An olive branch to get centrists on board with making Obamacare’s insurance regulations optional could mean a higher price tag.
An amendment to Republicans’ Obamacare repeal bill, advanced by a House panel, to create high-risk pools to cover the sickest patients may not have enough money, healthcare experts say. The measure is aimed at quelling centrists’ concerns about giving states the power to opt out of a requirement that insurers cover people with pre-existing conditions.
The amendment would give $15 billion to states for the pools from 2018 to 2026 and let states use the money leftover from a $115 billion stability fund to offset costs in the individual market. But some centrists say that consistent money must be available for the pools.
“We have to have funding to make these things work long term,” Rep. Tom MacArthur, R-N.J., a co-chairman of the centrist Tuesday Group, said last week.
Conservative members of the Republican House conference were more bullish on the amendment, pointing to the success of a similar program in Maine.
“When you look at the Maine experience, they haven’t needed any additional money,” said Rep. Gary Palmer, R-Ala., a member of the conservative House Freedom Caucus.
The Freedom Caucus wants to make optional the Obamacare mandate that insurers cover pre-existing conditions alongside mandates that insurers cover 10 essential health benefits and “community ratings,” which are price controls. However, resistance from centrists scuttled a plan to vote on the American Health Care Act last week before members left town for a two-week recess.
Experts doubted if $15 billion is enough for the entire country.
“It is not very much money to make a meaningful dent in the cost of covering sick people generally,” said Gary Claxton, vice president for the nonpartisan Kaiser Family Foundation.
Tim Jost, an Obamacare supporter and law professor with Washington & Lee University, wrote that high-risk pools are extraordinarily expensive. He pointed to data from the think tank Commonwealth Fund that showed in 2010, high-risk pools in 35 states cost a total $2.4 billion to cover just 221,879 people.
“The $15 billion over nine years is likely far less than would be needed to create a credible program, even with insurer contributions,” Jost wrote in a blog for the journal Health Affairs.
The Maine program is called “invisible risk sharing.” It creates a high-risk pool for people who can’t get coverage on the individual market because of a pre-existing condition, such as cancer. The individual market is for people who don’t get insurance through their job.
Before Obamacare, more than 30 states adopted high-risk pools. The state would subsidize coverage for people in the pools, but insurance premiums were often much higher than on the individual market.
Maine’s program, created in 2011, has insurers cover some of the cost of people in the pool, thus defraying some of the burden.
The program “has the same function as making sure that people with pre-existing conditions get covered,” said Rep. Mark Meadows, R-N.C., the head of the Freedom Caucus.
Meadows said if Maine Republican Gov. Paul LePage could get risk sharing to work in a blue state then “that would be a good litmus test on whether we can do it from coast to coast.”
Under Maine’s program, premiums were as much as 70 percent lower than existing plans, according to the right-leaning think tank Foundation for Government Accountability. The foundation noted that in addition to the pools, Maine installed a rule that allowed insurers to charge seniors five times the amount it charges younger people.
But Claxton said Maine may not be a good indicator for the rest of the nation.
“It worked in Maine because Maine was a substantially broken [individual] market,” he said.
He added that the program assessed a $4-per-person fee on insurer plans in all markets, including employer-sponsored insurance.
Another unknown factor is the states’ opt-out process being negotiated for the American Health Care Act. The White House has yet to release legislative text outlining which insurance mandates states could opt out of.
The White House is expected to remain in talks over the Obamacare replacement plan, and House GOP leaders told members they could be called back to Washington if a deal emerges.
Claxton said that the legislative text could help fill in more of the blanks on the impact of the high-risk pools.
“We really don’t have a full proposal that all fits together,” he said.
