High-Risk Pools

Back when one of my daughters was 8 or 9, she said something that was an alternative fact. I asked, “Where did you hear that?” My daughter responded with a comment that would cement her argument, at least in her mind, “I read it on the internet.”

Needless to say, that did not go over well with my wife or me. First I explained to my daughter why her original statement was not true and then went into a short talk about how you need to know who wrote an article and what their biases might be. My daughter took at least one part to heart. She never used “I read in on the internet” as an authoritative argument in front of her parents again.

Now, as I listen to all the alternative facts by President Trump and Republicans about how Trumpcare is better than the Obamacare, and how high-risk pools can be used to protect the chronically ill while lowering costs for everybody else, I am reminded of my daughter’s statement, “I read it on the internet.” There is one difference. There is a decent chance that you can read something that is true on the internet. When Trump and Republicans talk about how they will “improve” health care, you can be sure that they are lying.

In their misguided effort to repeal Obamacare, Paul Ryan and other Republicans have been pushing high-risk pools. They say that high-risk pools will allow reduced premiums while allowing people with preexisting conditions to be covered. Here is the simple truth: high-risk pools do not work. Anyone who suggests otherwise is either lying, incompetent or both. Some Obamacare opponents are even touting Maine’s high-risk pool program as a “success.” Maine’s high-risk pool failed along with the other high-risk pools.

A review of high-risk pools by the Commonwealth Fund found many problems. Premiums were up to 250 percent more than healthy beneficiaries paid and still only covered 53 percent of the costs. High deductibles combined with low coverage limits–including annual and lifetime caps–caused delayed or forgone care resulting in adverse effects on consumers. “By concentrating risk, high-risk pools also concentrate costs, resulting in greater expenses to administrators and consumers and driving plans to impose severe coverage limits that often serve to negate the benefit of having insurance.”

This brings us to Maine. In 2011 Maine passed PL90. This law allowed insurers to shift high-cost patients in the individual market to a high-risk pool. PL90 also loosened regulations and allowed insurance that covered fewer services. The state’s largest insurer stopped covering maternity care, and many plans instituted separate deductibles for prescription drugs. The high-risk pool was funded by a $4 per-person per-month fee on policies in the individual, small-group and employer-based markets.

Proponents of the plan claim that “individual premiums dropped by nearly 70 percent for better plans.” That claim is extremely deceptive:

“Lower premiums? An analysis of a public rate filing compiled by Consumers for Affordable Health Care, a Maine advocacy think tank, found that premiums rose for most customers of Anthem, the largest insurer in the market. While rates fell for all those younger than 40, they rose for 91% of policy holders 55 to 59 and 100% for those 60 and older.

“Better plans”? The new plan Anthem offered to replace its pre-2011 version charged deductibles of up to $12,000 each separately for in-network and non-network treatment, plus another $1,000 deductible for prescriptions. For many buyers, it raised out-of-pocket maximums and instituted co-pays of as much as 40% across the board. Mental health and substance abuse coverage was sharply curtailed. Maternity coverage was eliminated.”

In fact, Maine was one of two states where the uninsured rate actually increased from 2012 to 2013. Saying that premiums decreased in Maine would be like claiming that transportation costs went down for everybody even though costs just went down for a subgroup that bought new bicycles instead of cars for transport.

Another problem with Trumpcare is that the funding level shows that Republicans are not serious. The House proposed at best $138 billion over ten years to pay for high-risk pools. That is absurdly low. The Commonwealth Fund estimates that the net federal cost for a national high-risk pool would be about $178 billion per year, meaning the average funding per year, $13.8 billion, is short by more than 90 percent.

High-risks pools are corporate welfare. Normally what happens in insurance is that a company insures many people to spread the risk. With high-risk pools, once people have a chronic problem, they become subsidized by the state to keep up the profits of insurance companies.

If the idea is to reduce the cost of health care for individuals then high-risk pools fail in a way that is expensive for consumers, expensive to administer and prevents people from getting necessary care.

They are the wrong medicine for our health care system.

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