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President-elect Donald Trump told the Wall Street Journal Friday that there are two parts of the Affordable Care Act he’d like to keep: the ban on preexisting conditions and the provision that allows young adults to stay on their parents’ coverage through age 26.
Trump told the Journal, of those policies, “I like those very much.”
That second policy is easy enough to keep running. It’s a pretty simple regulation that the insurance industry has already become accustomed to.
Continuing the ban on preexisting conditions is ... not so easy. Because as it stands now, the guaranteed issue of insurance is intertwined with two other major reforms of the individual market: a requirement that everybody purchase insurance or pay a fine (the mandate) and subsidies to make coverage affordable for those with low and middle incomes.
If you just have a ban on preexisting conditions, it is true that everyone can buy health insurance. But it’s also true that without other policies to induce healthy people into the market, only the very sickest people stick around. And this leads to spiking insurance premiums.
Requiring coverage of preexisting conditions didn’t work well in New York
One reason we know this is because New York state did it for a number of years. In 1992, the state passed a mandate that insurers had to accept everybody, but didn’t require New Yorkers to buy coverage or offer subsidies to make it more affordable.
What happened next: Premiums skyrocketed, and New York’s uninsured rate went up.
The Los Angeles Times’s Noam Levey wrote in 2010 about what happened next (this is before the Affordable Care Act took effect):
Making isolated changes to the complex medical insurance system can have unwelcome consequences.
Premiums in New York are now the highest in the nation by some measures, with individual health coverage costing about $9,000 a year on average. And nearly one in seven New Yorkers still lacks health coverage, a greater proportion than before the law was passed.
The state has become a victim of a dangerous dynamic in insurance markets. Laws allowing consumers to buy insurance at any time often saddle companies with a lot of high-cost customers.
Margot Sanger-Katz at the New York Times charted what happened to premiums there — and how they changed when the Affordable Care Act added subsidies and a mandate.
@sarahkliff Here's a chart I made about that. https://t.co/4NEedZHmYu pic.twitter.com/gbVdoxRkhb
— Margot Sanger-Katz (@sangerkatz) November 11, 2016
And here is her summary of what happened in New York and a handful of other states that tried banning preexisting conditions as a solo policy move:
In the 1990s, a handful of states forced insurers to cover everyone but did not provide subsidies. In all of those states, prices for insurance went up substantially and the number of people in the market declined. Sicker customers, who had been shut out of the unregulated market, bought insurance. Healthier ones, facing increasing prices, fled it. Insurance companies also often stopped selling individual insurance in those states, finding the line of business unprofitable and the size of the market too small to be worth the risk.
Trump probably won’t continue the individual mandate given its unpopularity. He might be open to keeping Obamacare’s subsidies — as he told the Wall Street Journal in the same interview, his current view on Obamacare is that it will be “amended, repealed or replaced.” There is a lot of space between those different options.
But make no mistake: A ban on preexisting conditions, on its own, is no policy solution at all.
