Can health insurance denies my wife's application for health insurance because she is pregnant?

I had to move to Utah. She has been covered with health insurance for more than 2 years without gap. I tried to purchase an individual health insurance for her and it was denied because she is pregnant.
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Yes, they can deny her because it is a "pre-existing" condition. If you have her under a prior group policy, it would be almost necessary to get her under a new group policy or COBRA, as almost all new individual policy's will exclude coverage for her current pregnancy.
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