Last week, the Department of Justice (DOJ) asked a federal court in Texas to end the Affordable Care Act’s (ACA) protections for people with pre-existing conditions. The underlying legal challenge was filed earlier this year by 20 state attorneys general, who argue that without the individual mandate—which was eliminated in December’s Tax Cuts and Jobs Act—the entire is ACA unconstitutional. In an unexpected move, the DOJ declined to defend the ACA in this case, and instead asked the court to invalidate only the law’s provisions that prevent insurers from denying coverage or charging higher rates based on health status.
Before the ACA, pre-existing conditions created a nightmare for consumers. Insurers were permitted to refuse coverage, to kick people off their policies, to charge extremely high prices that few could afford, and to set lifetime limits on the amount of coverage a person could have. The ACA created new protections, requiring that insurance companies cover people regardless of health status and forbidding insurers from increasing prices for individuals with pre-existing conditions. These rules cover the individual market and, importantly, they also cover the employer market for insurance—where the majority of Americans acquire their health care coverage.
The ACA also required people to purchase health insurance or pay a penalty. Last year, Congress ended this requirement—known as the individual mandate—effective 2019. In addition to serving as the basis of the current legal challenge, this rollback is one reason why many insurance companies are raising their rates, as they fear it means many young, healthy people will go uninsured making the pool of people in the markets skew older and sicker than before. A larger pool of uninsured people leads to increased pressure on the Medicare program as people become eligible and need care they could not get while uninsured.
If DOJ’s legal argument is ultimately successful, the protections in the ACA for people with pre-existing conditions would go away, leaving people in both the employer and individual markets at risk of having no way to access affordable coverage. It would also potentially end help individuals currently get to purchase health insurance.
While the fate of this case is uncertain, few believe DOJ’s position to be a winning one. However, regardless of the outcome, the administration’s decision to side with those seeking to invalidate the ACA puts the law—and those who rely on its consumer protections and coverage requirements—in jeopardy. This includes millions of people in the individual market, plus tens of millions of people who have coverage through their jobs.
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