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Many Americans are greatly concerned that repeal of the Affordable Care Act (ACA) will once again leave people with pre-existing conditions without health insurance. The ACA replacement proposal released by Speaker Ryan on February 16 would move coverage from the general ACA marketplace to specific High Risk Insurance Pools. These High Risk Pools would separate the poorest, sickest Americans from the rest of the broader risk pool in order to keep premiums down for those consumers remaining in the larger individual arena – healthier, more affluent Americans. High Risk pools are not a new idea. They failed before ACA, but some lawmakers seem determined to revisit them nonetheless. These plans failed because they did not provide quality, affordable insurance for quality care.

Below is an Annotated Bibliography that highlights how prior efforts to use High Risk Pools failed.

Abelson, Reed. “Trump’s Vow to Repeal Health Law Revives Talk of High-Risk Pools.” The New York Times. 22 January 2017. (site visited February 8, 2017).

The article introduces the concept of high-risk pools and has this to say: “The system worked for Dan Nassimbene and his wife, who had breast cancer but is in remission. They enrolled in Colorado’s high-risk pool for three years. She paid about $375 a month for a plan that covered most of her treatments.

In Washington, over 80 percent of the people referred to the state’s high-risk pool never got health insurance, said Mike Kreidler, the state’s insurance commissioner. In California, which relied on lawmakers to allocate money as part of the state budget, there was a waiting list, recalled Richard Figueroa, who was a senior administrator for the program. The pool operated on a first-come-first-served basis, Mr. Figueroa said, without regard to people’s income or the severity of their medical condition. ‘There were people literally dying on the waiting list,’ he said.

Beth Martinez, 40, who has multiple sclerosis, was forced to join Texas’ high-risk pool when she and her husband moved to Austin. Only six visits to the doctor were covered, and she found she could not afford the annual M.R.I. recommended to monitor her disease because of her high deductible. The company really surprised us with some top gaming monitors on the market. At one point, she said, she went four years without an M.R.I.”

Bartolone, Pauline. “The Trouble With Replacing Obamacare With High-Risk Health Pools.” Time. 22 November 2016. (site visited February 8, 2017).

In discussing the high-risk pool California ran prior to the enactment of the ACA: “‘People would literally pass away while they were on the waiting list,’ said Richard Figueroa, who was one of the original staff members of California’s program, the Major Risk Medical Insurance Program (MRMIP), when it started in the early 1990s. Later, he served on the governing agency’s board before it was dissolved under the Affordable Care Act.

The program never had enough money to cover the need among the uninsured, Figueroa said. It had a $30 to $40 million budget in a given year, mostly from tobacco tax revenue. Figueroa said the limit on how many people could enroll declined over the years in part because costs kept rising. In 2011, fewer than 7,000 people were enrolled. In the 1990s, thousands of people languished on waiting lists, Figueroa said. When their turn came for coverage, some people found they couldn’t afford the monthly premium.

Dean Clancy, a former Republican health policy analyst for President George W. Bush, acknowledges the programs have struggled in the past but says if revived with the funding proposed by Speaker Ryan, they would be more viable. ‘The ideal health insurance market would be based on medical risk,’ Clancy said. He explained that in an ideal system, people would pay according to the likelihood their health status would create costs for the insurers. Using government funds to help cover a small proportion of uninsurable people, Clancy said, ‘leaves the rest of the market free to operate according to normal insurance principles.’ High-risk pools are a form of charity, said Clancy, and he doesn’t see them as discriminatory.

Blewett, Lynn A.; Spencer, Donna; and Burke, Courtney E. “State High-Risk Pools: An Update on the Minnesota Comprehensive Health Association.” American Journal of Public Health. February 2011. 101:2. (site visited February 8, 2017). P. 231–237.

“We examine the experience of the largest and oldest pool in the nation, the Minnesota Comprehensive Health Association, to document key issues facing state high-risk pools in enrollment and financing. We also considered the role and future of high-risk pools in light of national health care finance reform.

With federal grant support, MCHA and other states have provided subsidies to eligible low-income enrollees at several times in the past decade. In 2007, 2422 MCHA beneficiaries with incomes below 200% of the federal poverty level, or about 8% of all plan enrollees, received premium assistance. Additional federal or state subsidies could help more individuals afford coverage through a high-risk pool. This program may grow if federal funding continues, as those losing jobs and income may qualify. As noted, in 2005, 23% of enrollees reported that they applied to MCHA because their COBRA benefits had terminated, they could not afford COBRA, or COBRA was not available to them at the time of job termination.”

Blumberg, Linda and Holahan, John. “Don’t Let the Talking Points Fool You: It’s All about the Risk Pool.” Health Affairs. 15 March 2016. (site visited February 7, 2017).

“Left unchecked, people who perceive themselves healthy will tend, if they are pursuing their own near-term financial self-interests, to separate themselves from sick people—either by avoiding health insurance entirely, purchasing insurance products sold predominantly to other healthy people, or purchasing insurance products offering limited benefits that likely are not attractive to those requiring significant medical care. Those supporting public policies that allow or encourage this type of separating of health care risks often argue that they are placing greater personal responsibility on each individual, who will in turn make better decisions about the use of medical services. However, the burden of that increased responsibility falls most heavily on those with health problems, since it places larger financial costs on those with medical care needs at the time those needs arise, reducing costs for individuals while they are healthy.

