If you have a preexisting health condition, don’t even think about leaving your job

Job lock is back.

CREDIT: AP Photo/Alex Brandon
CREDIT: AP Photo/Alex Brandon

If President-elect Trump follows through on his campaign promises, millions of individuals — immigrants, religious minorities, people of color — face a very grim four years. One of the worst hit groups will be Americans with significant health costs. The Trump transition team published a brief summary of the incoming president’s health plan on its website, and the news is not good for the elderly, the poor, and millions of Americans with preexisting conditions.

Much of the plan is vague. Trump plans to “Modernize Medicare,” for example, an unclear statement that is likely code for Speaker Paul Ryan’s (R-WI) plan to repeal Medicare and replace it with a voucher system that imposes much higher out-of-pocket costs on seniors. Similarly, Trump says he will “Maximize flexibility for States in administering Medicaid,” a statement that is probably code for Ryan’s plan to either “require states to provide less extensive coverage, or to pay a larger share of the program’s total costs, than would be the case under current law.”

A central prong of Trump’s plan, however, is to repeal the Affordable Care Act and replace it with, well, not much at all. Trump says he will “repeal the ACA and replace it with a solution that includes Health Savings Accounts,” which primarily benefit the rich and offer little or no benefits to low and middle income Americans. Trump will “enable people to purchase insurance across state lines,” a coded phrase which actually means that he will eliminate state regulation of insurance which requires coverage of treatments ranging from mammograms to maternity stays to well child care.

And then there’s his proposal for people with preexisting health conditions.

Prior to Obamacare, one of the most vulnerable groups was people with medical conditions who neither qualified for a government health program nor received insurance through their employer. Insurance companies would deny coverage to these individuals for conditions as severe as cancer or as routine as hay fever.

The reason why is that covering people with such conditions is expensive. A health insurance plan is a pool of money. Consumers contribute to that pool when they pay their premiums, and they take money out of that pool when they become sick or otherwise seek treatment. That means that, if someone tries to join the pool who has a preexisting condition, the insurer will try to keep them out because it will cost more to insure them than they will pay in.

The Affordable Care Act addressed this with a trio of reforms — a requirement that insurers allow everyone in, subsidies to help pay for coverage, and a financial consequence for people who fail to buy insurance. The final of these three reforms existed so that healthy people would not forego insurance, forcing insurers to cover only the most expensive individuals.

Trump plans to eliminate this framework and replace it with “high-risk pools,” essentially, a special insurance program for people with expensive preexisting conditions. In theory, high-risk pools can work to provide health coverage with such conditions, but they are an inefficient way to do so. And they have reliably failed when attempted by states.

At best, high risk pools are a way to maximize the insurance industry’s profits while shifting the costs of our health care system onto the taxpayers.

At best, high risk pools are a way to maximize the insurance industry’s profits while shifting the costs of our health care system onto the taxpayers. If the government takes on the burden of insuring the most expensive individuals — and only the most expensive individuals — then that’s a bonanza for the insurance companies because they will be left with a pool of less expensive (and more profitable) consumers. Meanwhile, the costs of providing care for the most expensive health care consumers will fall upon whatever new government program President Trump creates to manage the high risk pools.

But that’s actually the best case scenario for Trump’s health plan. Because high risk pools take on the most expensive health care consumers, they are expensive to maintain. And when states attempted to set them up in the past, they did not fund them enough to cover more than a fraction of what was needed. As one report explained when Sen. John McCain (R-AZ) proposed high risk pools during his 2008 presidential bid, these pools “have not been a viable alternative for the medically uninsured because of high premiums…and inadequate funding to subsidize the full cost of providing insurance to a high-cost population.”

McCain’s plan is informative regarding what a Republican proposal for high-risk pools is likely to look like. The Arizona senator proposed spending between $7 to $10 billion on these pools. But that would only cover a fraction of the Americans who would lose their health insurance if Obamacare is repealed. A national program “funded at $7 billion per year would cover only 875,000 people,” and that was in 2008. Alternatively, “even if participants had to pay half of their own premiums, as is generally the case today in state high risk pools, less than 2 million Americans would be covered.”

Obamacare provides health insurance to about 20 million Americans.

Of course, Trump’s proposal is vague on details and especially short on numbers. So maybe he plans to fund the high risk pools enough to fill the gap that will be created by repealing Obamacare. The likelihood that Republicans intend to replace a policy they denounced as socialism with what would likely be a significantly more expensive government program, however, is small.

If there is any ray of light in Trump’s proposals, it is that he doesn’t appear to have set his eyes on pre-Obama laws that protect workers with employer-provided health plans that have preexisting conditions. Nevertheless, Trump is, in effect, planning to reinstate a problem known as “job lock,” where people in jobs that they would rather leave are forced to stay in them because it is the only way that they can obtain health benefits.

That means fewer people starting businesses, more people working into the years when they would rather retire, fewer jobs opening up for younger workers eager for new opportunities, and more people simply stuck in jobs that they hate.

On November 7th, it seemed like workers were finally free to take risks without having to fear that they would lose their health coverage. Only a few days later, that freedom is likely to disappear.