Republicans technically have a plan for covering sick people: setting up a system that could do so, but, if history is any guide, wouldn’t.
Welcome to “high-risk pools,” the government-subsidized groups for people who — in the world where insurance companies can go back to their pre-Obamacare practice of discriminating against those with preexisting conditions — can’t get covered on their own. In theory, the pools can be a good way to make sure money is going to the people who need it the most. But in practice, they don’t tend to give out enough money in the first place. Which is why the GOP’s plan to repeal Obamacare’s protections for the sick and replace them with high-risk pools might literally be a life-or-death gamble for a lot of people.
Now, the first thing to know about high-risk pools is that they aren’t magic. They don’t make it any cheaper to cover sick people. That costs what it costs regardless of whether we pay for it with a combination of higher premiums and higher taxes (like Obamacare does), or with higher taxes alone (like high-risk pools would). And yes, it’s something that “we” have to pay for, since the most serious illnesses cost far more than anyone could pay on their own. Indeed, the sickest 5 percent of people make up 50 percent of health-care spending. Although there’s a big caveat here. The idea that high-risk pools won’t save any money is based on the assumption that, as President Trump put it, we won’t have people “dying in the streets.” In other words, that we’ll adequately fund the high-risk pools.
We haven’t in the past. Before Obamacare, you see, a lot of states had their own high-risk pools that were supposed to do what Republicans say they will today: cover sick people separately so that healthy people aren’t burdened with higher premiums. The only problem was they forgot to do that first part. State governments didn’t put anywhere near enough money into their high-risk pools, with the predictable result that these only slightly subsidized costs were still too expensive for a lot of people with preexisting conditions. And even then, they often faced lifetime limits on their coverage. Not to mention the fact that there were long waiting periods before you could join — not something, say, a cancer patient could afford.
Here’s why that matters now. Republicans don’t actually want to set up their own high-risk pool. They want the states to do that themselves — with $138 billion coming from Washington over the next 10 years. But there are three problems with this. First, this almost certainly isn’t enough money. Even conservatives like James Capretta and Tom Miller think that high-risk pools would need around $150 billion to $200 billion to work over the next decade. Emily Geeof the left-leaning Center for American Progress, meanwhile, thinks it’s more like $330 billion. Second, this money isn’t even required to go to high-risk pools. States could also use it to offset costs for healthy people in the individual market — which is what the nonpartisan Congressional Budget Office expects they’ll do. And third, this funding isn’t flexible. It’s a one-time grant that states won’t have an easy time supplementing since they have to balance their budgets every year. The result would be a much more precarious than the system we have now where sick people can’t be charged more and any subsidy they get automatically goes up with their premiums to try to keep them from being priced out of the market.