What The ACA’s High Risk Insurance Pools Say About Conservative Health Policy

Annamarie Andriotis of the Wall Street Journal reports that the government is lowering premiums for the Pre-Existing Condition Insurance Plan (PCIP) — the high risk insurance pools that serve as a bridge of coverage for Americans with pre-existing conditions — in an effort to attract more enrollees into the fledgling program:

Even fans of the effort say it may be too pricey, cumbersome and unrealistic to reach the right people. Already, the existing version has had problems: Only about 22,000 people—a small fraction of the potentially eligible— have signed up. “Why is this only reaching a small number of folks when we have a much bigger problem,” says Larry McNeely, a senior associate for policy advocacy at the National Coalition on Health Care, a nonpartisan group advocating for comprehensive health-system changes. “We haven’t really cracked this problem properly.”

Under the new pricing structure, premiums will fall as much as 40% in some states. In Florida, for example, policyholders age 55 and older will pay $376 a month for standard coverage, almost 40% less than the current rates and a savings of $3,000 a year, according to data from the Centers for Medicare & Medicaid Services.

There are several things to say about this: first, it’s slightly disappointing to see a story about premium decreases framed in “but it’s still not good enough” terms. Given the current trend of escalating health care costs, a reduction is a novelty that may help make coverage more affordable to more people.

But secondly, the relative unpopularity of the PCIP program highlights the failure of health policy proposals that seek to further fragment the health system. Part of the reason why PCIP premiums are still so high is because it’s terribly expensive to insure groups of sick people. They spend all the premiums they kick in and then some. It’s why the Affordable Care Act includes an individual mandate to encourage healthier individuals to purchase coverage and why you hear Democrats talking about universal coverage as a means of lowering costs. Conversely, the GOP is looking at proposals that would deregulate insurers and allow them to market policies exclusively to healthy people (i.e. sell policies across state lines); the sick would be placed in government-funded high risk pools. And here we see how that’s working out…