Bill protects coverage for prior health conditions, but critics say it falls short

In the shadow of a court case that threatens the Affordable Care Act (ACA), Wisconsin Republican lawmakers are promoting legislation to cover one of the federal health law’s centerpiece protections: that people buying health insurance can’t be denied or charged more because of a pre-existing health condition.

But health care advocates contend that, if the federal health law is overturned, the new state protection that the Wisconsin bill promises wouldn’t by itself keep health insurance affordable.

A landmark element of the ACA was a provision that health insurers could not deny coverage or increase the cost of insurance based on a person’s previous health history.

During the Trump administration, ACA advocates frequently warned that protection was under threat as the Republican-controlled Congress tried to repeal the landmark legislation in 2017 and 2018. Those warnings were common campaign talking points in the 2018 Congressional midterm elections, when Democrats recaptured the majority in the House of Representatives. And they’ve continued as the most recent lawsuit to overturn the ACA has worked its way up to the U.S. Supreme Court, which is expected to rule soon.

In March, the Assembly voted unanimously to pass a Republican bill that declares individual and small employer health plans cannot raise rates or exclude people from coverage because of pre-existing conditions. The bill also prohibits insurers from imposing a lifetime cap on benefits.

“This is something that I’m very pleased we’ve been able to build a bipartisan consensus around,” says Sen. Andre Jacque (R-DePere), author of the Senate version of the legislation.

The bill, AB34, is awaiting action in the Senate, where Jacque’s companion bill has also been introduced, although it hasn’t yet had a public hearing.

“The bill itself is ensuring that there are strong pre-existing condition protections,” says Jacque (R-De Pere). “Whatever else might happen at the federal level, those are going to be kind of core components of what a Wisconsin plan is going to look like.”

That doesn’t mean much, contends Bobby Peterson, executive director for ABC for Health, a Madison-based social service organization that helps people with low and moderate incomes navigate the health care system.

“It’s mostly window dressing,” Peterson says of the legislation.

By itself, a state law can’t guarantee affordable health care that protects people regardless of their health history, says William Parke-Sutherland, the health care specialist for Kids Forward, which advocates for families and children on state budget and policy matters.

“We obviously support providing protections for people with pre-existing conditions and making health insurance more affordable and accessible,” Parke-Sutherland says. “But this bill falls far short of continuing the kinds of coverage provided under the Affordable Care Act.”

Counting too much on a state-based protection “could do more harm than good,” he adds. “It gives people the wrong impression that these are issues that we can resolve sustainably and adequately at the state level.”

The proposed state law wouldn’t protect most people in the state who get their health coverage through their employers. Many medium and large employers use self-insurance, assuming the financial cost of covering their workers directly, although they might still contract with a health insurance company to manage the program.

According to the Kaiser Family Foundation, 64% of Wisconsin residents covered by an employer-based health insurance plan were enrolled in self-insured plans in 2019, the most recent year for which statistics are available. But self-insurance plans are regulated exclusively by the federal government and are exempt from most state regulations. A state pre-existing condition protection would not apply.

“It’s not going to impact well over half of the people in Wisconsin,” Peterson says of the proposal.

Also missing without the ACA are protections that have held down premiums.

With the proposed state law, people with preexisting conditions can’t be charged more than others. But because the overall pool of insured people is smaller, the premiums for all health plans covered by the law are likely to be driven up, according to advocates.

“The ACA provides substantial subsidies to make that kind of coverage more affordable,” Parke-Sutherland says. “Without those subsidies, people with pre-existing conditions won’t be able to get the quality coverage they can afford — unless they can afford a relatively exorbitant sum of money for that coverage.”

Unlike the ACA, the state pre-existing conditions bill doesn’t specify what must be covered.

“It doesn’t require that plans cover essential health benefits, like prescription drugs or hospitalization or mental health services,” Parke-Sutherland says. “Insurance could drop broad ranges of categories.” Indirectly, that could be the equivalent of blocking someone because of a pre-existing condition. 

Jacque says the bill by itself doesn’t address all the changes that ending the ACA would bring. But if that happens, he expects other legislation in response.  “We’re going to have to react to any changes that happen at the federal level,” he says. “But as to what those will be? I can’t say.”

For instance, Jacque observes that Wisconsin formerly had a high-risk pool plan, with state subsidies, for people who are denied coverage or priced out of the market for health insurance. 

Such a plan could theoretically fill a gap if the ACA were gone, but could come with challenges of its own.

“More than 800,000 people in Wisconsin have a deniable pre-existing condition,” Parke-Sutherland says — while only “a fraction” of that number were covered under the state’s high-risk pool.

“It would need to be a lot better funded” to make insurance affordable for people who enrolled in it, Parke-Sutherland adds. “It’s another example of how these kinds of health insurance protection and reforms really need to be accomplished at the federal level — and were accomplished by the ACA.”