Continuous Coverage Requirements: A More Harmful, Less Effective Mandate

People with pre-existing conditions, low-income consumers, and others would not fare well under the continuous coverage provisions contained in both Speaker Paul Ryan’s bill to repeal the Affordable Care Act and other Republican health care proposals.

While the term “continuous coverage” doesn’t sound harmful, don’t be fooled: This concept is just an ill-advised and less effective alternative to the individual mandate. While the ACA’s individual mandate penalizes people for not having coverage, continuous coverage proposals penalize people once they get coverage.

Not only does the continuous coverage provision carry penalties that are harsher and longer-lasting than the individual mandate, it may mean that health insurance companies can discriminate and/or charge people more when they seek coverage.

The negative impact of continuous coverage requirements

Vulnerable populations would be most affected: Everyone would feel the effects of continuous coverage requirements, but the negative effects will be felt most acutely by people with pre-existing conditions, low-incomes, and unstable employment. These are the most vulnerable people often in the most need of health coverage.

Young, healthy people would be discouraged from coverage: Continuous coverage requirements will also make it harder to attract new young, healthy people who are needed to balance the risk pool. This is because young people who go without coverage will face unaffordable options when they try to enroll.

The proposal being considered in the House bill, the American Health Care Act (AHCA), would charge a 30 percent premium surcharge to anyone who didn’t maintain coverage for the prior year. So, many young and healthy people who are interested in enrolling will be deterred because they can’t afford the premium they would face, as the nonpartisan Congressional Budget Office noted in their analysis of the AHCA.

Sick people most in need of coverage will be the ones with the biggest incentive to pay the surcharge and enroll when they need it. However, even many sick people in need of coverage will be left behind, because premiums will be too steep for them to afford coverage.

Why people go without coverage in the first place

Most people don’t want to go without the protection that health insurance provides. There are a number of reasons why people don’t have health coverage or go without it for a period of time, including:

• a drop in income
• moving
• recently losing coverage
• having a child
• facing any number of financial difficulties

The Commonwealth Fund recently found that 40 million adults ages 19 to 64 experienced a gap in health coverage in 2016. The vast majority of those people (about 75 percent, or about 30 million people) had been uninsured for longer than three months. Under the AHCA requirements, those people would face the premium surcharge because their gap in coverage was longer than 63 days.

How Continuous Coverage Would Hurt a Person with Colon Cancer: Kim Hall Jackson’s story illustrates the drawbacks of continuous coverage. Kim was diagnosed with colorectal cancer but was fortunate to have coverage through her job. Unfortunately, as she got sicker, she lost her job and the health coverage that came with it. COBRA coverage was unaffordable for her, so she had to go without insurance, despite her critical need. Under the AHCA plan, she would face a 30 percent premium surcharge. The surcharge, paired with the less generous financial assistance, offered in AHCA, would make the cost of coverage out of reach for Kim and so many people like her.

Other harmful continuous coverage requirements

There are many other, similarly problematic ways of structuring continuous coverage requirements other than premium surcharges. Other requirements would open the door for harmful health insurance company practices.

For example, someone not maintaining continuous coverage could be charged more if they have a pre-existing condition or they could face limitations on coverage for their pre-existing condition.

Other proposals would institute waiting lists for those who didn’t keep coverage, and some required prior coverage for 18 months rather than 12.

Under these different requirements, Kim, mentioned above, could face a situation where her colorectal cancer treatment isn’t covered or where she is charged more for her coverage due to her pre-existing condition. This belies the GOP promise of protecting those with pre-existing conditions.

Requirements of reconciliation

There is one, big outstanding question about whether the continuous coverage provisions currently included in AHCA would even be able to be included in the ultimate bill. This is because of the “Byrd Rule” that requires all provisions included in a reconciliation bill to have a direct impact on the federal budget. The surcharges would be paid directly to health insurers, so it is a stretch to say this would affect the federal budget. This is a significant question because continuous coverage requirements are a central component of the bill.

All told, continuous coverage requirements harm consumers and would create a less-balanced risk pool that is more costly for consumers.