Obama administration officials have warned insurance companies that they could face steep fines for denying coverage to people with certain health conditions, according to a new report.
The Obama administration is asking insurers to set up “pre-existing condition” exclusions in their policies that will force them to pay a fee to cover people with a specific condition.
The insurers would then have to pay the fee, as the federal government requires, even if those conditions don’t appear on their policies.
The issue of pre-exclusions was a focus of an upcoming Congressional hearing by Republican lawmakers.
In a letter dated March 10, the Congressional Budget Office said the fee would likely add $1.5 billion to insurance premiums and cost consumers $1,300 per year, as people with conditions that the agency could not prove would qualify for coverage.
The administration is trying to prevent insurers from offering pre-Exclusion exclusions on a broad range of policies, according the letter.
The CBO report said the Obama-era health care law would require insurers to cover the pre-condition exclusions if they could prove those conditions were “preventable” or “modifiable.”
The CBO also said insurers would have to collect the fee to be able to pay.
The White House and insurance companies have disagreed over the fee and how it would work.
The Administration has argued that pre-conditions, while technically legal, would require a court order, not the ACA, and the fee will not apply to policies that are already in effect, which have no pre- Exclusion coverage.
But the insurance industry, which has long said that preclusion exclusations are a problem, has been pushing for the fee change.
In response, the White House says the fee is necessary to address a problem that affects about 5 million Americans.
“Insurers must be able get the information they need to make the right choices for their customers, and we’ve asked the CBO to give them that authority,” said the White the President’s budget director.
The report comes as the administration is expected to announce a major effort to help Americans with preexisting conditions pay for their health care.
In addition to providing money for the American Health Security Act, the budget office also is expected be proposing new tax credits for health insurance.
It is also expected to propose the creation of a “prevention credit” for health care workers.