Depending upon the extent of the risk segmentation created, these policies can effectively deny care to those that need it. Those who are well off financially can finance a considerable amount of necessary care out-of-pocket; a low- or middle-income individual experiencing a health crisis cannot. Thus, policies that separate risks will not only harm the sick, they will decrease access to care most heavily for the non-wealthy with health problems. Therefore, the amount of risk pooling versus risk segmentation is a fundamental choice.

A well-financed high risk pool that provided such high-need individuals with adequate, affordable coverage is in principal conceivable but would require very hefty public expenditures. As a result, customarily, states (and the federal government as transitional assistance between 2010 and 2013 prior to full ACA implementation) have provided only limited subsidization of insurance coverage through high risk pools.

Because the average health care costs of those eligible to enroll were high by design (they all had at least one high-cost medical condition) and because subsidies were limited, the high risk pools’ insurance premiums and cost-sharing requirements were large. Many such pools had pre-existing condition exclusion periods, limited benefits, and enrollment limits; all of these characteristics served to reduce the value of the coverage, creating high financial burdens for enrollees and limiting the number of people who could access the coverage. These problems could be addressed, but only with a much higher investment of tax dollars than any candidate proposing this approach has suggested.”

Bryan, Bob. “'I Have to Have Coverage in Order to Make Sure That I Don't Die': GOP Lawmakers Get Blasted on Obamacare at Town Hall.” Business Insider. 10 February 2017. (site visited February 13, 2017).

“Lawmakers got an earful from constituents in Tennessee on Thursday night during a town hall to talk about the future of the Affordable Care Act.” One participant in the town hall “criticized a proposal favored by Republicans that would put sicker people in high-risk pools for those with preexisting conditions, saying ‘we are effectively punishing our sickest people’ by using the pools. Bohon pointed to previous state high-risk pools, which have exhibited high costs and poor coverage. Bohon asked why the government wouldn't just ‘fix’ the ACA or provide Medicaid for all instead of repealing the law.”

Chollet, Deborah J. “Expanding Individual Health Insurance Coverage: Are High-Risk Pools The Answer?” Health Affairs. October 2002. 21:10. (site visited February 8, 2017).

“Most states the high-risk pool mirrors the individual market’s problems: Coverage is expensive, the waiting period for coverage of preexisting conditions is long, and benefits may be limited. A few states with high-risk pools have addressed these problems by adequately funding high enrollment and comprehensive benefits; some also require the market to accept more risk. But most discourage enrollment in the high-risk pool in myriad ways and fail to ensure access to the individual market for persons with health problems.

The most common waiting period is six months, but in seven states it is a full year. Waiting periods are used to discourage individuals from buying coverage only when they anticipate expenditures (and dropping it when they do not), but they are very blunt instruments for this purpose.  Shorter waiting periods may work as well (four states limit the waiting  period  to  three months),  as might waiting periods that are reduced by the duration of coverage held during the prior twelve months (most states do not credit prior coverage  that  lapsed  as  recently  as  thirty  to  sixty-three days). In contrast, long waiting periods discourage enrollment at any time:  The individual pays the high-risk pool premium but receives no coverage for the preexisting condition.

No high-risk pool charges standard market rates. All charge a higher premium—typically 125 to 200 percent of the average standard rate for comparable coverage—and also vary the premium for age and other factors.  Six states provide specific, modest subsidies for low-income enrollees. In most states the average high-risk-pool premium ($3,083 in 1999) is high relative to measures of ability to pay, and premiums for older persons range much higher than the average… For enrollees nearing age sixty-five, premiums can be very steep. In six states annual premiums ranged above $10,000 in 1999.”

Chollet, Deborah J. “Health Policy Outlook 2017: Could High-Risk Pools Work in ‘Repeal and Replace’?.” Mathematica. 31 January 2017. (site visited February 9, 2017).

“Insurers would rehire a workforce of medical underwriters, adding a layer of administrative cost that was abandoned with implementation of the ACA. If ACA’s repeal also relieves insurers from restrictions on the premiums they can charge net of medical costs (called a medical loss ratio), insurers will pass the new cost of underwriting forward into the premiums that all individual consumers pay.”

The writer then goes on to talk about the costs that would be passed onto consumers who participate in high-risk pools.

“High-risk pools might achieve cost savings, reducing the burden on both consumers and tax payers, by paying for care that is more efficient than it had been historically. However, there are limits on how efficient a high-cost patient’s care can be. The cost of care for very sick patients will predictably exceed even very high deductibles, beyond which more care has (and arguably should have) no further financial consequences to the patient.

New high-risk pools might be more successful at curbing costs if they borrowed lessons from the payment and delivery system reforms that the ACA has encouraged for Medicare and Medicaid beneficiaries, and also are becoming the norm in large employer plans. Such reforms bundle payments for some services, connect payment to the quality of care, integrate behavioral and physical health, and introduce care management to reduce hospital readmissions and use of emergency departments—in general, seeking to encourage appropriate care and disrupt fee-for-service incentives for providers to deliver care of little or no value to the patient. However, in the individual market, patients with health problems—who are likely already to have selected providers and a care regimen—might resist moving into health plans that do not cover their providers and services.”

Chollet, Deborah J. “How Temporary Insurance For High-Risk Individuals May Play Out Under Health Reform.” Health Affairs. June 2010. 29:6. (site visited February 7, 2017). P. 1164-1167.

“To keep both premiums and assessments on carriers as low as possible, some high-risk pools constrain enrollment. All limit the value of covered benefits. Currently, California’s high-risk pool maintains a waiting list for most applicants. Florida’s pool has been closed to new enrollment since 1991. Also, most states have increased cost sharing to constrain premium growth. In a growing number of states, the lowest deductible is $1,000. Many offer options with individual deductibles of $5,000–$10,000, and some are as high as $25,000.

