Told you so

Evidently, Austin is too polite to say, “I told you so.”  So I’m going to do it for him.

The high-risk pools that were a part of the PPACA have not been the success that some thought they would be, says Timothy Noah:

Even so, enrollment has not been high. Medicare’s chief actuary predicted that 375,000 people would sign up in 2010, but as of Nov. 1 only about 8,000 had, including only four in West Virginia, only one in North Dakota, and none at all in the District of Columbia and Vermont. That’s partly because 27 states declined to participate in the program, relying instead on their own risk pools (apparently they worry they’ll get stuck with the higher cost); partly because even Obamacare’s more-highly-subsidized high-risk premiums were relatively expensive (non-group insurance doesn’t come cheap for people with pre-existing conditions); partly because potential customers worried that Congress would eliminate the new high-risk pools by repealing Obamacare; and partly because the Obama administration, no doubt wrestling with the high-risk pools’ fundamental unworkability, didn’t start signing people up until summer.

Yes, even as someone else said more than a year ago, “High risk pools are not going to make things better.”  But Austin was more on point with his own research:

In 2000, high-risk pool enrollment was a small proportion of the number of medically uninsurable individuals: 8% nationally, with state variation between 1% and 54%. So, high-risk pools were making a dent, but only a small one. Recent reports suggest not much has changed in this regard. The main limitations to greater enrollment were enrollment caps and affordability. These are really two symptoms of the same thing: low levels of funding. Some states capped enrollment due to limitations of funding. And premium subsidies were, of course, subject to funding limitations.

We estimated that high-risk pool premiums were above 25% of family income for 29% of the medically uninsurable population. That is, even when high-risk pool enrollment was possible, for a large minority of medically uninsurable individuals, it was unaffordable. We simulated the effect of lowering high-risk pool premiums to 125% of the individual market rate and found that doing so would increase enrollment by 33%.

You need to heavily (and I mean heavily) subsidize these plans in order to make them attractable.  In order to be “high-risk”, you need to be very expensive to insure.  Pooling expensive people together alone is a terribly inefficient way to provide insurance.

The problem is, you have to remember that high-risk pools aren’t the darling of those who favor comprehensive reform.  They have been traditionally pushed by those who favor much more incremental reform:

They were the central idea in the health plan proposed by Republican presidential nominee Sen. John McCain, R-Ariz., during the 2008 election. They were the central idea in the House leadership’s proposed substitute for the Democratic plan in 2009, and they played a major role in the alternative plan set forth that year by Sen. Tom Coburn, R-Okla., a medical doctor who became the GOP’s lead opponent to Obamacare. They were the central idea in a 2010 repeal bill introduced in May by Rep. Wally Herger, R-Calif., that would have replaced the health reform bill that became law with the 2009 House leadership bill.

There are plenty of ways to build a health care system without high risk pools.  One way would be the PPACA in 2014 once the exchanges and new regulations kick in. Another, of course, would be a single-payer system like Medicare.  It’s just that those plans were unacceptable to some; so they favored high risk pools.

Now that those have been shown not to work, what will they offer?

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