As Republicans struggle to replace Obamacare, House Speaker Paul Ryan wants to make state high-risk pools part of the solution – but doing so would resurrect a failed coverage model that suffered from high premiums, poor funding and limits on coverage, say independent health care experts.
Republicans are meeting in Philadelphia this week, and health care coverage is expected to be a major topic. GOP congressmen and senators plan to meet Thursday with President Donald Trump and Vice President Mike Pence.
Congress took the first step toward repeal this month, passing a measure calling for lawmakers to deliver repeal plans by Friday. They’re unlikely to meet that deadline.
Ryan, a Wisconsin Republican, offered a detailed blueprint last year of how he’d replace the 2010 law that required nearly everyone to obtain health insurance coverage.
Before Obamacare became law, 18 percent of Americans were denied individual insurance coverage because of pre-existing medical conditions such as high blood pressure or cancer, according to the Kaiser Family Foundation. In Kentucky, North Carolina and Ohio, Kaiser found, 1 in 3 applicants was typically denied.
In 35 states, 226,000 people who were unable to get private insurance in the days before Obamacare found coverage through state high-risk pools, a safety-net program for the medically uninsurable. The pools covered only about 2 percent of eligible individual-market enrollees in those states, said Karen Pollitz, a senior fellow at Kaiser.
Republicans are adamant that they want most Obamacare provisions repealed, but they want to keep its popular measure barring insurers from denying coverage due to pre-existing conditions. Under Obamacare, those more costly consumers’ premiums are supposed to be held down because they’re part of a pool that includes healthier people.
Ryan would put some of the higher-cost people with previous medical conditions into a special pool. That allows private insurers to charge lower premiums for everyone else.
“State high-risk pools are a smarter way of guaranteeing coverage for people with pre-existing conditions,” Ryan said during an appearance on CNN earlier this month.
But most experts agree that the state-run pools were largely a failure, suffering from poor funding, which led to restrictions on enrollment and benefits along with higher premiums. Pool coverage costs were typically 50 to 100 percent above private market rates, Pollitz said.
Over their decades of availability, the pools weren’t an option for many people who needed them because of their high cost and benefit limits, like a standard six- to 12-month waiting period to cover pre-existing conditions.
“That was kind of a big deal-breaker for most people who looked at the high-risk pools,” Pollitz said.
The Affordable Care Act changed all that by requiring individual and small-group insurers to offer coverage regardless of past or current health problems. As a result, most high-risk pools ended.
But if Ryan’s proposal to repeal and replace Obamacare drops the individual-coverage guarantee, many with pre-existing conditions could find themselves, once again, struggling for affordable coverage.
“There’s absolutely no question that we will return to a market in which many people with pre-existing conditions will be unable to access affordable, comprehensive insurance that covers their needs,” said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms.
Ryan’s 2016 plan would allow Obamacare enrollees with pre-existing conditions to retain their coverage – but only if they don’t let their policies lapse. Doing so and facing disqualification from future coverage “could be a harsher financial hit than the individual mandate on many families,” Corlette said, referring to the Obamacare requirement that most people have health insurance.
For those who don’t maintain their coverage – and there will be many, due to job losses and layoffs – Ryan’s proposal provides $25 billion to states to fund high-risk pool coverage over 10 years. That’s in the ballpark of what states were spending before the Affordable Care Act, Pollitz said.
Ryan’s plan would also provide federal subsidies to help pay for the coverage. But the amounts would be less than the marketplace subsidies available under Obamacare, said Pollitz.
“By financing state high-risk pools to guarantee people get affordable coverage when they have a pre-existing condition, what you’re doing is you’re dramatically lowering the price of insurance for everybody,” Ryan said earlier this month.
But each risk-pool enrollee requires an average of $7,000 to $10,000 a year in public funding, said Harold Pollack, a professor at the University of Chicago School of Social Service Administration who has studied risk pools.
Nationally, $30 billion to $50 billion a year is needed to fully fund the pools, Pollack said.
“And I don’t see anybody putting up that kind of money. And even if they did, I think (the pools are) a very poor mechanism to solve a problem that the ACA has basically already addressed in a better way,” Pollack added. “The experience of high-risk pools is that they are typically underfunded, and because they are underfunded they don’t treat people very well who are counting on them.”
A repeal proposal by Rep. Tom Price, R-Ga., President Trump’s choice for health and human services secretary, also calls for risk pools.
At his Senate confirmation hearing Tuesday, Price said he believed high risk pools “can be incredibly helpful in making certain that individuals who have pre-existing illness are able to be cared for in the highest quality manner possible.”
Pollack remains skeptical, at least until Republicans provide more details about funding.
“The appropriations people are throwing around are way, way, way below the levels required,” Pollack said. “It just makes me think that this is a gimmick that will leave a lot of people out in the cold, but provide some element of plausible deniability that this is what’s really happening.”
Lesley Clark contributed to this story.