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Lawmakers Allow A Health Insurance Plan To Bypass Federal Protections For People With Preexisting Conditions

Texas Department of Public Safety officers and small crowds inside the Capitol building on Jan. 11, 2021.
Gabriel C. Pérez

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The Texas House passed a bill on Friday allowing a health insurance company to skirt federal health care laws — including protections for preexisting conditions.

House Bill 3924 is a little-known measure that allows the health care plan for the Farm Bureau to act like insurance but bypass some of the regulations for insurers under the Affordable Care Act. Coverage through the Farm Bureau, an insurance company and lobbying group, would be available to anyone who pays the $35-50 fee to join.

Supporters of the bill say the workaround is meant to create a more affordable coverage option, particularly in rural areas.

But Stacey Pogue, a senior policy analyst with the policy think tank Every Texan, said those health plans won’t be required to provide the same protections under the ACA, including popular protections for people with preexisting conditions such as diabetes, cancer or heart disease.

“[It] purposefully creates a loophole in those protections so that a single entity can offer coverage that can turn you down based on your health, or charge you more, or make you wait before you get any treatment covered for your health care conditions,” she said.

Pogue said the move — led by Republicans — is surprising because both parties have embraced protections for people with preexisting conditions.

According to a 2019 survey conducted by the Episcopal Health Foundation, about 9 in 10 Texans believe health insurance companies should not be allowed to discriminate against people with preexisting conditions. In Texas, about 28% of the population 64 years old and younger has a preexisting condition.

Five other conservative states are already allowing the Farm Bureau to skirt rules created by the ACA by not classifying their health coverage as insurance.

Under federal health care laws, states can determine what health plans should be classified as insurance, which gives the state the ability to decide who can follow the rules other insurance plans have to follow.

Pogue said if healthy people concentrate in plans like the Farm Bureau’s plan, it could affect other parts of the insurance market — specifically the online marketplace created by the ACA. That's because sicker people will be less able to get coverage through the Farm Bureau, while healthier people will have a financial incentive to pick a cheaper plan that excludes people with preexisting conditions.

“What that does over time is the pool of people covered by the health insurance marketplace will become older and sicker on average,” Pogue said. “And that raises the cost of their coverage and it adds to instability in the market.”

The bill still needs to be approved by a committee and then passed out of each chamber of the Legislature again before heading to the governor’s desk.

Ashley Lopez covers politics and health care. Got a tip? Email her at Follow her on Twitter @AshLopezRadio.
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