Republican senate candidate Rep. Cory Garnder (CO) — who has previously argued that guaranteed coverage for pre-existing conditions should not be included in health care reform — has introduced a measure that seeks to extend insurance to sick people after the Affordable Care Act is repealed. There are just two major problems: the legislation relies on a mechanism that is already included in the existing law and has failed to provide affordable coverage to sicker beneficiaries.
Gardner’s H.R. 4496, Covering People With Pre-Existing Conditions Act of 2014, was introduced on Monday and would compel states to establish or expand existing insurance access programs — commonly called high risk pools — for individuals with pre-existing conditions. The pools would be required to offer at least two coverage options and “limit the pool premiums to no more than 150 percent of the average premium for applicable standard risk rates in that State.”
The ACA offered a similar solution until 2014. The Pre-Existing Condition Insurance Plan (PCIP) was designed as a bridge to the exchanges for families and individuals who didn’t have an offer of coverage from an employer and could not find insurance in the individual market. Officials sought to offer hundreds of thousands of Americans unable to qualify for insurance temporary coverage until the exchanges opened for business. Under the $5 billion program, uninsured individuals with pre-existing conditions who have been without coverage for six months were able to enroll in high-risk insurance pools paying premiums at “standard rates” (or no higher than the average person of that age would pay for insurance in the private market) and with limited out-of-pocket medical costs.
But insuring large groups of sick people proved very expensive and as PCIP enrollment increased, federal officials began to fear that that they would exhaust the appropriated funds. In January 2013, the Department of Health and Human Services (HHS) “instituted benefit changes that shifted more costs onto PCIP enrollees, including by increasing enrollee coinsurance from 20 percent to 30 percent in many states” and ultimately stopped enrolling new beneficiaries. As the Government Accountability Office (GOA) reported, “Due to growing concerns about the rate of PCIP spending, in February 2013, [HHS] suspended PCIP enrollment to ensure the appropriated funding would be sufficient to cover claims for current enrollees through the end of the program.” The federally-run pools were eventually extended for an addition four months in 2014 in the aftermath of the rocky rollout of HealthCare.gov to ensure that beneficiaries “did not experience a break in health coverage as they transitioned to other coverage through the Health Insurance Marketplace.”
Though Gardner’s proposal appears to fund the pools at higher level than PCIP ($15,000,000,000 for the period of fiscal years 2015 through 2024; and an additional $10,000,000,000 for the period of fiscal years 2020 through 2024) his program would charge sick people more than the federal program and is unlikely to remain solvent of the long-term. According to a 2008 report from the Tax Policy Center, using high-risk pools “to prevent large losses in insurance coverage among the sick and needy could be extremely expensive—on the order of $1 trillion over ten years given projected health care costs.”
Gardner couldn’t offer anywhere near that amount and without a mechanism that encourages younger and healthier individuals to buy coverage and spread the risk and cost of insurance, programs composed of very costly applicants will never be sustainable.