BEYOND THE NUMBERS
President-elect Trump proposes to rely on high-risk pools to help people with pre-existing conditions and significant medical expenses get health coverage, if Republicans repeal the Affordable Care Act (ACA) as they intend. House Speaker Paul Ryan’s health plan and those of other congressional Republicans also include high-risk pools. But the history of high-risk pools clearly shows that, far from the “proven approach” that Mr. Trump claims, they’re a failed approach to providing coverage.
High-risk pools combine sick people with even sicker people rather than pooling sick and healthy people together, as regular insurance does. The pools consequently tend to charge extremely high premiums that people can ill afford — much more than what healthier people paid in the pre-ACA individual market.
Experience with state high-risk pools before the ACA shows that even these high premiums covered only about half of the cost of operating high-risk pools. The rest had to come from public support, such as state general revenues or premium assessments on insurers. Unless that support was substantial and rose significantly over time, states eventually had to scale back these pools to keep costs from spiraling out of control. States sharply restricted enrollment, set premiums further above what many families could afford, and/or scaled back coverage (such as by cutting benefits, raising deductibles and other cost sharing, imposing waiting periods for coverage of pre-existing conditions, and establishing lifetime dollar limits on benefits).
Only 226,000 people in 35 states were enrolled in high-risk pools in 2011, on average. In 2008, only about 5 percent of those estimated to be eligible for those high-risk pools (because they had a chronic condition and were uninsured) were enrolled. Research also shows that the pools’ high out-of-pocket costs and limited benefits — deductibles as high as $25,000 and annual benefit limits as low as $75,000 in some states — led to delayed or forgone care, adverse health outcomes, and medical debt among enrollees.
The Commonwealth Fund concludes that relying on high-risk pools to provide substantial coverage would be “extremely expensive and likely unsustainable.” In fact, the Tax Policy Center estimated in 2008 that an adequately financed national high-risk pool system could easily cost more than $1 trillion over ten years, even though it would likely cover many fewer people than the ACA’s Medicaid expansion and marketplace subsidies and many enrollees would still be underinsured and go without needed care.
Speaker Ryan’s plan and other conservative health plans don’t come anywhere near the needed funding. The Ryan plan includes $25 billion over ten years. House Budget Committee Chairman Tom Price’s plan includes $1 billion in seed funding to support existing state high-risk pools and help start new pools but no funding for ongoing operations after three years. The Republican Study Committee’s 2015 plan provides no dedicated funding for its high-risk pools, merely authorizing Congress to appropriate up to $25 billion over ten years for them. Congress might never provide such funds, especially given the 2011 Budget Control Act’s tight annual caps on discretionary funds, which have shrunk even further due to sequestration. Funding for non-defense discretionary programs, the budget area from which new funding for high-risk pools would have to come, is expected by 2018 to reach its lowest level as a share of gross domestic product on record in data going back to 1962, the Congressional Budget Office estimates.