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Cassidy-Graham’s Waiver Authority Would Gut Protections for People with Pre-Existing Conditions

The revised Affordable Care Act (ACA) repeal plan from Senators Bill Cassidy and Lindsey Graham, which is also backed by Senators Dean Heller and Ron Johnson, would give states broad waiver authority to eliminate the ACA’s core protections for people with pre-existing health conditions. These waivers would come on top of the proposal’s elimination of the ACA’s marketplace subsidies and Medicaid expansion, its radical restructuring of the rest of the Medicaid program, and its large cuts to total federal funding for health insurance coverage.

Specifically, a little-noticed provision of the block grant funding states would receive under the plan would let them obtain waivers of ACA pre-existing conditions protections and benefit standards for any insurance plan subsidized by block grant funding. For example, a state that used a small portion of its block grant funding to provide even tiny subsidies to all individual market plans could then waive these protections for its entire individual market. Likewise, states that used block grant funding to offer or subsidize coverage for low-income people could offer plans with large gaps in benefits. States seeking waivers would have to explain how they “intend” to maintain access to coverage for people with pre-existing conditions, but they wouldn’t have to prove that their waivers would actually do so.

In particular, states could waive the ACA’s:

  • Prohibitions against insurance companies charging people higher premiums based on their health status. While insurers would still be required to offer coverage to people with pre-existing conditions, they could offer them plans with unaffordable premiums of thousands or tens of thousands of dollars per month. For consumers, an offer like that is no different than a coverage denial.
  • Requirements that plans cover “essential health benefits.” Before the ACA introduced the requirement that all plans cover a defined set of basic services, 75 percent of individual market plans excluded maternity coverage, 45 percent excluded substance use treatment, and 38 percent excluded mental health care, according to analysis by the Kaiser Family Foundation. Under the Cassidy-Graham proposal, states could let insurers restore these exclusions, leaving many people — especially those with pre-existing conditions — without access to the health services they need.

The waiver authority included in the Cassidy-Graham plan is similar to the so-called “MacArthur amendment” waivers that were included in the House-passed ACA repeal bill. Analyzing those waivers, the Congressional Budget Office concluded:

  • States accounting for one-sixth of the nation’s population would choose to let insurers charge higher premiums based on health status. In those states, “less healthy individuals (including those with preexisting or newly acquired medical conditions) would be unable to purchase comprehensive coverage with premiums close to those under current law and might not be able to purchase coverage at all [emphasis added].”
  • States accounting for half of the nation’s population would choose to let insurers exclude essential health benefits. In those states, “services or benefits likely to be excluded … include maternity care, mental health and substance abuse benefits, rehabilitative and habilitative services, and pediatric dental benefits.” People needing these services “would face increases in their out-of-pocket costs. Some people would have increases of thousands of dollars in a year.”

Announcing their revised plan, Senators Cassidy and Graham explained that they sought to revise their prior legislation to accomplish the goal of letting states waive the ACA’s core consumer protections. Apparently, they largely succeeded: if their bill were adopted, millions of people with pre-existing conditions would lose access to these protections, and, as a result, would lose access to needed coverage and care.