Nearly all high-risk pools limit the amount they will pay out for covered benefits. Lifetime limits are typically $1–$2 million, but plan options can have lifetime limits of $500,000 or less. Only Indiana and New Mexico have no lifetime limit. Minnesota caps lifetime benefits (at $5 million) but historically has raised the cap as any enrollees have approached it. Six state pools —in California, Kansas, Louisiana, Tennessee, Utah, and West Virginia—also limit annual benefits, paying no more than $75,000 (California) to $300,000 (Utah) in 2008.

Finally, most high-risk pools have waiting periods, ranging from ninety days to one year, during which care for preexisting conditions is not covered. For those who qualify under HIPAA, all high-risk pools reduce waiting periods for time the person spent in a prior group plan. Some also credit prior individual coverage if it was comprehensive and continuous for a minimum period of time. However, people who cannot meet the state’s requirements for “creditable” coverage must pay both premiums and all medical costs for preexisting conditions out of pocket during the waiting period.”

“Consumer Guide to High-Risk Health Insurance Pools.” National Association of Health Underwriters. (site visited February 8, 2017).

This page provides a short FAQ that describes high-risk pools.

Cornish, Audie. “Republicans Consider Restoring High-Risk Pools In Obamacare Replacement.” NPR. 03 February 2017. (site visited February 7, 2017).

“Cornish talked to Ryan Burt, who's been involved with high-risk pools for 25 years and helped establish Minnesota's high-risk pool, one of the oldest and most highly regarded high-risk pool programs in the country.

CORNISH: So you helped start Minnesota's high-risk pool and it did pretty well. In California the idea didn't do so well. People actually reportedly died while on waiting lists to get coverage. Can you help us understand kind of, like, what the tipping point is between one doing well and one not?

BURT: Well, I think one of the big issues is funding. The people that use risk pools are sick. They require health care services. And they use a lot of those services. And there's really no way that you could charge premiums high enough to be able to cover those claims costs and yet have anybody be able to afford them. So there's a delicate balancing act between charging premiums that cover a relatively significant amount of the claims that are going to be incurred, but also finding an outside funding mechanism to balance the difference.

CORNISH: Was it cheap coverage? Was it high deductible coverage? Did it cover everything?

BURT: Well, it varied by state. There were some states that controlled premiums to we'll say a relatively affordable level. On the other hand, there were states that in order to try and control costs had more limited benefit sets and had higher premiums along with those.

CORNISH: House Republicans want to put $25 billion towards high-risk pools over the next decade. Will this work?

BURT: Risk pool programs do require an outside funding to make them work. They are not a catch-all, be-all, end-all for all individuals that require a lot of health care services, who are very sick. They're really designed to help a smaller segment of that group who generally are employed, who have some means and can afford to pay for the insurance which admittedly is higher than what the average a relatively healthy person just walking around in the street every day would pay.

CORNISH: So is there a chance that there are people who fall through the cracks, Right? Maybe there's a gap.

BURT: That would be true, yep. If, in order to cover those folks, there would be subsidies required and ways to try and make the premiums more affordable for those folks.”

Frakt, Austin. “High-Risk Pools and Health Reform.” The Incidental Economist. 07 October 2009. (site visited February 9, 2017).

“If one is looking to quickly assist the medically uninsurable, leveraging existing high-risk pool organizations is a good way to do it. Third, directing funds toward coverage of those otherwise medically uninsurable is an efficient use of taxpayers’ dollars. It steers the money and the benefits toward individuals who need it most.

What about that six month waiting period? Presumably it is included to avoid crowd-out of unsubsidized plans. The concern, no doubt, is that people who aren’t really uninsurable will cause themselves to appear so in order to obtain subsidized coverage from the high-risk pool. Therefore, forcing individuals to be uninsured for six months before eligibility for high-risk pool coverage protects the pool from gaming, albeit at the expense of additional suffering by those who badly need the coverage.”

Frakt, Austin;  Pizer, Steven D.; and Wrobel, Marian V. “High-Risk Pools for Uninsurable Individuals: Recent Growth, Future Prospects.” Healthcare Financing Review. Winter 2004-2005. 26:2. (site visited February 9, 2017).

The authors conclude that high-risk pools were a small part of the insured population in the year 2000—8% nationally with a state variance between 1% and 54%. The authors then conclude that, nationally, high-risk pool premiums were at this time costs families above 25% of incomes for 29% of the medically uninsurable population examined in the study. The writers then estimated what would happen if premiums in the high-risk pools were only 125% of the average on the individual marketplace. This in theory resulted in an increased enrollment in high-risk pools of by 33%. The main conclusion of the study is that subsidies injected into a high-risk pool can have a substantially helpful effect on making the healthcare that high-risk pools provide more widely available.

Regarding HIPAA’s effect on high-risk pools, the authors add the following: “Of the two chief barriers to access, enrollment caps or freezes and affordability, HIPAA only addresses the first one, establishing that a high-risk pool must not impose restrictions on the number of HIPAA eligible enrollees in order to be an acceptable portability mechanism (25 of the 27 high-risk pools in operation in 2000 satisfy this criterion, though only 23 are HIPAA pools). Most States  do not provide additional premium subsidization for low-income pool applicants. Therefore, for  much of the high-risk target population (the medically uninsurable)  high-risk pool coverage is unaffordable.”

