Before adjourning to the White House Rose Garden for their celebratory ‘kegger’, the House of Representatives managed to pass the American Health Care Act (AHCA) by a very slim margin. Virtually all of the provisions of this $800 billion tax-cut masquerading as health care reform are incredibly odious and worthy of discussion; perhaps the most odious are the provisions, or lack thereof, for addressing pre-existing conditions.

Do you recall when Sarah Palin was claiming that the Affordable Care Act (ACA) included ‘death panels’ that would decide who would live and who would die? What she was referring to was a provision in the ACA that would allow health care providers to discuss end of life care with their patients. Clearly she had misinterpreted the language, either from ignorance or the desire to mislead. In short, ‘fake news’. While speaking nonsense for political effect, she was, however, prescient. The GOP AHCA, if enacted without substantial change, will have turned the Republican caucuses in the House and Senate into their own “death panels” for people with pre-existing conditions.

One out of every two Americans has a health condition that qualifies as a pre-existing condition. As many as 86% of those aged 50 – 64 have a pre-existing condition. As insurance companies currently define them, a pre-existing condition could be acne, allergies, anxiety, asthma, basal cell skin cancer, depression, ear infections, fractures, high cholesterol, hypertension, incontinence, joint injuries, kidney stones, menstrual irregularities, migraine headaches, overweight, restless leg syndrome, tonsillitis, urinary tract infections, varicose veins, and vertigo. (See additional conditions). Obviously, we’re talking about a very large percent of the population.

Most insurance is based on the law of large numbers. When applied to health insurance this means that the larger the pool of people covered by the plan, the more likely it is that the costs of the claims and overhead expenses will not exceed the revenue from premiums. Purchasers’ risks are pooled so that the premiums paid by the majority of enrollees who incur low costs for claims help pay claims for those enrollees who incur high costs.

This concept was the basis for Obamacare, but is now being discarded by the GOP. The AHCA instead proposes that states set up high-risk pools for people who are likely to incur high costs. 

High-risk pools were common before the advent of the ACA but were no longer needed once Obamacare was fully implemented.  Originally, high-risk pools were created to offer coverage to state residents who were “uninsurable” because their pre-existing conditions made them too expensive to include in a medically-underwritten, non-group (i.e. individual) health insurance market.  Most state risk pools adopted features to limit enrollment.  These included:

• Charging significantly higher premiums for these plans
• Excluding coverage of pre-existing conditions
• Limiting annual and/or lifetime expenditures, ranging from $1 million to $2 million
• Offering plans with high deductibles
• Having long waiting periods for enrollment in high-risk pool plans
• Limiting the number of annual enrollments in these plans
• Reducing the benefits these plans offer, e.g. by not covering prescription drugs or hospitalization stays 

High-risk pools generally covered just a fraction of people with pre-existing conditions who lacked insurance.  Frequently the plans included arcane rules covering what an enrollee must do to provide adequate proof of their uninsurability.   And, to a large degree, the pools were inadequately funded, so that many were forced to shut down, leaving everyone who might have been eligible for a high-risk pool without any option for health insurance.

Flying in the face of past experience, the GOP thinks high-risk pools are a perfect solution.  Or perhaps they are including this ill-conceived concept to deceptively allay concerns.   The bill passed by the House would include most of the features of the earlier plans, so it is not clear how they propose to avoid the same pitfalls.  For example, according to the Department of Health and Human Services data in 2011, 130 million nonelderly Americans have pre-existing conditions, and the higher premiums would subject them to thousands of dollars of extra expenses for individual market coverage. 

Responding to this, the GOP has proposed including $130 billion dollars of subsidy to offset this expense.  The Center for American Progress found that the amount of funding already in the AHCA would be insufficient to sustain even a small high-risk pool.  Based on their calculations, the current version of the AHCA falls $200 billion short of what would be required, and the $8 billion promised to House Republican moderates (Upton/Long amendment) would fill in just 4 percent of the funding gap.  This total would subsidize about 700,000 people annually.  But if roughly 5 percent of current individual market and small-group enrollees needed coverage through high-risk pools, more than 800,000 people with high-cost health conditions would still be left without protection or affordable coverage.

Complicated enrollment, huge increases in premiums, exclusionary underwriting, limited benefits, and insufficient subsidization.  Oh yes, keep in mind that a state has the option to not provide a high-risk pool.  What a deal!  There is speculation that the bill as written in the House will not fare well in the Senate; however, this is merely conjecture.  We can only hope that at least a modicum of sanity will prevail.  Lest we exaggerate the plight that could befall many, there may be hope.  Follow this link to see some covered pre-existing conditions.

Additional Reading:

http://www.ncpssm.org/EntitledtoKnow/entryid/2107/what-aca-repeal-means-for-seniors

http://host.madison.com/wsj/news/local/health-med-fit/obamacare-repeal-could-involve-high-risk-pools-like-wisconsin-s/article_1537eb53-3cc0-58a4-967b-ea5110722bd7.html

http://www.dailykos.com/story/2017/5/1/1657768/-GOP-create-Deadpools-for-Americans-with-Pre-Existing-Conditions

http://obamacarefacts.com/pre-existing-conditions/

https://www.americanprogress.org/issues/healthcare/news/2017/04/20/430858/latest-aca-repeal-plan-explode-premiums-people-pre-existing-conditions/

https://www.americanprogress.org/issues/healthcare/news/2017/05/03/431827/upton-amendment-aca-repeal-bill-will-almost-no-effect/

https://www.americanprogress.org/issues/healthcare/news/2017/04/20/430858/latest-aca-repeal-plan-explode-premiums-people-pre-existing-conditions/

https://www.americanprogress.org/issues/healthcare/news/2017/05/03/431827/upton-amendment-aca-repeal-bill-will-almost-no-effect/

http://kff.org/health-reform/issue-brief/pre-existing-conditions-and-medical-underwriting-in-the-individual-insurance-market-prior-to-the-aca/