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Have hay fever or hives? If Obamacare is repealed, you could be denied health insurance again

As congressional Republicans double down on their promise to repeal the Affordable Care Act but defer a replacement for as long as several years, healthcare stakeholders and experts are stepping up their warnings of the consequences of half-baked policymaking.

That’s important, because none of the proposals that Republicans have put on the table during the last six years is close to fully baked. But hospitals, actuaries and economists are warning that it’s easy to vandalize the healthcare system in ways that make it worse for tens of millions of Americans dependent on Obamacare’s Medicaid expansion and individual insurance exchanges.

Much of the repeal-and-replace rhetoric of ACA critics depicts the pre-Obamacare health insurance landscape as a sort of nirvana in which consumers had almost unlimited options to fashion the coverage they wanted, without government interference. So it’s proper to recall what that marketplace was like. 

A useful reminder comes from Georgetown University’s Center on Health Insurance Reforms, which compiled a list of the conditions that insurance buyers in Illinois had to report when applying for coverage. The list included serious conditions such as heart attacks, emphysema and cirrhosis, but also common maladies such as hay fever, hives, sinusitis and acne. Any of these gave insurers an incentive to deny coverage to applicants or offer it at inflated prices or with exclusions.

As The Times reported in 2006, insurers often combed through the medical histories of policy holders who incurred large claims, hunting for inconsistencies in their disclosures that could justify canceling their coverage retroactively.

These practices were outlawed by the ACA, but they could return if the regulations are lifted. The GOP says it wants to retain protection for preexisting conditions, but its replacement proposals typically would scrap the ACA’s individual mandate, which supports the requirement that insurers offer standardized coverage to anyone, regardless of medical condition, with the requirement that all Americans have insurance. GOP plans typically replace the mandate with a rule protecting only buyers who have maintained coverage without a significant lapse. Since the cost of insurance sometimes prompts families to drop their coverage for a period of time, many with medical needs could be vulnerable to denials.

That could be a sizable population. The Department of Health and Human Services estimated in 2011 that as many as 129 million Americans — up to half of all the non-elderly — had conditions that could result in insurance denials. The ratio of those with such conditions rose sharply with age — from about 35% of Americans 18 to 24 to 86% of those 55 to 64.

The riskiest GOP plan involves repealing provisions of the Affordable Care Act subject to reconciliation in the Senate. This is a legislative maneuver that applies to provisions that affect the federal budget, which can’t be filibustered. (Republicans will hold only 51 seats in the upper chamber next year, so the threat of Democratic filibusters offers a significant counterweight to GOP policies.) 

According to a report issued Tuesday by the Urban Institute, reconciliation would allow the GOP to eliminate the ACA’s Medicaid expansion and subsidies for premiums and, for especially low-income Americans, for deductibles and copays too. That’s likely to leave the country in worse shape than before the Affordable Care Act was passed. “This scenario does not just move the country back to the situation before the ACA,” the institute’s Linda J. Blumberg, Matthew Buettgens and John Holahan write. “It moves the country to a situation with higher uninsurance rates than was the case before the ACA’s reforms.”

Reconciliation would leave in place such reforms as the ban on preexisting condition exclusions and the requirement that every plan provide a roster of minimum essential health benefits, including preventive care without copays and pregnancy and maternity care. Some Republicans in Congress, however, have the knives out for these provisions, too. 

Based on the terms of a reconciliation bill passed by Congress this year but vetoed by President Obama, the Urban Institute estimated that the partial repeal would more than double the ranks of the uninsured to 58.7 million from 28.9 million in 2019. The percentage of non-elderly Americans without insurance would rise to 21% from 11%, “a higher rate of uninsurance than before the ACA because of the disruption to the nongroup insurance market,” according to the institute.

Also sounding the alarm this week were two major hospital organizations. In a letter to President-elect Trump and Vice President-elect Pence, the American Hospital Assn. and the Federation of American Hospitals warned that implementing the cuts in the vetoed reconciliation bill could cost their members nearly half a trillion dollars through 2026. 

“Losses of this magnitude cannot be sustained and will adversely impact patients’ access to care, decimate hospitals’ and health systems’ ability to provide services, weaken local economies that hospitals help sustain and grow, and result in massive job loss,” the organizations warned. They said the potential funding cuts were double those Congress imposed in 1997, when institutions were forced to “cut back staff, services, education, research, investments in new technology, and modernization and upgrading of aging facilities” and resulted in congressional rollbacks of the cuts in subsequent years.

The biggest concern of healthcare experts is that Congress will try to dismantle the Affordable Care Act piece by piece without regard to the adverse consequences of leaving some rules in place. Eliminating the individual mandate and subsidies, cautioned the American Academy of Actuaries in a letter to House Speaker Paul D. Ryan (R-Wis.) on Wednesday, would create “increased uncertainty and instability regarding future enrollment, premium rates, and risk pool profiles…. Insurers would likely reconsider their participation in the market and some may choose to exit in the near term. This could lead to severe market disruption and loss of coverage among individual market enrollees.”

Will Ryan listen? It’s questionable. In an appearance Wednesday on CNBC, he declared that “Obamacare is entering a death spiral” in which higher premiums drive healthier buyers out of the market, forcing even higher premiums upon those who remain.

Ryan is not above concealing his ideological desire to cut government spending behind a shroud of lies, as we pointed out before in regard to Medicare, and this is another example. While it’s true that Obamacare premiums are going up, so are the subsidies, so the net price for most buyers has not significantly increased — the Dept of Health and Human Services reported in October that despite premium increases, 77% of buyers on the federal healthcare.gov exchange will be able to find plans with premiums below $100 a month in 2017.

That doesn’t mean the Affordable Care Act market is invulnerable to a death spiral, only that the death spiral it faces would come from the proposals being advanced by Ryan himself and his caucus.  

Keep up to date with Michael Hiltzik. Follow @hiltzikm on Twitter, see his Facebook page, or email michael.hiltzik@latimes.com.

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