Goldberg, Dan. “Concerns Rise in New York Over Republican Proposal for High-Risk Pools.” Politico. 18 January 2017. (site visited February 9, 2017).

“The Cuomo administration this week came out against high-risk pools, an idea favored by Republicans that creates a separate insurance market for the very sick, most expensive consumers. ‘Many high-risk pools have failed or floundered due to budget constraints that limit subsidies and lead to capped enrollment,’ Maria Vullo, superintendent of the Department of Financial Services, wrote to U.S. Sen. Lamar Alexander, chairman of the Senate Health and Education Committee. ‘New York believes that high-risk pools are not a viable option.’”

The writer then describes how high-risk pools function, how they are funded, their out-of-pocket costs, and the access to care problems participating patients faced in the past.

“New York State never had a high-risk pool because it required insurance companies to cover everyone who enrolled, regardless of pre-existing conditions. That led to some of the most expensive insurance plans in the nation before the Affordable Care Act added an individual mandate, which lowered costs.

‘In practice, the challenge is in year one they work and in year two they may not get funded to the degree they need and the only way to make that up is to increase the cost sharing,’ Glick said. ‘Then the individuals get sicker because their utilization goes down.’

That can lead to more expensive care, worse outcomes and financial distress for community hospitals in high-risk neighborhoods, said Ira Kirschenbaum, chairman of the Department of Orthopedic Surgery at Bronx-Lebanon Hospital.”

Hall, Jean P. “Why a National High-Risk Insurance Pool Is Not a Workable Alternative to the Marketplace.” The Commonwealth Fund. December 2014. (site visited February 7, 2017).

“The Pre-Existing Condition Insurance Plan (PCIP) was a national high-risk pool established under the Affordable Care Act (ACA) to provide coverage for individuals with preexisting conditions who had been uninsured for at least six months…Coverage under PCIP and the state high-risk pools was expensive for both enrollees and administrators. At the same time, the benefits offered were less comprehensive than what is required in marketplace plans, both in the range of covered services and their overall actuarial value. The lack of comprehensive coverage created significant barriers to care for enrollees.

Premium estimates for the hypothetical national high-risk pool plan are based on the average standard risk rate for a 50-year-old person enrolled in the extended, or lower-deductible, plan option in the 27 federally administered PCIP programs. These premiums were then multiplied by 150 percent, which is the level allowed in HR 4496, a recently introduced bill that would create a national high-risk pool to be administered by the states. Given that people who enrolled in PCIP had very high utilization and costs, the estimates assume that enrollees reach their annual out-of-pocket limit of $6,350.  National high-risk pool coverage would be unaffordable for people with incomes below 400 percent of the federal poverty level. Moreover, based on the PCIP and state high-risk pool experiences, the coverage individuals could obtain through such a high-risk pool would likely be more limited in scope than that required for marketplace plans.”

Hall, Jean P. “Why High Risk Pools (Still) Won't Work.” The Commonwealth Fund. 13 February 2015. (February 8, 2017).

“Recent proposals to replace ACA reforms with high-risk pools focus on using state-based programs, but historical experience with 35 state-based high-risk pools and more recent experience with the national Pre-Existing Condition Insurance Plan (PCIP) illustrate the problems with this approach. Even though state-based high-risk pools charged premiums of up to 250 percent of those charged to healthy beneficiaries in the individual insurance market, premium revenues paid just 53 percent, on average, of program costs. In addition to these high premiums, enrollees in state-based high-risk pools faced annual deductibles as high as $25,000 and annual coverage limits as low as $75,000…For these reasons, use of high-risk pools in lieu of marketplace and Medicaid expansion coverage would result in greater state and federal costs, fewer people with preexisting conditions able to obtain coverage, and coverage that fails to meet the often greater needs of people with chronic conditions.”

Hall, Jean P. and Moore, Janice M. “Does High-Risk Pool Coverage Meet the Needs of People at Risk for Disability?” Inquiry Journal. Fall 2008. 45. (site visited February 7, 2017). P. 340–352.

“Data were collected through the demonstration study with 416 enrollees in the Kansas high-risk pool… The focus group participants were a convenience sample of 42 individuals drawn from the full sample in two geographic areas…. some survey respondents reported that the high out-of-pocket costs for medical services created financial hardship, and that medical debt or high  deductibles prevented them from seeking medically appropriate care. One survey respondent stated, ‘‘I have to work three jobs just to afford my premiums and deductibles.’’ A focus group participant, like-wise, indicated he paid one-third of his $30,000 annual income for high-risk  pool premiums even before incurring any out-of-pocket costs. Twenty-six percent (n=104) of survey respondents reported that they had medical debt. Of those respondents with medical debt, one in five owed $5,000 or more and 8% owed $20,000 or more. Sixty-one percent of these

individuals with medical debt incurred their debts because of chronic, rather than acute, illnesses. Allowing for multiple responses, most respondents with medical debt cited high deductibles (72%), and nearly half (45%) cited high coinsurances as the reason for their medical debt… The   survey revealed a 51% dissatisfaction rate for high-risk coverage overall.  When asked the  reasons for their dissatisfaction, respondents cited high premiums, high deductibles, steep out-of-pocket costs, and limited coverage.”

Hellmann, Jessie. “Koch-Backed Group Details Hopes for Healthcare Reform.” The Hill. 30 January 2017. (site visited February 13, 2017).

