High-risk pools won't match Obamacare's protections for pre-existing conditions

Posted at 4:03 PM, May 03, 2017

House Republicans want to replace the protections Obamacare provides for people with pre-existing conditions with federally funded high-risk pools.

GOP lawmakers are scurrying to save their health care bill by proposing to pump more money into a fund aimed at helping states and insurers deal with high-cost patients. The latest change: an additional $8 billion over five years to support high-risk pools in states that seek waivers to opt out of two key Obamacare insurance provisions.


While states would be able to design their high-risk pools in different ways, they would not offer the same protections that Obamacare does for those with pre-existing conditions, experts say.

Here's how the coverage will differ for those with pre-existing conditions:

Prior to the health reform law, consumers who have or who previously had medical issues -- even if it were years earlier and completely resolved -- could be denied coverage or charged much more in premiums. Obamacare remedies that by requiring insurers to cover everyone and charge them the same amount, regardless of their health history. Also, it mandates all policies cover 10 essential health benefits, including prescription drugs, hospitalization and doctors' visits, so the sick could be assured their treatments are covered.

"The rules under Obamacare were comprehensive," said Karen Pollitz, senior fellow at the non-partisan Kaiser Family Foundation.

This expansive coverage, however, comes with a high price tag. It bumps up the cost of premiums for everyone. That's why the conservative Freedom Caucus set its sights on getting rid of these popular provisions.

Under the most recent version of the GOP repeal bill, states would be allowed to opt out of requiring insurers to cover everyone at the same price and to offer all 10 essential health benefits in all policies. This would likely lead insurers to jack up rates for those with pre-existing conditions who didn't maintain continuous coverage and to offer skimpy plans that don't pay for the treatments the sick need.

As a balm, Republicans would require states to set up high-risk pools or other programs to mitigate the risks of insurers with high-cost patients. House Speaker Paul Ryan and other GOP lawmakers have strongly defended high-risk pools as a way to separate out and cover those who are sick, thereby lowering premiums for healthy consumers.

Faced with a strong backlash from consumer advocates, providers and even some Republican lawmakers, two GOP members on Wednesday proposed beefing up the funding for high-risk pools by $8 billion. They hope this will satisfy those worried about watering down Obamacare's protections for those with pre-existing conditions.

Experts, however, say the two don't equate.

"It doesn't offset what it takes away," said Pollitz, of the GOP bill. "You just aren't going to cover many people with $8 billion over five years. These are expensive, expensive cases."

High-risk pools have long been a favorite tool of Republicans, but they have a very checkered past. They were typically severely underfunded, charged participants high premiums, excluded coverage of pre-existing conditions initially and had waiting lists for enrollment.

Some 35 states ran high-risk pools prior to Obamacare. In 2011, they covered 226,000, who racked up $2.6 billion in claims. But premiums covered only about half that amount, forcing states to kick in $1.2 billion to make up the difference, usually through assessments on insurers. However, these levies were usually offset by tax credits, so the funding effectively came from the state revenues.

And the pools only covered a small fraction of those who were potentially eligible, the Kaiser Family Foundation found. The strict rules and high costs dampened enrollment by those who were sick and needed coverage.

"Prior to the enactment of the Affordable Care Act, 35 states operated high-risk pools, and they were not a panacea for Americans with pre-existing medical conditions," said Andrew W. Gurman, president of the American Medical Association. "The history of high-risk pools demonstrates that Americans with pre-existing conditions will be stuck in second-class health care coverage -- if they are able to obtain coverage at all."

In Ryan's home state of Wisconsin, some 21,000 people were in the state's high-risk pool in 2011. They paid double the premiums of a comparable plan in the individual market -- about $450 a month for a 55-year-old -- and had an annual deductible of $2,500. But their conditions weren't covered for six months and they had a lifetime benefits cap of $1 million, which sick Americans can burn through very quickly.

The program cost $186 million that year, and the state had to kick in $82 million to cover these residents.

The $8 billion injection into the State Stability Fund that lawmakers are seeking is their latest attempt to address the high cost of health insurance.

The GOP's legislation, named the American Health Care Act, initially provided states with $100 billion through 2026 to offset health care premiums and deductibles by a variety of methods, including high-risk pools. As members revised it to chip away at Obamacare's protections, they added $30 billion to the fund to cover maternity, mental health and substance abuse benefits and to keep premiums down by providing insurers with funds to cover high-cost patients. The latest injection brings the total to $138 billion.