Claim that 129 million could be denied health coverage doesn't match reality

"Once again, 129M people with pre-existing conditions could be denied coverage and insurers could charge sick people more money."

-- Sen. Kamala Harris, D-Calif., in a tweet, May 4, 2017

As part of a tweet storm condemning the House Republican bill to overhaul the Affordable Care Act, Sen. Kamala Harris, D-Calif., relied on a talking point that a number of Democrats have used when attacking the changes that proposed legislation would make concerning the handling of preexisting medical conditions in the individual market.

But there are some significant problems with the 129 million figure and the assertion that people would be denied coverage.

The Facts

First of all, let's remind ourselves of the narrow scope of the preexisting provision in the American Health Care Act. Originally, in an effort to keep people buying health insurance, the legislation had a requirement that people not have a lapse in coverage or they risk a 30 percent increase in premiums for one year. The bill that passed included an amendment that would allow states to seek waivers from this "continuous coverage" provision.

Instead, if the state met certain conditions, insurance companies for one year could consider a person's health status when writing policies in the individual market. Another possible waiver would allow the state to replace a federal essential-benefits package with a more narrowly tailored package of benefits, limited to the individual and small-group markets.

Thus, four things would need to happen before someone would be affected: You live in a state that seeks these waivers; have a lapse in health coverage for longer than 63 days; have a preexisting condition; and buy insurance on the individual market.

A person who fell into this category would face insurance rates that could be based on their individual condition, for one year. (States that seek a waiver would need to provide ways to help make up the difference in costs.) After that, people would qualify for prices at the community rate, rather than based on their individual conditions.

The individual market serves about 18 million people. So where did Harris get the 129 million figure?

The senator was relying on a somewhat dated 2011 estimate from the Department of Health and Human Services. That report said that 50 million to 129 million (19 to 50 percent of) non-elderly Americans have some type of preexisting health condition.

Just before the Obama administration left office, HHS published an updated version of the report, which said 61 million to 133 million (23 to 51 percent) of non-elderly Americans have preexisting conditions. The difference in the numbers depends on the definition that is used. The more narrow definition is based on eligibility of state-run high-risk pools that predated Obamacare - which might reemerge as an option under the GOP plan for people in a waiver state and with a lapse in coverage. The broader definition includes health conditions (such as arthritis) or behavioral health disorders (such as substance abuse) that might have resulted in denial of coverage or higher premiums.

Harris, obviously, chose the high-end estimate.

There are other estimates as well, such as a Kaiser Family Foundation study that said 27 percent of adult Americans younger than 65 have "health conditions that would likely leave them uninsurable if they applied for individual market coverage under pre-ACA underwriting practices that existed in nearly all states." This number is more conservative in part because the survey did not have enough detail on some illnesses (such as HIV/AIDS) that before Obamacare would have left someone without insurance.

Meanwhile, a 2010 investigation by the House Energy and Commerce Committee, based on documents from the four largest for-profit health insurers, found that companies denied coverage to one out of every seven applicants. That would be 14 percent. So even if you took the entire U.S. population with health insurance - about 257 million people - that means 34 million would face a denial of coverage. Within the individual market - assuming every state sought a waiver - the result would be 2.5 million, assuming they all experienced a lapse in coverage of more than two months.

But, as we noted, the individual market is just one-seventh the size, with employer-provided plans (half of Americans), Medicare and Medicaid unaffected by the provision. (Medicaid, as we have reported, would face steep cuts in funds.)

Harris' staff emphasized that she said 129 million "could" be denied coverage: "They could be denied coverage if they lost their employer coverage and the potential cuts from Medicaid would eventually put a bunch of people at risk, as well."

Harris' staff also pointed to reporting in the Wall Street Journal that because of a potential interaction between federal regulations and the law, employer-provided insurance could be affected, specifically that employers could again impose lifetime limits for catastrophic illnesses. Again, that would affect a relatively small number of people with medical bills over, say, $1 million.

Republicans say the concern is overblown. "The waiver does not apply to the large-group market," said Zach Hunter, a spokesman for the House Energy and Commerce Committee. "The MacArthur amendment explicitly allows states to seek a waiver for essential health benefits only for the individual and small-group market, and it will have no effect on the large-group (employer) market. Any ambiguity caused by previous administrations' guidance from HHS could be resolved by Secretary Price."

An HHS spokeswoman told the Journal that the waiver on essential benefits applied only to the individual and small-group markets. "Should the AHCA become law, the Department of Health and Human Services will administer it in line with both the explicit text of the bill and its intent," Alleigh Marré said.

As for Harris' claim that people could be denied coverage, that's false. The AHCA does not change the ACA's guarantee of coverage. The rule for debating the amendment actually included a line to clarify any possible ambiguity - that "nothing in this Act shall be construed as permitting health insurance issuers to limit access to health coverage for individuals with preexisting conditions."

Harris' staff says the language in the tweet referred to the possibility that people would be "effectively denied coverage" because they could not afford it. This line of reasoning was based on the notion that the House GOP bill, as drafted, could lead to a death spiral because of the continuous-coverage provision, with the stabilization funds unable to help people cover their costs during the one-year period when they are not in the community-rated premium pool. But the CBO report said that the AHCA, as originally structured, could "attract a sufficient number of relatively healthy people to stabilize the market." (CBO also said, contrary to GOP claims, that the Obamacare markets were also stable.) A CBO report on the final bill will be released this week.

The Pinocchio Test The use of the word "could" does not get Harris off the hook. As currently drafted, the provision affects a relatively small portion of the health insurance market - and even then, several factors would need to play out before a person faced an issue. Moreover, the Republican plan specifically sets aside billions of dollars to help states create high-risk or invisible health pools to assist people if their health condition results in higher premiums or loss of coverage during the one-year transition period. It's a valid question about whether the funding is adequate, but that's different from assuming there is no funding at all.

Yet Harris uses a very high figure to suggest that everyone with a preexisting condition is at risk. The gap between her number and the reality of who might be affected is too large to ignore. She earns Four Pinocchios.

FOUR Pinocchios