The article says that a group funded by the Koch brothers is trying to push for high-risk pools as the GOP deliberates an ACA replacement plan. The article notes that Tom Price’s 2015 Empowering Patients First Act proposed the creation of high-risk pools following the repeal of the ACA.

Hiltzik, Michael. “Here Are the Lies Paul Ryan Told about Obamacare During His Town Hall Meeting.” The Los Angeles Times. 13 January 2017. (site visited February 9, 2017).

Congressman Ryan “told the town hall audience that the GOP has ‘a better way’ to guarantee coverage for those people: high-risk pools. Separating those with expensive conditions from the overall insurance pool will make insurance cheaper for everyone else, he asserted. Since ‘8% of all the people under 65 have that kind of preexisting condition,’ sequestering them would ‘dramatically lower the price for the other 92%.’

‘We had a really good one in Wisconsin,’ Ryan said. ‘Utah had a great one. I was talking with a congresswoman from Washington today who was telling me how good their state high-risk pool is.’

A lot of misconceptions and untruths are packed into this spiel. It’s unclear where Ryan got his figure of 8% of Americans suffering from conditions that would relegate them to a high-risk pool, but it grossly underestimates the problem. The Department of Health and Human Services estimated in 2011 that 50 million to 129 million Americans under 65, or 19% to 50%, had some kind of preexisting condition and up to 20% of them were uninsured. The ratio rose sharply with age, so that as many as 86% of those aged 55 to 64 were at risk of being denied insurance because of their medical condition. In 2012, FamiliesUSA estimated that nearly 25% of all Americans under 65 could be denied coverage without the ACA protections.

As for the success stories Ryan touted, he’s overstating the case. Wisconsin’s pool did better than most, with 23,000 enrollees in 2013, but imposed deductibles of at least $5,000, premiums of twice the standard rate, and a six-month waiting period for coverage of a preexisting condition.  Utah Gov. Gary Herbert was already fretting about the rising cost of his state’s high-risk pool in 2010, when the Affordable Care Act was enacted and took the problem off his hands.

It’s unclear what Ryan is referring to in his mention of Washington’s high-risk pool. Like other states, Washington shut down its pool when the ACA’s guarantee of coverage for anyone with a preexisting condition kicked in. It’s still covering a few people who were enrolled before 2014, but that will end this Dec. 31. Before the ACA, the program was not popular. Premiums ran as high as $23,000 a year, and covered only about 30% of patients’ expenses. The rest was borne by surcharges on commercial insurers, meaning that everyone with an individual or group policy in the state was paying for the pool — a reminder for Ryan that the cost of covering preexisting conditions can’t be eliminated, only shifted around.”

Hiltzik, Michael. “Paul Ryan's Idea to Cover Preexisting Conditions Via High-Risk Pools Is a Scam. Here's Why.” The Los Angeles Times. 28 April 2016. (site visited February 9, 2017).

The writer highlights that Rep. Ryan discussed in the first half of 2016 his desire to replace the ACA with high-risk pools. The article also discusses the high out-of-pocket costs and participation caps patients in high-risk pools faced prior to the ACA’s creation of a national-wide high-risk pool. The writer also had this to say: “Would high-risk pools fare any better today? It's doubtful. Ryan's apparent effort to low-ball the potential enrollment indicates that he and his colleagues are utterly unprepared to accept the cost of segregating the medically uninsurable in their own coverage pool. Like every program for the economically or socially needy, a federally-funded high-risk program would be first on the chopping block every time a House or Senate committee decided that government needed to shrink.”

Jost, Timothy. “Taking Stock of Health Reform: Where We’ve Been, Where We’re Going.” Health Affairs. 06 December 2016. (site visited February 7, 2017).

“The federal government also operated a pre-existing condition high-risk pool between 2010 and 2013 to offer a bridge to coverage under the 2014 market reforms.

Experience with high-risk pools has not been encouraging. Although two thirds of the states offered high-risk pools before the ACA, fewer than 200,000 individuals, about 5 percent of the eligible uninsured, enrolled in coverage. Coverage was generally skimpy with high deductibles and low annual dollar limits. Premiums were high, and pre-existing conditions were often excluded. Risk pools were chronically underfunded and in some cases had enrollment caps and wait lists.

The first question a risk-pool program would have to face is who would qualify for risk-pool coverage. Would anyone with a pre-existing condition? Only those refused coverage? Or all those facing a premium mark up of a certain amount or exclusion of a condition? The federal pre-existing condition high-risk pool required that applicants be uninsured for at least 6 months, which excluded individuals who had continued to cling to existing coverage despite very high premiums.

A second question is how comprehensive or limited the coverage offered by high-risk pools would be, and how high premiums would be. Would the program offer only catastrophic coverage, or some kind of basic coverage, or would it offer coverage similar to that offered by most employers? Would the premiums be subsidized for low-income individuals, and would they be set at standard rates or even at some higher rate, recognizing the higher costs of the population?”

Kapur, Sahil. “Carly Fiorina's Obamacare Replacement Plan Hasn't Fared Well With House Republicans.” Bloomberg Politics. 04 May 2015. (site visited February 9, 2017).

The author highlights Republican presidential candidate Carly Fiorina’s outlining her plan to replace the ACA with state-run high-risk pools which the federal government would subsidize to an unspecified degree.

"‘High-risk pools are attractive because they seem to magically solve certain problems without onerous requirements or lots of government funding,’ said Larry Levitt, a senior vice president at the nonpartisan Kaiser Family Foundation, which focuses on national health issues. ‘But it's a bit of a mirage because they're really not a solution for covering the uninsured.’…‘There's no way those people with preexisting conditions could afford to pay their own insurance. So there needs to be some kind of subsidy to make coverage even reasonably affordable,’ Levitt said, adding that no state has ever succeeded at using high-risk pools to cover its uninsured residents for a sustainable period of time.”

