While the Senate failed last week to pass a full repeal of Obamacare, the negative effects of the health care overhaul continue to build the case for scrapping it and starting over. Americans were told that Obamacare would open the door to medical coverage for all children. Those with preexisting conditions would become newly protected by a requirement that health insurance companies “guarantee issue” to all children 19 years old and under. No child would be denied coverage.
But being able to get child-only coverage depends on the existence of child-only policies. And under Obamacare, this is anything but certain. A recent Republican Senate committee staff survey of state insurance departments found that 20 states no longer have insurance companies offering child-only policies. According to Politico, this is because “many carriers decided to leave the market altogether … rather than take on the burdensome cost of writing policies for potentially pricey medical conditions.”
Obamacare prohibits insurance companies from excluding children with preexisting conditions under any circumstances. This creates the incentive for parents to delay purchasing insurance for their children until they get sick, leaving insurance companies to pick up steep medical costs. Many insurers have thus opted to forgo offering these risky policies rather than face the ruinous effects they could have on their ability to stay in business.
Instead of expanding children’s ability to obtain coverage, then, Obamacare actually has the reverse effect. In response, California, Washington, Ohio, Indiana, New Hampshire, Kentucky, Maryland, and Colorado have provided incentives for health insurance companies to continue offering child-only plans. “Had [states] not taken aggressive action to intervene, the damage could have actually been a lot worse,” reports Politico.
Widespread upheaval has already created more problems than it solves, which will only become worse once Obamacare eliminates preexisting-condition exclusions under any circumstance for adults as well in 2014. Instead, Congress could have targeted reform to those who are affected by applying to the individual market rules similar to those that govern employer-sponsored insurance.
Before Obamacare was signed into law, the only individuals who could face preexisting-condition exclusions when changing plans were those who purchased coverage in the individual market. Yet individual market policies account for less than 10 percent of those covered by private insurance. Under prior law, an enrollee in an employer-sponsored plan could not be denied coverage or charged a higher premium based on health status. An enrollee also could not be subject to a preexisting-condition exclusion as long as he or she had prior coverage for at least a year.
Thus, under employer-sponsored coverage, preexisting-condition exclusions apply only to those who do the wrong thing by going without coverage until they need it. Those who follow the rules are rewarded.
Health care reform can fix the problem of preexisting-condition exclusions without the detrimental effects seen under the new law. To expand access to coverage for children and adults without harming existing coverage, Congress should first repeal Obamacare.
Co-authored by Amanda Rae Kronquist.
Kronquist is currently a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm