Sounds Like A Good Idea? High-Risk Pools

By Julie Rovner and Francis Ying
Kaiser Health News, October 31, 2016

One way Republicans say the system could be fixed is by returning to something called a high-risk pool.

The idea is to let all the sick people buy their policies in a separate insurance pool, and then have insurance companies and states and the federal government all chip in to pay for their care and keep their premiums low.

Before the Affordable Care Act, 35 states had high-risk pools.

The federal government had one, too, as a transition to the health law. But none of them worked very well.

The biggest problem? Both premiums and other costs remained too high for many people with health conditions to afford. The federal program ran out of money almost a year before it was scheduled to end.

Sometimes the pools got so expensive for states that they had to impose waiting lists for coverage.

And often, to keep costs down, risk pools set up waiting periods before they started paying bills for the very illness that made people high risk.

Republicans say their new risk pools plan would be better than the old ones. Their plan says it would keep premiums low, and no wait lists would be allowed.

But it’s not clear that the $25 billion in federal funding they propose would be enough, or that states would step in to help fund the pools.

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Republicans have repeatedly voted to repeal the Affordable Care Act, stating that health plans are too expensive, They suggest that we replace them with plans that cover only what is needed, leaving many benefits out, and that we reduce regulation by selling plans across state borders, relieving insurers of the requirement that they must sell plans to the sick as well as the healthy. Such plans would certainly have lower premiums, but they would work only for healthy individuals who have relatively few health care needs. What about those who would need much more care?

The Republicans do recognize the need. They suggest that we establish high-risk pools to cover these individuals. Plans in these pools would be very expensive – not affordable for most. They suggest that these plans be partially subsidized by the government, and they have proposed $25 billion in federal funding.

Since the sick would be concentrated in these high-risk pools, many of the 80 percent of us who are relatively healthy could then afford to buy the deregulated, stripped-down plans they propose. So the Republicans can sell their concept based on the fact that these plans would be much more affordable than those currently offered in the exchanges.

But the high-risk pool concept is not new. Many states have experimented with them before, and even ACA included high-risk pools during the transition. But these plans mostly failed for a very obvious reason. Concentrating very expensive patients into a single risk pool results in unaffordable premiums, and our legislators refused to provide the level of funds that would be required to make the programs work. They stripped down the plans, exposing patients to intolerable out-of-pocket costs, and they sharply restricted enrollment in the plans, creating long waiting lists of people in need.

If we created a separate high-risk pool for the 20 percent of us who have greater health care needs, how much money would we need? Well, since they would use about 80 percent of our health care dollars, it would require roughly $2,400 billion of the $3 trillion plus that we are already spending on health care. Obviously the $25 billion that the Republicans propose would not go very far, and people would have to look to other programs to finance their care.

However some of the high-risk patients are already in other programs. Some are covered by Medicare or Medicaid, though the Republicans would convert Medicare to a defined contribution program (premium support), shifting more of the costs to these patients with high needs, and they would change Medicaid into a block-grant program, reducing the federal component of the funding when Medicaid already has serious problems because of its chronic underfunding. Basically, Republicans want to reduce the role of government in financing health care. That can only make things worse for those with greater health care needs.

In a bit of irony, the Republicans are now in a position wherein they can stand on the sidelines and holler about protecting the public purse from the public option proposed by the Democrats, while smugly realizing that it is likely that the public option will turn out to be the high-risk pools that Republicans support.

Ida Hellander, Director of Policy and Programs for Physicians for a National Program, has this to say:

The Democratic Senators are calling on states to create ‘public options’ for their health exchanges because 20 percent of people won’t have a choice on insurer in 2017, and in 2018 it could be higher.

The exchanges open a week before the election, and they want to look like they have a solution.

Clinton herself has said repeatedly that the states can set up public options because of section 1332 of the ACA.

Alaska got down to one insurer that was going bankrupt so it had to kick in $51 million in state funds to keep it afloat. In MN all seven insurers were going to bail until the state agreed to let them limit enrollment. If the state doesn’t put together a public option soon, there will be people eligible for subsidies on the exchanges with no insurance plan to sign up for.

These state options won’t have any of Medicare’s advantages of course. They’ll have to follow all the rules already set for commercial insurers. They serve only one purpose.

The PO is not a ticket to single payer. It is a last ditch attempt to save the ACA. These state-based public options will only survive with giant state subsidies. In other words, we’ll be back to state-based high risk pools, which is what they will quickly turn into.

The intersection of policy and polarized politics makes for quite a scene. The Republicans fight for high-risk pools. The Democrats fight for the public option not realizing that it is really just high-risk pools in drag. The Democrats win by trading off more important public policies, but that is a win in name only. The Republicans get their high-risk pools, adding to their other obfuscated victories (Medicare Advantage privatization of Medicare, Medicaid managed care privatization, privatized Medicare drug benefits, and especially the conservative Heritage reform plan that became Obamacare). That should explain why the mixed aroma of cigars and brandy wafts over from the right side of the Congressional isle.

Need more proof that the liberals keep losing? We have nothing remotely resembling an equitable, efficient, universal single payer system, but the conservatives have almost everything they want.

Physicians for a National Health Program (PNHP) is a nonpartisan educational organization. It neither supports nor opposes any candidate for public office.