Konrad, Walecia. “Obamacare: The Dirty Little Secret of "Repeal and Replace." CBS News. 12 January 2017. (site visited February 9, 2017).

The writer describes Rep. Ryan’s plan to take more expensive and “high-risk” individuals out of the individual market and put them in a separate insurance pool. The writer then describes the high out-of-pocket costs patients in such pools paid as well as the six-month waiting period many faced before coverage could kick in. A Families USA representative, Ms. Fish-Parcham, had this to say about the pools: “‘High-risk pools served only 1 percent of the population back in 2008,’ said Fish-Parcham. That wasn’t anywhere near the number of people who needed coverage but couldn’t afford it, she noted, adding: ‘Risk pools simply didn’t work.”’

Merlis, Mark. “Health Coverage for the High-Risk Uninsured: Policy Options for Design of the Temporary High-Risk Pool.” National Institute for Health Care Reform. May 2010. 2. (site visited February 7, 2017).

“Because the pools are designed to attract the highest-risk applicants, even these higher premiums are insufficient to meet claims costs. In 2008, premiums covered 54 percent of costs in an average pool, according to the GAO. Every pool relies on some form of additional funding to subsidize pool losses. In 29 states, health insurers pay an assessment based on their share of total health insurance premiums earned in the state. These assessments are imposed both on nongroup and group premiums but not on self-insured employer plans, although some states do assess stop-loss carriers used by self-insured plans, according to the National Association of State Comprehensive Health Insurance Plans. Some states also use general revenues, tobacco settlement money or other special funds. Since 2002, there has been a federal grant program for state high-risk pools, with $75 million allocated for 2010.

Even after subsidies, risk-pool premiums can be quite high. The median state pool rate for a 50-year-old male nonsmoker in 2008 was $6,288 a year, according to GAO. Rates ranged from a low of $3,300 in Idaho to a high of $10,176 in Oklahoma for the most popular plan in each state’s pool.”

Meyer, Harris. “Are Paul Ryan's High-Risk Pools a Better Way to Insure Sick People?” Modern Healthcare. 28 April 2016. (site visited February 9, 2017).

“Ryan and some other conservatives believe that taking the sickest people out of the commercial market and putting them into separate, tax-subsidized, high-risk plans would reduce premiums in the commercial market and stabilize it… High-risk pools ‘are basically targeted welfare, which is a lot better approach than distorting entire markets with mandates and price controls,’ argued Dean Clancy, a policy consultant at Adams Auld, and a former senior health policy advisor to congressional Republicans and the George W. Bush administration.”

One commentator had the following to say: “effective high-risk pools would be expensive and tricky to design, and many Republicans wouldn't like having billions of dollars of their cost passed on to taxpayers.’ But you have to subsidize the care of these individuals,’ he said. ‘You can make the case that we're spending a lot on the ACA for not good effect, so let's spend it instead on high-risk pools. There's no way around it.’

Clancy wants to see the states, not the federal government, fund the high-risk pools. But that could easily lead to a replay of past problems, when many of the 35 state programs, which served just 200,000 people nationally, were severely underfunded.”

Mohney, Gillian. “Tom Price's Last Known Plan to Replace 'Obamacare'.” ABC News. 18 January 2017. (site visited February 9, 2017).

The author discusses Tom Price’s 2015 ACA replacement bill, the Empowering Patients Act, which would have provided federal dollars to states to help create and cover people in high-risk pools. The writer then discusses the significantly-higher premiums people in the state-run, high-risk pools faced prior to the ACA’s dissolution of these pools.

Pipes, Sally C. “GOP Will Fix Health Insurance with High-Risk Pools.” Philadelphia Inquirer. 11 January 2017. (site visited February 8, 2017).

The author describes high-risk pools as the following: “insurance plans created to cover individuals who are otherwise uninsurable because of a costly health condition. Government subsidies help keep premiums affordable for eligible individuals. Meanwhile, by separating out the costliest patients, high-risk pools drive down premiums in the rest of insurance market.” The writer then goes on to hail Minnesota’s high-risk pools and decry the costs of the ACA marketplace.

Pollitz, Karen. “High-Risk Pools for Uninsurable Individuals.” Kaiser Family Foundation. July 2016. (site visited February 8, 2017).

“In the U.S. and other developed nations, population health care spending is highly concentrated:  in any given year, the healthiest 50% of the population accounts for less than 3% of total health care expenditures, while the sickest 10% account for nearly two-thirds of population health spending.

Nearly all state high-risk pools excluded coverage of pre-existing conditions for medically eligible enrollees, usually for 6-12 months. This made coverage less attractive for people who needed coverage specifically for their pre-existing conditions.

Thirty-three pools imposed lifetime dollar limits on covered services, most ranging from $1 million to $2 million.  In addition, six pools imposed annual dollar limits on all covered services while 13 others imposed annual dollar limits on specific benefits such as prescription drugs, mental health treatment, or rehabilitation.

Nearly four decades of experience with high-risk pools suggests they have the potential to provide health coverage to a substantial number of people with pre-existing conditions. State high-risk pools that existed prior to passage of the ACA covered over 200,000 people at their peak, and the temporary PCIP pool created as part of the ACA covered over 100,000 individuals.”

