The shocking reaction to the recent murder of a major health insurance CEO has heightened awareness of widespread discontent with coverage restrictions, among them the exclusion of preexisting conditions. Yet it is expected that the new Trump administration will roll back some consumer protections under the Affordable Care Act (ACA). One such measure would permit greater availability of short-term health insurance policies that are exempt from ACA mandates, including the requirement that policies cover preexisting conditions. Allowing their sale is justified by the belief that consumers should be able to choose a lower-cost policy with restricted coverage, in preference to a higher-cost, ACA-compliant policy. That belief depends on consumers’ understanding of the policies’ coverage differences. Federal rules therefore require sellers of exempt policies to disclose the exemption. However, the effectiveness of such disclosures is untested. This Article presents findings from a controlled experiment, showing that neither the disclosure current regulations require, nor a stronger and more complete one devised for this study, fully succeed in communicating the impact of the preexisting-condition exclusion. We conclude that the problem is in part an intractable difficulty in formulating the exclusion in clear language that also serves the exclusion’s actuarial purpose of controlling the insurer’s risk exposure. Because disclosure that reasonably ensures consumer understanding may not in fact be possible, policymakers should consider either barring the exclusion or requiring it be framed in more specific terms, even though that framing may not fully achieve the exclusion’s actuarial purpose.
Authors
Ira M. Ellman, Distinguished Affiliated Scholar, Center for the Study of Law and Society, University of California, Berkeley School of Law. Ahmed E. Taha, Professor of Law, Pepperdine University Caruso School of Law. Michael J. Saks, Regents Professor, Professor of Law, Sandra Day O’Connor College of Law, Arizona State University. Mark A. Hall, Fred D. and Elizabeth L. Turnage Professor of Law and Public Health, Wake Forest University School of Law and School of Medicine.
Copyright 2025 by Ira M. Ellman, Ahmed E. Taha, Michael J. Saks & Mark A. Hall
Cite as: Ira M. Ellman, Ahmed E. Taha, Michael J. Saks & Mark A. Hall, Why Explaining the Impact of Excluding Preexisting Conditions From a Health Insurance Policy Is So Difficult: Experimental Evidence and Policy Implications, 120 Nw. U. L. Rev. Online 59 (2025), https://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?article=1358&context=nulr_online.