Ten years ago, the passage of the Affordable Care Act (ACA) ended the ability of insurers to discriminate against people who were sick. Before ACA protections took effect in 2014, insurance companies in the private market were allowed to craft their business models around either excluding people who had health conditions or met other demographic criteria that correlated with high health costs, or to charge far higher rates to those individuals. The practices were draconian but legal. If they existed today, it would mean the over 1.5 million current COVID-19 patients, and the tens of millions more who may test positive or be at risk for contracting COVID-19 going forward, would face significant discrimination.

The ACA opponents behind the Texas-led and Department of Justice (DOJ)-supported lawsuit attempting to overturn the ACA, known as Texas v. California, are pursuing a return to that pre-ACA world. If successful, millions would lose coverage, and in the wake of the global pandemic, access to health care for current and future COVID-19 patients would be at risk.

Pre-ACA Discrimination

Recently, a friend sent me her health insurance rejection from over a decade ago. At the time, this person was a college student with anxiety and depression, and sought out services to support her in continuing to lead a normal and productive life. That she provided information about her (common) mental health challenges and her proactive steps to seek counseling was enough to reject her application entirely in the summer of 2009.

From a 2009 health insurance rejection letter, citing pre-existing conditions as the rationale. Source: a friend of the author.

A response such as this was not rare: she is among the 54 million people under the age of 65 with a pre-existing condition in this country that, before the ACA took effect, would make them completely uninsurable. Furthermore, as many as 130 million people have a pre-existing condition that could subject them to discrimination under prevailing business models of private health insurance before the Affordable Care Act. It was legalized and prevalent discrimination against sick people, and any one of these millions could have faced a lifetime of it had the Affordable Care Act not passed in 2010—for my friend, nine months after she received this rejection.

It was legalized and prevalent discrimination against sick people, and any one of these millions could have faced a lifetime of it had the Affordable Care Act not passed in 2010.

Such discrimination took a number of forms. The first was the most drastic: a complete denial of coverage. Insurers primarily rejected applications because of underlying health conditions, but they also excluded people who worked somewhere within entire categories of occupations (for example, steel workers, pilots, and taxi cab drivers). The second form of discrimination included covering someone, but excluding a particular service or treatment for a particular condition. For example, someone who previously had shoulder surgery may expect to receive a coverage offer that excluded coverage for their shoulder. The third form was to charge more for coverage or setting a higher deductible. Charging women more than men was ubiquitous: 93 percent of individual health plans used “gender rating” when setting premiums.

The last form of discrimination was undertaken through what were known as rescissions. Insurers would cover someone and accept their premiums, and then, if the person got sick, insurers would aggressively search the person’s application to see if they found anything—anything—wrong or missing about their health that they claimed should have been disclosed. At that point they would deny the claims and rescind coverage.

In an influential study undertaken by the Kaiser Family Foundation in the early 2000s, researchers found that when they submitted applications to different insurance companies for seven hypothetical individuals and families in less than perfect health—across a range of ages and with a diverse set set of health conditions, from hay fever to asthma to HIV—insurers rejected 90 percent of the 420 applications for the standard rate, and rejected applications completely 154 times. (The HIV-positive applicant was deemed uninsurable for all 60 applications). There was variation across companies, but only because state laws provided varying levels of protection.

Pre-Existing Conditions and COVID-19

It is not hard to imagine what such a pre-ACA private health insurance market might look like in the age of COVID-19. In addition to ongoing discrimination based on other existing health conditions, the presence of a highly contagious virus with unknown, but potentially severe, long-term health implications would only exacerbate such discrimination.

Over 1.5 million people have tested positive for COVID-19 in the United States. The number increases daily, and likely represents an significant undercount of the number of people who have been infected, given the limited testing undertaken so far. Almost everyone is at risk of contracting the virus, although for some, that risk remains higher. Under the old business model, insurers might have responded in a number of ways:

  • Rejection of, or discrimination against, COVID-19 patients. We have no idea what the long-term effects of COVID-19 may be. Early reports warn of a long recovery, even for mild cases and even for young and healthy patients, and various studies point to lung, kidney, heart, and neurological damage, to name a few potential long-term effects. Of course, private health insurers would have no idea what those effects will be, which is why they may have decided simply not to insure anyone who had tested positive. Or, insurers in a pre-ACA world may have required serology tests to determine who had the virus.
  • Disproportionate coverage rejection of people from communities of color. Insurer decisions would almost certainly increase racial disparities in both coverage and health disparities, given the disproportionate number of people of color who have contracted COVID-19, the share of people of color working in higher-risk jobs, and the share of people of color who have become severely ill.
  • Discrimination against high-risk populations. Those who have not yet had the virus, but are at high risk if they do, may have also faced discrimination. Private insurers would have rejected applicants over 50 in higher numbers than ever, or charged far more, out of concern that treating COVID-19 for these patients would be significantly more expensive. Reports of length of hospital stays for elderly patients with more severe cases make clear that such a cost would be significant. (Currently, the ACA still does allow private insurers to charge older patients more, but limits how much more).
  • Discrimination against frontline workers. People working in the fields most likely to be exposed to coronavirus may find themselves uninsurable. Ambulance drivers and people working for the contracting companies responsible for cleaning facilities might go on the list. Health care workers and caregivers not insured through their work might also be out of luck.

While the pandemic, and the growing economic crisis resulting from it, have exposed severe cracks in our health coverage and care system—for example, the impact of the coverage gap in states that have not expanded Medicaid, or the limitations of relying on employers for health coverage—it has also highlighted the critical progress made by the Affordable Care Act, and, in particular, the ongoing protections it will provide for people if they get sick today.

California v. Texas: Making Discrimination Legal Again

The attempts by Republican state policymakers and by the Trump administration to strike down the ACA entirely, including its pre-existing condition protections — to “terminate it,” in the words of President Trump—would make this alternate universe a reality. Not only would tens of millions of people lose protections due to other existing health conditions, but millions more could face additional discrimination due to COVID-19 diagnoses or their potential for exposure.

If the lawsuit succeeds, the loss of coverage will extend past the effects of pre-existing condition discrimination.

Moreover, if the lawsuit succeeds, the loss of coverage will extend past the effects of pre-existing condition discrimination. Among other provisions, discounts available for low- and moderate-income individuals, and the Medicaid expansion, would also disappear. Last year, those provisions together helped 28 million people afford coverage, and the number of people relying on that financial help will skyrocket during the COVID-19 economic downturn. Already, researchers project that 27 million people could lose their employer coverage due to the job losses of the past few months.

The lawsuit is based on flawed legal reasoning, something conservative scholars and even some Republican members of Congress acknowledge. But, if successful, the initial prediction that 20 million people would lose their health insurance is, unfortunately, outdated. The coverage carnage would be far worse.