Pollock, Harold A. “High-Risk Pools for the Sick and Uninsured Under Health Reform: Too Little and Thus Too Late.” Journal of General Internal Medicine. January 2011. 26:1. (site visited February 8, 2017). P. 91–94.

The ACA “provides $5 billion for temporary, federally funded high-risk pools, now known as the Pre-Existing Condition Insurance Plan (PCIP). This analysis explores the adequacy of such funding. Using 2005/06 data from the National Health and Nutrition Examination Survey (NHANES), we find that approximately 4 million uninsured Americans have been diagnosed with emphysema, diabetes, stroke, cancer, congestive heart failure, angina, or a heart attack. To provide adequate health care for uninsured individuals with chronic diseases, the federal PCIP appropriations would need to be many times higher than either Democrats or Republicans have proposed.”

Rovner, Julie and Ying, Francis. “Sounds Like A Good Idea? High-Risk Pools.” Kaiser Health News. 31 October 2016. (site visited February 8, 2017).

“One way Republicans say the system could be fixed is by returning to something called a high-risk pool. The idea is to let all the sick people buy their policies in a separate insurance pool, and then have insurance companies and states and the federal government all chip in to pay for their care and keep their premiums low.

Before the Affordable Care Act, 35 states had high-risk pools. The federal government had one, too, as a transition to the health law. But none of them worked very well. The biggest problem? Both premiums and other costs remained too high for many people with health conditions to afford. The federal program ran out of money almost a year before it was scheduled to end.

Republicans say their new risk pools plan would be better than the old ones. Their plan says it would keep premiums low, and no wait lists would be allowed. But it’s not clear that the $25 billion in federal funding they propose would be enough, or that states would step in to help fund the pools.”

Smedsrud, Jeff. “When Everything Old Is New Again: High-Risk Pools A Health Reform Solution.” Forbes. 28 November 2016. (site visited February 8, 2017).

The author describes how a successful high-risk pool might work: “Minnesota’s pool had broad eligibility, based both on health status and income criteria. The Minnesota high-risk pool was broadly funded by fees collected from the health industry, a small statewide assessment, and premiums paid by enrollees. The managers of the high-risk pool became very smart wholesale buyers of health care, and used big data (back then it was big) and care management techniques to nudge enrollees toward better health care decision-making. People could also enroll in the high-risk pool with nothing more than a doctor’s diagnosis.

The Minnesota high-risk pool was broadly funded by fees collected from the health industry, a small statewide assessment, and premiums paid by enrollees. The managers of the high-risk pool became very smart wholesale buyers of health care, and used big data (back then it was big) and care management techniques to nudge enrollees toward better health care decision-making.

Most importantly, Minnesota capped its premiums at 125% of the average cost for an individual buying insurance in the individual market. And, concurrently, the Minnesota health insurance market was reformed to limit denials for pre-existing conditions, to achieve an 80% medical loss ratio and to have a modified community rating.

And, finally, my home state had the good sense a long time ago to realize that health care costs are not just a collection of equal parts. The deductible and copayments for prescription drugs were different than it was for hospitalization, as one example. There were rewards for good health behavior.

When the Minnesota program closed here this was its legacy: One of the lowest rates of uninsured in the nation, the lowest health insurance costs for individuals, and a high-risk pool that covered people at costs about 50% less than Obamacare.”

Sneed, Tierney. “The Problem With Paul Ryan's Go-To Obamacare Replacement Idea? Money.” 17 January 2017. TPM. (site visited February 13, 2017).

The article says that high-risk pools do not have the equivalent protections the ACA has. "‘A high-risk pool is not an appropriate substitute,’ said Linda Blumberg, a senior fellow in the Health Policy Center at the Urban Institute. ‘It’s not an equivalent in any way for making sure that people with pre-existing conditions have adequate affordable coverage on an ongoing basis, unless the federal government was willing to invest an enormous amount of dollars into making it work.’

That’s not to say that high-risk pools aren’t entirely unworkable, nor that some people didn’t greatly benefit from having them as an option before the Affordable Care Act. Ryan, while on CNN, pointed to the high-risk pool programs in Wisconsin and Utah, and indeed Wisconsin’s was larger than the norm (covering 6.8 percent of those in the non-group market) though still well below the estimated percentage of consumers who suffer from the pre-existing conditions insurers pre-ACA cited to prohibit coverage.

‘There’s nothing wrong with it in theory, it’s just a second question that the resources available to these programs have to be established,’ said Karen Pollitz, a senior fellow at the Kaiser Family Foundation.”

“Sources: Top Republicans Considering High-Risk Pools, Changes to Medicaid.” NBC WESH 2. 08 February 2017. (site visited February 9, 2017).

The writer highlights that many of the GOP’s proposed ACA replacement plans include language that at the very least encourages states to create high-risk pools. The article then highlights that many of the GOP’s Freedom Caucus are growing increasingly impatient as replacement plans are created behind the scenes. It is unnecessary, they say, to include any replacement plans when repealing the law.

Sullivan, Peter. “Trump Adds High-Risk Pools to Healthcare Plan.” The Hill. 06 October 2016. (site visited February 8, 2017).

“Donald Trump has added to his healthcare plan a ‘high-risk pool’ for sick enrollees — a traditional Republican idea long dismissed by Democrats. The unannounced change in the Republican presidential nominee's healthcare plan comes as a bullet point in a new healthcare page on his website. The new bullet point reads: ‘Work with states to establish high-risk pools to ensure access to coverage for individuals who have not maintained continuous coverage.’

