WASHINGTON ― The Republican Obamacare replacement was resurrected from political death this week by a plan to deal with pre-existing conditions through something called a “high-risk pool.”
Some people have unusually high health care costs. These people are colloquially known as “sick” people. In medical jargon, they’re called people with “pre-existing conditions.”
Obamacare tried to help these people cope with their costs by spreading them out among as many people as possible. Obamacare forced everyone to buy health insurance and banned insurance companies from discriminating against people with pre-existing conditions. This meant higher premiums for some healthy people, and new access to insurance for millions of others.
The GOP replacement takes the opposite approach to dealing with this problem. It allows states to move people with pre-existing conditions out of the private insurance system and into high-risk pools, which gives insurance companies room to reduce premiums.
“Freed from the current system’s coercive mandates, insurers would finally be able to bring down costs for all patients, including those with pre-existing conditions,” health secretary Tom Price maintained in a Wednesday CNBC column.
The problem, of course, is that high-risk pools are very expensive ― they’re full of sick people with high health care costs. The only way for the GOP bill to bring down costs for all patients is to funnel tons of taxpayer cash into the high-risk pools. Otherwise, it’s just a gambit to sack sick people with massive bills ― exactly the sort of thing insurance is supposed to prevent.
And the GOP bill appears to have extremely scarce funding for high-risk pools.
Listen to HuffPost’s analysis of the House Obamacare replacement in the latest episode of the politics podcast “So That Happened”:
At the beginning of the week, the GOP bill provided up to $130 billion that states could theoretically use to set up high-risk pools. The Center for American Progress, a liberal think tank, calculated that would still be $200 billion short. To placate moderate Republicans, party leaders added another $8 billion that could only be used for the pools.
So maybe the Senate will fix the bill and pour hundreds of billions of dollars into high-risk pools, enough to make up for the $673 billion in premium subsidies that the bill cuts. What’s far more likely to happen is what has happened with high-risk pools in the past ― a big underfunded mess.
Before Obamacare, 35 states ran high-risk pools for people who couldn’t get private insurance. These programs covered about 200,000 people, though they weren’t backed by billions in federal funding. Instead, states levied assessments on insurance companies and hospitals, according to the Congressional Research Service. The state pools tended to have high premiums, high deductibles and typically excluded coverage for health problems related to a potential enrollee’s pre-existing condition for six months.
Insurance companies lose money by participating in the pools, with losses totaling $1.2 billion in 2011, according to the Kaiser Family Foundation.
During the 14-month debate over the Affordable Care Act, Republicans pitched expanded pools as an alternative. Democrats incorporated the idea in their legislation, setting up a $5 billion high-risk pool that opened almost immediately after the bill became law. They billed the provision as a stopgap for people with pre-existing conditions who couldn’t get health insurance until Obamacare’s ban on discrimination against the sick took effect in 2014.
Administration officials expected the Obamacare pool, known as the Pre-Existing Condition Insurance Plan, to cover up to 375,000 people out of as many as 25 million Americans who were uninsured due to pre-existing conditions. It only reached 100,000 enrollees, and their medical claims were so extensive that the Obama administration closed enrollment early in 2013. The program’s medical losses totaled $2 billion in its final year.
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