As Republican lawmakers continue to work on passing The American Health Care Act (AHCA), state-run high-risk pools could make a comeback. Some experts have touted high-risk pools as a better, less-market-distorting way to provide care to patients with pre-existing conditions, while others say the pools are expensive and unsustainable.
Pre-ACA High-Risk Pools
High-risk pools are not a new concept; the first high-risk pools were launched in Minnesota and Connecticut in 1976 to serve high-cost patients who could not otherwise obtain insurance. In the pre-Affordable Care Act (ACA) era, states commonly created high-risk pools because insurers were able to deny coverage to people with pre-existing conditions or charge them prohibitively high premiums. Sleep apnea was one of the conditions listed as a ‘pre-existing’ condition, which allowed insurers to raise premium rates.
Through high-risk pools, states provided coverage access for high-cost patients who would otherwise be unable to enroll in a health plan on the individual market. Prior to the ACA, 35 states had implemented high-risk pools covering a total of 226,615 consumers, but states often took steps that restricted an individual’s access. For example, some common aspects included: enrollment limitations; high deductibles; lifetime dollar limits on covered services or benefits; pre-existing condition exclusions; and premiums above standard individual market rates.
Further, experts at the time said that many states did not provide enough funding to create successful high-risk pools. According to a Kaiser Family Foundation analysis, the combined net losses for the 35 state high-risk pools in 2011 averaged $1.2 billion, or $5,510 per enrollee.
In addition, most states allowed insurers to quiz applicants for regular individual policies with lengthy questionnaires, including details about the health of each family member. Insurers also could review medical and pharmacy records. A prescription for insulin for diabetes or an immunosuppressant for arthritis could mean a denial of coverage. Insurers automatically denied individual coverage for people with cancer, cerebral palsy, congestive heart failure and many other conditions, or they excluded certain conditions and even family members in the coverage they offered.
ACA High-Risk Pools
However, the ACA high-risk pools faced challenges too. Under the law, the government set up a temporary program called the Pre-Existing Condition Insurance Plan, to serve as a bridge until the phase-in of the requirement that insurers accept people with health problems. The plan was open to people who had a pre-existing condition and had been uninsured for at least six months. Premiums were comparable to what healthy customers paid.
But the cost of care quickly threatened to drain the $5 billion budget for the program. With about 100,000 patients participating nationwide, the government unexpectedly froze enrollment. Then midway through the 2013 plan year, 17 states unwilling to pay for cost overruns turned their programs back to the federal government. Patients did not lose coverage, but they had to meet new deductibles and out-of-pocket limits, which meant thousands of dollars in unplanned costs for those being treated for serious illnesses.
Starting in 2014, insurers were forbidden from turning away people in poor health, and the cost of their care was spread across the entire pool of people with individual policies, which is one reason why the cost of those policies has soared. The increases have especially affected people whose income is too high to qualify for a government subsidy.
The House GOP bill takes a slightly different approach by giving states funding to pursue cost-controlling measures, such as high-risk pools, as they see fit. Specifically, the bill, which is being marked up by committees this week, would establish a “Patient and State Stability Fund” that would allocate $15 billion for 2018 and 2019, after which it would allocate $10 billion annually through 2026. If the Republican bill passes, patients with sleep apnea could be placed into a high-risk pool that offers fewer benefits at higher costs.
In the coming weeks, debate will intensify about the proposed replacement program for the ACA. Advocates on both sides believe individuals should be afforded protections in any future program. However, there are distinct differences in how these advocates believe coverage should be provided.
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