Maine Health Care Model Could Save Obamacare Repeal

Advocates tout success of 'invisible' high-risk pool to cover patients with pre-existing conditions

If Republican leaders in the House of Representatives are ever to persuade enough moderates to back a repeal of Obamacare, a program that operated briefly in Maine could prove the key.

The Maine Guarantee Access Reinsurance Association took effect in July 2012 and operated for about 18 months before provisions of the Affordable Care Act shelved state-run high-risk pools across the country in January 2014. In that time, according to advocates, insurance premiums plummeted while a modest fee on insurance customers covered people with expensive medical conditions.

“Setting up one program like this is a lighter lift than setting up 50 … There’s an opportunity here to have stable health markets.”

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A pair of Republican lawmakers last month cited the Maine program as a possible model for reducing health care costs as part of an Obamacare repeal.

Joel Allumbaugh, who served on the board of directors of that program, said the infrastructure is in place to restart the Maine high-risk pool quickly. But he said it would be smart for Congress to create a national high-risk pool, at least for the first few years until states could develop their own.

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“It makes a lot of sense,” he told LifeZette. “Setting up one program like this is a lighter lift than setting up 50 … There’s an opportunity here to have stable health markets.”

The Republicans failed in their first effort to repeal the law in March and, despite some progress, do not yet have the votes to pass a revised bill. One of the biggest obstacles is the thorny question of what to do about people with pre-existing conditions. Under Obamacare, insurance companies must write policies for people regardless of their health and cannot charge them higher rates.

[lz_table title=”Health Spending in America” source=”Kaiser Family Health”]A small number of people account for most health care spending|Cohort,Share of Spending
Top 1%,23%
Top 5%,50%
Top 10%,66%
Top 15%,76%
Top 20%,82%
Top 50%,97%

Critics argue that has driven up the cost of health care for everyone else, but it remains one of the most popular provisions of the Affordable Care Act, and President Donald Trump has insisted that protections remain for people with pre-existing conditions.

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Enter the Maine program.

It was a so-called “invisible” high-risk pool, meaning that customers saw no difference in their insurance. They purchased insurance plans in the regular market and paid the same premiums as healthy customers. But based on the results of a questionnaire that insurance customers filled out, people with certain medical conditions automatically were referred to the pool. In addition, insurance companies had discretion to refer others.

A nonprofit organization set up by the state collected 90 percent of the money paid in premiums by each person referred to the pool. In addition, each insurance customer in the regular market — whether it be an individual plan or a policy through an employer — paid a fee of $4 per month. Allumbaugh said that came out to be about 1 percent of the cost of an average insurance policy.

Program Ran Without Federal Funds
Allumbaugh said this was sufficient to cover the more-expensive customers in the high-risk pool, which did not need the federal funding on which other state high-risk programs relied.

“Funding has always been a huge problem,” he said. “And this was absolutely enough for us.”

[lz_table title=”Pre-Obamacare High-Risk Pools” source=”Kaiser Family Health”]State,Share/individual market
S. Carolina,1%
South Dakota,1%
West Virginia,4.4%

The creation of high-risk pools is a possible way for Republicans to generally deliver on their promise of reducing premiums without forcing massive increases for people with expensive medical problems. House Speaker Paul Ryan (R-Wis.) specifically mentioned the Maine program at a Capitol Hill news conference last week.

White House press secretary Sean Spicer also touted the idea on Monday, although he did not specifically mention the Maine program.

“The bottom line is to try to give the states flexibility to actually try to get that premium down,” he said. “The idea is, actually, they would create a high-risk pool. The idea is actually to create a system where it gets the premium down for them, as well.”

Allumbaugh said rates from Anthem Blue Cross, the state’s dominant insurer, dropped 20 percent after the program took effect. Perhaps more significantly, he said, insurance companies began selling a larger number of different types of plans.

“They were not investing in our insurance market and had not been for some time,” he said. “It had been in a death spiral.”

During a joint appearance on “Meet the Press” on Sunday, Maine’s two senators diverged on the program. Republican Susan Collins said it worked well.

“It had a $5 million surplus when it ended,” she said.

But independent Angus King, who caucuses with the Democrats, said some faced canceled coverage and that costs shot up for customers older than 60. He said a federal program would depend greatly on the details.

“It is worth looking at, but it is not a panacea,” he said.

States Had Different Experiences
Before the Affordable Care Act passed in 2010, 35 states ran high-risk insurance pools, according to the Kaiser Family Foundation. Each operated differently. On average, 2.2 percent of insurance customers in the individual market in those states were in high-risk pools. That is significantly lower than in Maine, which had about 10 percent of the market, Allumbaugh said.

Kaiser suggested that the programs excluded a large number of people who could have been denied health coverage under the pre-Obamacare rules. A study by the think tank pegged the figure at 27 percent of adults younger than 65.

Many programs placed lifetime coverage limits on people in the pools. Most made people with pre-existing conditions wait six to 12 months before they could enroll. A majority also had high deductibles. Some $1 billion a year in government subsidies were needed for the state pools beyond other revenue sources.

“A high-risk pool with minimal barriers to enrollment could cost substantially more,” Kaiser stated on its website.

Robert Graboyes, a senior research fellow and health care scholar at George Mason University’s Mercatus Center, said high-risk pools are of limited value if they simply transfer risk and cost from insurance companies to taxpayers.

[lz_related_box id=”789643″]

“Are we simply moving the deck chairs around?” he said. “I don’t think the answer is obvious.”

Graboyes said the program in Maine had pros and cons.

“Lots of people argue that it’s worked well in Maine,” he said. “Others will argue that it has problems, too.”

Charles Blahous, the J. Fish and Lillian F. Smith Chair at the Mercatus Center, said the debate over pre-existing conditions is a subset of a larger issue with health care. He said Americans love protections for people with illnesses that are expensive to treat and other regulations associated with Obamacare. They just don’t like the taxes and government mandate that people buy insurance, he said.

“Part of the reason is that there wasn’t a real sense of tradeoffs,” he said.

However Congress decides to rearrange the costs and benefits of the health system, Blahous said, lawmakers should be clear with Americans about they would gain and what they would lose.

“It’s important that people buy into whatever those judgments are because they’re going to be angry when the tradeoffs haven’t been presented,” he said.

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