Comment by Don McCanne
One of the prime drivers of the Affordable Care Act was the inherent flaws in the
individual insurance market. As more people with expensive health
care problems enrolled in the individual plans, premiums went up and
the healthy dropped out, resulting in the “death spiral” of
skyrocketing premiums. Insurers countered by limiting benefits, by
excluding individuals with preexisting disorders, or by pulling out
of markets with higher-cost beneficiaries.
care problems enrolled in the individual plans, premiums went up and
the healthy dropped out, resulting in the “death spiral” of
skyrocketing premiums. Insurers countered by limiting benefits, by
excluding individuals with preexisting disorders, or by pulling out
of markets with higher-cost beneficiaries.
To cover those who had a greater need for care, many states established high-risk
insurance pools, but these pools were very expensive. The benefits
were quite limited, and the premiums were very high, but they also
required large contributions from the states. Think about the fact
that the 20 percent of people who had major health problems consumed
80 percent of the health care (the 80/20 rule). Moving 80 percent of
the costs for these patient populations into separate pools proved to
be far too much for the states, so the pools were severely
underfunded. Benefits were spartan, many could not afford the
premiums, and intolerable waiting lists were established due to
enrollment caps. They were a policy failure.
were quite limited, and the premiums were very high, but they also
required large contributions from the states. Think about the fact
that the 20 percent of people who had major health problems consumed
80 percent of the health care (the 80/20 rule). Moving 80 percent of
the costs for these patient populations into separate pools proved to
be far too much for the states, so the pools were severely
underfunded. Benefits were spartan, many could not afford the
premiums, and intolerable waiting lists were established due to
enrollment caps. They were a policy failure.
Yet what does the current Congress and administration want to do about this problem?
They have emphasized repeatedly that the leading priority is to make
premiums affordable. To do this they would go back to the
dysfunctional individual market in which only the healthy were
insured, with one technical modification. They would reestablish
separate high-risk pools to insure the costly patients, or they would
leave everyone in the same risk pool but provide reinsurance to cover
the excessive losses resulting from caring for the more expensive
patients. In either case, the costs of the pools and/or reinsurance
would be very high. Since they want to keep the premiums low these
extra costs would have to be paid by the state or by “federal
pass-through payments.”
premiums affordable. To do this they would go back to the
dysfunctional individual market in which only the healthy were
insured, with one technical modification. They would reestablish
separate high-risk pools to insure the costly patients, or they would
leave everyone in the same risk pool but provide reinsurance to cover
the excessive losses resulting from caring for the more expensive
patients. In either case, the costs of the pools and/or reinsurance
would be very high. Since they want to keep the premiums low these
extra costs would have to be paid by the state or by “federal
pass-through payments.”
The CMS checklist states, “State-operated reinsurance programs have a demonstrated
ability to help lower premiums, and if the state shows a reduction in
federal spending on premium tax credits a state could receive Federal
pass-through funding to help fund the state’s reinsurance program.”
In other words, the federal contribution would be only the amount
that they would otherwise be contributing in the form of premium tax
credits - a budget neutral solution. This could not possibly fund
either a high-risk pool or a reinsurance program for the the most
expensive patients. The prior experience with the state high-risk
pools has already confirmed that the states, for both political and
fiscal reasons, are not capable of funding these pools either.
federal spending on premium tax credits a state could receive Federal
pass-through funding to help fund the state’s reinsurance program.”
In other words, the federal contribution would be only the amount
that they would otherwise be contributing in the form of premium tax
credits - a budget neutral solution. This could not possibly fund
either a high-risk pool or a reinsurance program for the the most
expensive patients. The prior experience with the state high-risk
pools has already confirmed that the states, for both political and
fiscal reasons, are not capable of funding these pools either.
So all of this talk about federal authorization of high-risk pools and reinsurance
programs through Section 1332 waivers is garbage. The current federal
government has no intention of funding these programs, but they will
authorize them and then sit back and blame the states for failing to
implement them properly. Who is harmed by all of this? The patients,
of course.
government has no intention of funding these programs, but they will
authorize them and then sit back and blame the states for failing to
implement them properly. Who is harmed by all of this? The patients,
of course.
We would not have to worry about the 80/20 rule if everyone were in the same universal
risk pool as they would be in a single payer, improved Medicare for
all program. Unless our current political leaders suddenly have a
miraculous communal epiphany, we need to replace them.
all program. Unless our current political leaders suddenly have a
miraculous communal epiphany, we need to replace them.
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