If anything good has come of the Affordable Care Act, it’s that insurance companies can no longer deny people who have pre-existing conditions from coverage.
Previous to the ACA’s implementation on Jan. 1, 2014, insurance companies could examine a patient’s past health and deny him or her coverage, based on any of 400 different conditions — from chronic heart disease to asthma to even pregnancy.
High-risk pools would provide coverage for people who otherwise could be denied coverage for having a pre-existing condition.
However, forcing companies to provide coverage has also forced them to absorb staggering losses. They’re now leaving the Obamacare public marketplaces en masse. Small insurance companies cannot get a foothold in the industry because only massive carriers with large pools of healthy enrollees can cover the costs of the many people with pre-existing conditions.
“Carriers can no longer screen applications for risk factors — primarily health conditions,” said David A. Reid, founder and CEO of San Francisco-based EaseCentral, an online HR and benefits software platform.
No matter what type of insurance Americans purchase, there is typically a screening process. For example, when you purchase auto insurance, you pay more or can be declined if you have many speeding tickets or a DUI. They decline you or rate you because you are more high-risk (meaning likely to have more claims) than someone with a clean driving record.
“The larger a risk pool, the more ‘credible’ it becomes,” Reid told LifeZette. “By ‘credible,’ I mean the ability to obtain, manage, and predict the number of outcomes within the pool. For example, an actuary can very accurately tell you the number of heart attacks that will occur within a group of 10 million people. The ability to accurately predict this within a group of 10,000 people will be far less accurate.”
Related: ‘I Have Nothing Good to Say About Obamacare’
He added, “The ability to accurately make this prediction is critical when setting premium rates that will support the cost of claims. In a smaller risk pool, the ability to accurately price assumes that you can be selective as to which members join the risk pool. The ACA does not allow this process.”
[lz_bulleted_list title=”High-Risk in U.S.” source=”http://www.aspe.hhs.gov”]Fifty to 129 million non-elderly Americans have some type of pre-existing health condition.[/lz_bulleted_list]
Republican candidate Donald Trump has promised to repeal the Affordable Care Act, which would effectively negate the mandate for companies to cover high-risk individuals. However, Trump announced on his website just the other day that he would work with states to add high-risk pools as an alternative to the ACA mandate.
High-risk pools would provide coverage for people who otherwise could be denied coverage for having pre-existing conditions. These pools would be funded by a combination of state funds, enrollee premiums, and fees on private health insurance carriers.
Trump’s plan would allow people with expensive medical conditions to receive coverage — but it would not require their health care to be subsidized through the premiums of those who are forced to pay for insurance they don’t need. He would also allow tax deductions for premium payments.
Trump’s addition to his health care plan closely mirrors the Republican-led bill HR2653, which would apportion $50 million in seed grants and $2.5 billion for 10 years to help states fund high-risk pools. That’s substantially lower than the $660 billion needed to keep Obamacare afloat in 2016 alone.
The new law would require enrollees to maintain coverage instead of switching back and forth between cheaper plans and gaming the system.
This new plan would alter the ACA insurance market by limiting open enrollment to a one-time opportunity. The new law would require enrollees to maintain coverage instead of switching back and forth between cheaper plans and gaming the system.
The current law allows too many people to purchase insurance right before an expensive procedure and then drop their coverage immediately, cheating insurance companies out of the premiums that could keep them afloat. This was one of the reasons Blue Cross Blue Shield cited for pulling out of the Nebraska marketplace earlier this year.
Prior to the ACA, 35 states offered high-risk pools for individuals not otherwise covered. These pools provided supplemental insurance for people with pre-existing conditions, those who had experienced trade-related job loss, and Medicare-eligible patients who needed additional coverage.
Related: Obamacare in 2017: Higher Prices, Fewer Choices
In the first two years that states implemented these pools, the federal government spent $80 million each year. Then the government awarded $75 million in grants, followed by $49 million two years later. The sum total of all these years of federal spending doesn’t begin to touch the billions in costs from the Affordable Care Act for a single year.
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