Why you should care about the funding of high-risk health insurance pools. HHS cuts premiums, but not the cost

During the health care debate, there was much talk about insurance company discrimination, especially against people with pre-existing conditions. The President claimed many Americans had been locked out of coverage and with the reforms proposed; they would be able to obtain “quality, affordable healthcare.”  Guaranteeing enrollment in insurance is largely unrelated to the quality of health care provided and “affordable” is a relative term especially if the cost of coverage is rising at 9% a year or more.  Also during the debate, I participated in a Facebook ® group in favor of health care reform as structured by the administration.  I was regularly blasted as being insensitive as the group participants reflected the Presidents rhetoric on this issue.  I repeated the message that many people would be disappointed if they thought guaranteeing coverage was going to make that coverage affordable.

To date the high risk pools have enrolled 8,011 individuals nationwide compared with a prediction of 375,000.  Some observers conclude that the problem of uninsured because of a pre-existing condition was not a large as claimed by proponents.  I do not buy into that as the primary reason for low enrollment. Rather, it is more likely the unaffordable cost even after government subsidies of 65% of the premium or more.  New Jersey banned insurance companies from denying coverage years ago, but that does not make the coverage affordable. Premiums in the individual market for a family range from $9,000 a month to $2,100 a month.  Let’s assume single coverage of only $1,000 per month and a government subsidy of 65%.  That means that this “affordable” health insurance still costs the individual $350 per month or $4,200 per year.  And, according to an AP® report, part of the problem is sticker shock. Premiums vary by state, and can range from $400 to $600 per month or more for people in their 40s and 50s

The government’s answer to the apparent cost problem is to lower premiums by 20% in the pools run by HHS (in 23 states) and improve the benefit options, including adding a health savings account option.  That sounds like underfunding to me.  If the premiums do not reflect the cost of coverage what have we accomplished.  If a private insurer set premiums that way, it would be out of business or up before state regulators for inadequate reserves. 

Why should you care if the government wants to force some level of “affordable” into the high-risk pool? Well because this high-risk pool program expires in 2014 when the insurance exchanges are effective.  At that point, the true cost of the coverage for high-risk individuals will be reflected in the cost of coverage paid by all exchange participants.

Don’t get me wrong, I think high-risk people should have access to coverage, but that is quite different from rhetoric claiming that it can be done in an affordable manner without fundamental changes in the system that generates the cost of coverage.  We were told the devil was insurance companies and yet we find very quickly that government-run programs cannot provide coverage on an affordable basis either. 

For years, the debate on health care in America was focused on the uninsured and that is true in 2010 as well.  In reality the uninsured are a symptom of the cost problem. “Solving” for the symptom without solving the problem is no solution at all.

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