You may have heard about a multistate lawsuit, Texas v. United States, that revisits the individual mandate penalty in the Affordable Care Act. Some experts are speculating that it may spell trouble for the ACA (also known as ObamaCare) and the law’s prohibitions on denying coverage to people with pre-existing conditions. To really understand this lawsuit, you need two other pieces of information:
1) Twenty-six states originally sued the federal government (and lost) in a case that the Supreme Court decided in 2012. SCOTUS then ruled, 5-4, that the ACA’s individual mandate was a proper use of Congress’s taxing power.
2) At the end of 2017, Congress passed a set of tax reforms that included a change to the individual mandate penalty… Starting in 2019, it will be $0.
Put these two things together and you can see the problem: How can the individual mandate to purchase health insurance be a proper use of the taxing power if the “tax” is… nothing? Basically, that’s the question at the heart of the new lawsuit.
What does that have to do with pre-existing conditions? Well, as I explain in a new policy focus from IWF, the ACA rules about pre-existing conditions contributed greatly to changes in the insurance market that made ACA plans more attractive to people with expensive conditions and less attractive to healthy people with relatively low health costs. The consequences for the market have been bad for everyone: premiums have soared and insurers have exited, leaving little choice.
This was what the individual mandate was intended to prevent. It was intended to keep healthier people in the market, even if the insurance products available to them weren’t all that appealing. The individual mandate and the ACA rules (that prohibit insurers from denying coverage or offering higher premiums to people with pre-existing conditions) are supposed to work together.
Ironically, the individual mandate has always been the most unpopular part of the ACA while the rules on pre-existing conditions have always been the most liked. For this reason, lawmakers found it relatively easy to roll back the former, but the latter have become another seemingly untouchable topic in public policy. This is likely due to an enormous amount of misinformation about what the ACA's rules actually do, and how many people they affect.
Read IWF’s new policy focus on pre-existing conditions here. And if you’d like, take the quiz below to test your knowledge about pre-existing conditions and the ACA.