The Affordable Care Act (ACA), also known as ObamaCare, is a major piece of legislation that affects all areas of the health insurance industry. One of the biggest changes involves how insurance companies handle new applicants who have an existing illness.

In the health insurance industry, any existing illness is known as a “pre-existing condition.” This term refers to a health condition the applicant had before applying for insurance with that provider. In the past, Americans with pre-existing conditions had very few options regarding health insurance. With the passage of ObamaCare, pre-existing conditions are no longer a barrier to coverage.

Pre-existing Conditions Before the ACA 

Prior to the passage of the Affordable Care Act, pre-existing conditions often meant that you could not obtain new health insurance at all. If you had health insurance before your illness, you had to stay with that coverage – forever. Most health insurance companies would not take Americans with pre-existing illnesses.

If an insurance company was willing to cover you as a new applicant, many times any treatment regarding your pre-existing condition would be specifically excluded. Whether you had something as simple as asthma or as serious as cancer, you had to pay for any related treatment on your own. Only new illnesses or injuries would be covered by insurance.

Insurance companies made these rules to keep their own costs affordable. Insurance is based on the premise that, at any given time, only a small portion of their customers will need a payout. Thus, everyone who is covered can pay a fairly small premium for a large amount of coverage. However, if it was known that someone would need a large payout on a regular basis, they were not a good fit for this system. In order to keep the system affordable for the rest of the group, large known payouts were excluded, or at least minimized.

Of course, this put Americans who needed regular treatment in a very bad position. Unfortunately, it often meant they could not obtain the medical care they needed for their condition, or that they could not afford the most effective treatments. In order to give these Americans access to health care for their pre-existing conditions, ObamaCare dramatically change the rules.

Pre-existing Conditions After Health Care Reform 

Beginning January 1st, 2014, new health insurance plans were no longer able to exclude coverage for a pre-existing condition. Even more significantly, health insurers also can’t charge more for an applicant who has a pre-existing condition. Women also can’t be charged more than men simply because they may need significant coverage for pregnancy and childbirth. Every applicant must be treated the same, regardless of the amount of payouts they will need in the future.

Not all insurance plans are required to abide by the new rules surrounding pre-existing conditions. Any insurance plans that are purchased by individuals – not issued through an employer – and were created before March 24th, 2010 are grandfathered. However, all plans issued through the insurance Marketplace do have to meet the new rules, so Americans with pre-existing conditions are encouraged to find coverage through the Marketplace.

These changes put a strain on the health insurance system and may be among the factors that have contributed to rising costs as insurance companies pay out more claims. As a result, all Americans involved in new insurance plans could end up paying more than they may have paid in a pre-ACA plan, though a direct comparison is nearly impossible to make. While this works well for those with pre-existing conditions, it discourages other healthier Americans from using the Marketplace.

Although it’s difficult to point to one or two specific factors as a root cause of rising costs, new rating rules, essential health benefits that stand as a requirement of all ACA-approved plans, and general inflation of the cost of medical services all play a role. Particularly where it concerns the new essential health benefits of current ACA-plans, it’s difficult to compare current health care plans to those that existed prior to the passing of the ACA. Health care coverage between these two eras is just too different to compare in a meaningful way.

The effects of the Affordable Care Act are wide-reaching. One of the big changes to take effect in 2014 involved pre-existing conditions. For Marketplace plans and other new insurance policies, care for existing illnesses can no longer be excluded. In addition, insurance companies cannot charge more to cover these costs. As a result, insurance premiums have risen, but more Americans have access to important health care.

Sources: 

http://kff.org/health-reform/fact-sheet/obamacare-and-you-if-you-have-a-pre-existing-condition/

https://www.healthcare.gov/how-does-the-health-care-law-protect-me/#part=3

https://www.healthcare.gov/glossary/grandfathered-health-plan