One of the new health law’s first major programs was scheduled to start on July 1: $5 billion to bail out states’ so-called “high-risk pools” until January 1, 2014. 22 states have decided not to get involved directly, and let the federal government set up its own high-risk pools. It’s a tough choice for states suffering exploding health costs. Nevertheless, it’s the right choice.
2014 is when ObamaCare really gets going. As of that date, it will be illegal for health plans to use factors other than age (and that only in a limited fashion) to calculate premiums for their policies; and will conscript Americans into health plans with benefits chosen by the federal government.
In the interim, the law tries to solve the pre-existing condition problem “on the cheap” by throwing a relatively small amount of money at so-called “high-risk pools” for four years. But it’s not enough: The CBO does not believe that the funding will last longer than three years, and estimates that the plan would need $10 to $15 billion through 2013.
“High-risk pools” is actually a misleading term for these programs, because the patients who need them are not “high risk”, but high cost, which explains why the programs are so difficult to manage. Patients, insurers, and governments all know that the costs of high-risk pools are extremely high, which is why the 35 states that already have high-risk pools have had trouble managing them.
In the latest National Affairs journal, James Capretta of the Ethics and Public Policy Center and Tom Miller of the American Enterprise Institute figure that two to four million uninsured Americans with pre-existing conditions cannot get health insurance at reasonable premiums, but that only about 200,000 are currently enrolled in high-risk pools. They note that the Chief Actuary for the Centers for Medicare & Medicaid Services estimates that only 375,000 more will obtain coverage through ObamaCare’s $5 billion. Outbidding even the CBO, Capretta and Miller call for $15 to $20 billion per year, as well as further restrictions on insurers’ increasing premiums for people who leave the employer-based market and seek individual coverage. The latter would reduce the demand for high-risk pools, they assert.
However, socializing the costs of patients with expensive conditions, as Capretta and Miller advocate, surely invites a mechanism whereby insurers, employers, and individuals would crawl out of the woodwork to lobby continuously and perpetually for more federal money and expanded eligibility for high-risk pools — just as happened to Medicaid over the last four and a half decades.
A far simpler and more effective reform would be to eliminate employers’ monopoly control of Americans’ health dollars, so that individuals and families could buy their own health insurance that is portable from job to job and state to state. ObamaCare’s $5 billion bailout for high-risk pools is not the first step in solving America’s health crisis, but merely the “gateway drug” to a federal take-over of our access to medical services. There are also other market-based reforms that would involve less government regulation and lower taxpayer burdens.