition, there is no guarantee you can afford the products offered to you.
These limitations of HIPAA will change in about 14 months under the provisions of the Affordable Care Act (ACA), which codifies Obama’s vision for reforms to coverage portability in particular and access to affordable coverage in general. As of 2014, no plan may impose exclusions for preexisting conditions. Moreover, subsidies will be available to help individuals afford insurance. For the first time in the nation’s history, all legal US residents will have access to affordable coverage.
Romney has pledged to repeal the ACA. Several weeks ago on Meet the Press, he seemed to offer a replacement package that included portability protections identical to those in the ACA. He said, “Well, I’m not getting rid of all of health care reform. Of course, there are a number of things that I like in health care reform that I’m going to put in place. One is to make sure that those with preexisting conditions can get coverage.”
After some back-and-forth in the media and from his aides, the candidate made clear he only intends to ban exclusions on preexisting conditions for people who have continuous coverage. In other words, if you lack coverage for any length of time, all bets are off: you may not be able to purchase a new policy that doesn’t exclude some preexisting conditions. This is, at most, an extension of HIPAA-like protections to the individual market. It otherwise retains all the limitations of HIPAA.
Because of the continuous coverage requirement, Romney’s proposal potentially leaves a lot of people at risk of not being able to find a new policy when they need it. About 89 million Americans had a gap in coverage over a 3-year span beginning in 2004. To be sure, not all of them had preexisting conditions and so might not be denied coverage anyway. Still, the continuous coverage requirement will shut some people out of the market.
That’s not a bug, but a feature. Romney does not plan to require coverage. He now rejects an individual mandate, although he accepted one as governor of Massachusetts. As such, he can’t require all plans to accept all comers. That would invite people to game the system, only enrolling when they’re sick; they would save money on premiums when they’re healthy but drive up the premiums of others. Romney is also not offering subsidies that would guarantee that coverage is affordable. Consequently, many who do have continuous coverage, and to whom he would offer protections from preexisting condition exclusions, may be forced out of the market because they are unable to afford the premiums. Of course, anyone forced out of the market fails to have continuous coverage, threatening their ability to get back in.
Romney has a few other ideas for increasing competition and choice in the health insurance market. Among them is a proposal for high-risk pools that might assist those with preexisting conditions who cannot otherwise obtain coverage. The details are unspecified and the full effects uncertain, but one thing is clear: as a package, compared with the ACA, Romney’s reforms offer less choice and access to health insurance for those who lack continuous coverage.
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