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High-risk pools may raise health care costs for all Americans

Reinstituting high-risk pools as a state option as part of the American Health Care Act that was recently passed by the U.S. House of Representatives would move health care policy in the United States “a huge step backward,” as it would segregate individuals with preexisting conditions from the broader insurance pool and increase costs for everyone, according to a commentary published in Annals of Internal Medicine.

“Historically, high-risk pools have not worked well,” Jean P. Hall, PhD, from the University of Kansas Medical Center, wrote. “They generally have not provided affordable or adequate coverage to persons with preexisting conditions, nor have they made the individual market affordable for others. Moreover, they have cost more than policymakers seem to appreciate on the basis of allocations for high-risk pool programs in past and current legislation.”

According to HHS, 51% of Americans have preexisting conditions, such as cancer, high BP, congenital heart problems, asthma, head injuries or paralysis, that may force them into high-risk pools. Prior to the Affordable Care Act, high-risk pools included extremely high premiums and deductibles and significant limits on coverage, according to Hall. Under the AHCA, high-risk pools may have more severe coverage limits, particularly for mental health, substance abuse and maternity care. In addition, high-risk pools would subject many individuals to unaffordable coverage, having to forgo care and poorer outcomes due to the allowance of increased premiums, deductibles and out-of-pocket costs under the proposed legislation, according to Hall. Overall, individuals with chronic conditions who are forced into health care plans that they cannot afford will only shift costs to others, she wrote.

Separating individuals with preexisting conditions into high-risk pools does not reduce costs or the number of uninsured, according to Hall. Policymakers should fund a robust national reinsurance program to efficiently and justly make health insurance more affordable rather than state-based high-risk pools, she wrote.

Supporters of the AHCA argue that only individuals with preexisting conditions who allow their existing coverage to lapse would be subject to medical underwriting and high-risk pools; however, data from HHS indicate that spells of insurance are experienced by millions of individuals with preexisting conditions each year due to job changes or phases of financial difficulty, according to Hall.

“Insurance works best when it spreads costs across a large pool of people, limiting the effects of those with higher costs on overall rates,” Hall concluded. “High-risk pools do not work, because they concentrate costs and require subsidies at a level that policymakers have never funded adequately. Perhaps ironically, the AHCA likely will increase the cost of individual insurance, even for the healthiest people, because those with preexisting conditions will make heroic efforts to maintain their coverage in the Marketplace, whereas healthy people may choose to drop out. At the same time, persons with preexisting conditions who have a lapse in coverage will be subject to premiums and deductibles that may make it impossible for them to obtain insurance or to use it when needed. When their conditions worsen because of lack of care, all Americans will share their costs.” – by Alaina Tedesco

Disclosure: Hall reports receiving support from The Commonwealth Fund.