McCain’s High-Risk Pools — A Gift To The Insurance Industry

Yesterday, during Sen. John McCain’s (R-AZ) “tele-townhall meeting,” Debbie, a woman who was laid off her job and subsequently denied health insurance in the individual market because she was taking “blood pressure medication,” asked McCain if his health reform plan would “reform the insurance business” and help her find coverage.

McCain conceded that Americans with pre-existing conditions would have a hard time finding coverage in the unregulated market but reassured Debbie that she could find coverage in government subsidized high-risk pools:

We have to develop – the state of FL is starting to develop them – government approved plans. Which is the legislatures and the governors and the federal government join together with the Federal government making a very significant contribution so that they can establish risk pools and others and make sure that every American is able to get – particularly with somebody like you – that basically can’t get insurance, can get affordable and available insurance and the government is going to have to weigh in physically and financially to see that you get the ability and the health insurance that you need…These are tough times and a lot of people facing the same challenge you are, Debbie. I’m committed to fixing it.

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But McCain’s “fix” is inadequate. As the Wonk Room has previously explained, high risk pools have many of the same draconian limitations as the unregulated private market: waiting periods, premiums that are out of reach for many families, substantial deductibles and co-pays, and limits on mental health and maternity care.Moreover, experts estimate that McCain’s “very significant contribution” to high risk pools is not significant at all. In fact, according to most experts, McCain’s proposal to boost funding by $7 to $10 billion is “nowhere near enough, [to cover the uninsured] particularly given the large number of people with pre-existing conditions who would need this help if employers send their workers out to the open market.”

Thus, Americans like Debbie would have to pay outrageous premiums and deductibles for health insurance because high risk pools, unlike general risk pools, don’t spread risks and costs across a mixed pool population of healthy and sick people. She would pay more for insurance because, under McCain’s plan, her pre-existing condition would force her into a pool that cannot offset the costs of treating her condition.

In some ways, McCain is right. He would “reform the insurance business.” But rather than increasing access to health care, McCain’s plan to subsidize high risk pools would only release insurance companies from covering sicker people.