Republican lawmakers holding town hall events have repeatedly faced questions about ObamaCare. Among them: What are you going to do for people with pre-existing conditions?
The Affordable Care Act, which Republicans are seeking to repeal, bars insurers from denying coverage to people with previous health conditions. The policy has long been one of the most popular parts of ObamaCare.
In their drive for repeal, Republicans have stressed that they want to ensure that people with pre-existing conditions can get coverage — but without the regulatory mandate created by Democrats. The solution, they say, is creating what are known as high-risk pools.
"They can work if properly funded by a combination of the federal government and the state government and be based at the state level," Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellFixing Congress requires fixing how it legislates McConnell: GOP should focus on future, not 'rehash' 2020 Hoyer: Democrats 'committed' to Oct. 31 timeline for Biden's agenda MORE (R-Ky.) said at a recent town hall event.
"So that's the goal here. We fully understand the need for high-risk pools to take care of those with pre-existing conditions, and that will be part of anything that comes next."
High-risk pools essentially serve as the insurance of last resort for people with expensive medical conditions. By separating the seriously ill out of the insurance market, the thinking goes, insurers can offer cheaper premiums to healthy people.
Before ObamaCare, 35 states operated high-risk pools, often at great cost.
“They’re expensive by definition. This has been true in our population forever and it’s true around the world,” said Karen Pollitz, a senior health policy fellow at the Kaiser Family Foundation.
Some states such as California did not have enough funding to keep their pools active.
“It was characterized by limited state funding, high costs, limited benefits and waiting lists,” said Richard Figueroa, who was a senior administrator for California’s high-risk pool.
“It was not at all untypical for people to die on the waiting list waiting for coverage.”
Other states had similar issues: pools with high premiums, skimpy benefits and annual and lifetime caps. Some pools, like the one in California, had a waiting list and had to cap enrollment to limit costs.
“It was very sad to have to hear about people on our waiting list whose family would call and say, ‘Take our name off,’ because the person had passed on while they were waiting for the insurance to kick in.”
Under ObamaCare, people with pre-existing conditions cannot be denied insurance because of their previous conditions. They also can’t be charged more for coverage.
Republicans have criticized the provision as meddling in the marketplace that raises the costs of premiums for otherwise healthy people.
Asked about it at a CNN town hall last month, House Speaker Paul RyanPaul Davis RyanJuan Williams: Pelosi shows her power Cheney takes shot at Trump: 'I like Republican presidents who win re-election' Cheney allies flock to her defense against Trump challenge MORE said: “We believe that state high-risk pools are a smarter way of guaranteeing coverage for people with preexisting conditions.”
“By financing state high risk pools to guarantee people get affordable coverage when they have a pre-existing condition like yourself, you are dramatically lowering the price for everybody else.”
Now that Republicans have the chance to repeal and replace ObamaCare, it looks like they may seek to create some version of the high-risk pools that were in place before President Obama took office.
Experts say states will need a consistent and sustained source of funding from the government for high-risk pools to work.
If Republicans revisit risk pools, they need to “recognize this is a permanent promise for federal funding,” said Joseph Antos, a health policy expert with the conservative American Enterprise Institute.
“States that set up high risk pools tend not to recognize that if you’re going to do that, you have to have guaranteed funding for it.”
From 2003 through 2010, the federal government offered grant funding to high-risk pools that met specific criteria, with the funding ranging from $49 million to $80 million per year.
If Republicans created high-risk polls in all 50 states, they would need to appropriate at least $16 billion per year, according to Dean Clancy, a health policy consultant who worked for former President George W. Bush.
A leaked draft of the bill that Republicans hope to use to repeal ObamaCare would propose $100 billion in “state innovation grants” that are a version of high-risk pools, but appear to allow for a broader array of uses for the money by states. That works out to about $12.5 billion a year.
The money could be used by states to help sick people get coverage and stabilize premiums.
But spending billions a year on a new healthcare initiative could be a hard sell for some of the party's more conservative members, especially as they continue to battle the rising costs of the Medicaid and Medicare programs.
Other states with high-risk pools were able to run them successfully by taxing insurance companies.
Minnesota was widely regarded as running one of the most successful high-risk pools in the country until ObamaCare’s passage banned them.
The state’s pool was successful because it was properly funded, said Ryan Burt, an attorney who served as general counsel for the pool and has worked with others around the country since the early 1990s.
Unlike California’s pool, he said, Minnesota’s had no cap on enrollment, no waiting lists, “affordable premiums” and “very good coverage.”
“Someone who was very ill or had a chronic condition was paying less than 10 percent more than a healthy person,” Burt said.
With low premiums, Minnesota needed a secondary source of funding, which came from an assessment on insurance companies.
“There’s no question they need outside funding. That’s the way they were designed to work,” he said, saying no pool can operate on premiums alone unless it charges patients a large amount.
Federal funding could be another way to provide a “stable” source of funding, he added, but stressed that pools need to offer robust coverage for the people who are enrolled.
“In many cases, they’re very sick and need a lot of help” he said.