High-risk pools offer coverage for sick people that otherwise could be denied coverage for having a pre-existing condition if ObamaCare’s protections were repealed, as Trump proposes.”

“The Pitfalls of Replacing Obamacare.” The Economist. 26 January 2017. (site visited February 8, 2017).

The author describes high-risk pools in the following way: “The idea is to hive unhealthy people off into their own dedicated market and then subsidise their coverage. It reverses the logic of the ACA, which lumped everyone together to spread costs around. The law sent premiums skyrocketing for healthy folk who buy their insurance themselves, rather than through an employer. Whittling out higher-risk people from the market would bring those premiums back down. Middle-income earners too well-off to qualify for Obamacare’s tax credits, who have suffered the most from higher costs, would surely cheer such a reform.

Separating high-risk people out does not make their costs disappear. Minnesota paid for MCHA in two ways. First, premiums were up to 25% higher than elsewhere. After those were collected, a levy on other health insurance plans covered its losses. This tax inflated healthy folks’ premiums much less than Obamacare does, partly because it applied to a broad base which included employer-provided coverage.

But MCHA was the exception rather than the norm. Many states starved high-risk pools of cash. Florida’s contained only about 200 people in 2011. Premiums were commonly twice the normal rate… That makes worries on the left—that high-risk pools provide cover for denying care to the ill—look justified…Not even MCHA was accessible to everyone who needed it. In 2014 a 45-year-old paid about $350-400 a month for an MCHA plan with a $2,000 deductible. That seems a stretch for someone earning $24,000 a year, the income at which single-person households in Minnesota cease to be eligible for Medicaid or “MinnesotaCare.”

High-risk pools are in some ways preferable to Obamacare’s complex system of behind-the-scenes redistribution, which is hard on middle-earners who lack employer-provided coverage. But without generous, sustainable funding, high-risk pools could be a treacherous alternative.”

“Under Senate Finance Committee Plan, High-Risk Insurance Pools Get Funding Boost.” PBS Newshour. 05 October 2009. (site visited February 9, 2017).

‘“I think one of the major reasons we've been so successful is that our premiums have been relatively affordable,’ says Lynn Gruber, president of the Minnesota Comprehensive Health Association, Minnesota's high-risk pool.

By state law, she said, premiums cannot go above 125 percent of the average for the individual market, and they're generally lower than that. The funding for the program comes from a combination of premiums and an assessment on private insurers in the state. Like all high-risk pools, it runs at a deficit — it collected $116 million in premiums last year and paid out $245 million in claims.

To run the program, Gruber says, ‘the dollars have to be there.’

The Senate Finance Committee legislation would attempt to solve that problem by injecting $5 billion in new funding for high-risk insurance pools. With that money, according to the legislation, premiums would be set at an equal amount as private-market individual plans.”

Zdechlik, Mark. “GOP Leaders Urge Return To 'High-Risk Insurance Pools' That Critics Call Costly.” NPR. 18 February 2017. (site visited February 21, 2017).

“Supporters of the MCHA approach tout a return to it as a smart way to bring down the cost of monthly premiums. But MCHA had detractors, too.

Craig Britton of Plymouth, Minn., once had a plan through the state's high-risk pool. It cost him $18,000 a year in premiums.

Britton was forced to buy the expensive MCHA coverage because of a pancreatitis diagnosis. He calls the idea that high-risk pools are good for consumers "a lot of baloney."

‘That is catastrophic cost,’ Britton says. ‘You have to have a good living just to pay for insurance.’

And that's the problem with high-risk pools, says Stefan Gildemeister, an economist with Minnesota's health department.

‘It's not cheap coverage to the individual, and it's not cheap coverage to the system," Gildemeister says.

MCHA's monthly premiums cost policy holders 25 percent more than conventional coverage, Gildemeister points out, and that left many people uninsured in Minnesota.

‘There were people out there who had a chronic disease or had a pre-existing condition who couldn't get a policy,’ Gildemeister says.

And for the MCHA, even the higher premiums fell far short of covering the full cost of care for the roughly 25,000 people who were insured by the program. It needed more than $173 million in subsidies in its final year of normal operation.

That money came from fees collected from private insurance plans –- which essentially shifted a big chunk of the cost of insuring people in MCHA program to people who get their health insurance through work.

Gildemeister ran the numbers on what a return to MCHA would cost. Annual high-risk pool coverage for a 40-year-old would cost more than $15,000, he says. The policy holder would pay about $6,000 of that, and subsidies would cover the more than $9,000 remaining.”

Zdechlik, Mark. “To Replace Obamacare, GOP Pushes 'High-Risk' Pool.” NPR. 13 February 2017. (site visited February 13, 2017).

While not all participants in MN’s high-risk pools had high premiums, a former participant in MN’s high-risk pools had this to say about them after paying $18,000 a year for premiums: ‘"That is catastrophic cost,’ he said. ‘You have to have a good living just to pay for insurance.’…MCHA priced premiums for policy holders at 25 percent more than conventional coverage.”

An economist named Stefan Gildemeister said “even the higher premiums fell far short of covering the full cost of the insurance for the roughly 25,000 people on MCHA. The program needed more than $173 million in subsidies in its final year of normal operation. The money came from fees on commercial insurance plans. Gildemeister ran the numbers for a return to MCHA. Annual high-risk pool coverage for a 40-year-old would cost more than $15,000. The policy holder would pay about $6,000. The state would have to find more than $9,000 in subsidies.”

February 22, 2107 – M. Hubbard

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