Some Republican leaders are promoting state high-risk
pools as an alternative to the Affordable Care Act's popular provision requiring
health plans to accept consumers regardless of pre-existing medical conditions.
They cite Wisconsin's pre-ACA pool, the Health Insurance Risk-Sharing
Plan, as a model.
But a Wisconsin insurance official recently cautioned
a House panel that high-risk pools need a stable funding source and are not a
solution for every state. Other experts say state
high-risk
pools generally were a policy failure across the country, and making them
work properly would require a large amount of taxpayer funding.
ACA
replacement proposals presented by House Speaker
Paul Ryan
and newly confirmed HHS Secretary
Tom Price
would provide federal funding to states to establish separate high-risk plans to
serve sicker people. The goal is to enable insurers to reduce premiums in
standard individual-market plans by getting the costliest people out of those
plans while guaranteeing them continued access to coverage through the pools.
House Republicans reportedly aim to include high-risk pools in a
budget
reconciliation bill that would repeal most of the ACA that they hope to pass
on a party-line vote before the spring recess.
There is considerable
evidence, however, that state high-risk pools, which operated in 35 states prior
to the ACA,
were not
successful overall at providing broad access to high-quality, affordable
coverage. Many had limited enrollment, very high premiums, steep deductibles,
pre-existing condition exclusions lasting six to 12 months, annual and lifetime
benefit limits and waiting lists. Most operated in the red. Only about 226,000
people were enrolled in high-risk pools nationally at the end of
2011.
But at a House Energy and Commerce Committee hearing earlier this
month, Republicans touted the success of Wisconsin's high-risk pool, which was
started in 1979 and operated until the ACA took effect in 2014. They invited
J.P. Wieske, Wisconsin's deputy insurance commissioner, to talk up the merits of
this approach as part of their effort to repeal and replace the
ACA.
gPooling the high-risk individuals together and managing their needs
separately was a huge factor in the state's success in offering a competitive
insurance market,h Lieske told the committee.
Wisconsin's program covered
about 22,000 people in 2012, most of them in plans with deductibles ranging from
$2,500 to $7,500, according to
a report by
the Wisconsin Legislative Fiscal Bureau. There were numerous, complicated
eligibility criteria involving proof of rejection by private insurers.
gIt worked for those 20,000 people,h said Donna Friedsam, a health
policy expert at the University of Wisconsin. gBut it didn't solve the problem
of access for over half a million uninsured people, many of whom had
pre-existing conditions and couldn't afford the premiums in the high-risk
pool.h
For previously uninsured people who entered the program, there was
a six-month waiting period for coverage of pre-existing conditions.
The
benefit waiting periods used by Wisconsin's and other states' high-risk pools
are a big concern for patient advocates and provider groups. gA six-month
exclusionary period is a serious issue,h said Dr. Len Lichtenfeld, deputy chief
medical officer for the American Cancer Society, who also testified at the House
hearing. gCancer doesn't wait.h
In 2013, monthly premiums for a Wisconsin
high-risk pool plan with a $2,500 deductible ranged from $473 for a 45-year-old
woman to $847 for a 60-year-old man. Members with an annual income under $34,000
qualified for discounts on premiums and deductibles, with people earning under
$10,000 receiving a 43% premium discount and $750 off their
deductible.
The program was funded 60% by enrollees' premium payments,
20% by assessments on Wisconsin insurers, and 20% by provider discounts, with no
state dollars. It had total operating expenses of $146.8 million in 2011, when
it recorded a loss of $6.9 million, according to a report by the Wisconsin
Legislative Fiscal Bureau.
In an interview, Wieske acknowledged that the
high premiums posed affordability issues for Wisconsinites who did not qualify
for discounts on their premiums. But he argues that having a high-risk pool
resulted in lower premiums for the rest of the insurance market, though his
office never calculated the size of the rate reduction. And having all carriers
pay an assessment based on their market share produced an even distribution of
risk among insurers, he added.
The program gworked incredibly well in
Wisconsinh but wouldn't necessarily work in other states with different
demographics, health insurance markets and provider communities, Wieske said.
Some states might want to consider covering high-risk residents through standard
health plans backed by strong reinsurance mechanisms to protect insurers from
losses. Other states that have a dominant Blues plan might want to pay that
insurer to act as the carrier of last resort.
gThere a lot of options to
crack the nut,h he said. gStates individually could figure that out. We'll have
to see where the Republicans land.h
So far GOP plans to replace the ACA
don't discuss such alternatives to high-risk pools.
Asked how Congress
could ensure that all states had a program that guaranteed quality coverage to
people with pre-existing conditions, Wieske said lawmakers could set appropriate
federal standards to make sure every state provided adequate funding, access and
benefits.
But Harold Pollack, a health policy expert at the University of
Chicago who has studied
high-risk
pools, expressed doubt that congressional Republicans would be willing to
ante up enough money to fund an solid alternative system for covering people
with pre-existing conditions.
He previously estimated that at least 4
million Americans with serious pre-existing conditions—and probably many
more—would qualify for high-risk pool coverage, and that the annual public costs
would exceed $24 billion.
The Kaiser Family Foundation
recently
estimated that 27% of adult Americans under age 65 have health conditions
that likely would make them uninsurable in an individual market lacking the
ACA's protections against insurance discrimination.
Speaker Ryan has
proposed $25 billion in federal funding to the states over 10 years for the
pools, and other Republicans have offered significantly less. Even some
Republican experts think that's far too little.
gIt's an easy thing to
solve with money,h Friedsam said. gBut money is always the
problem.h