GUEST POST: Trumpcare – Why it’s okay to panic and what is an invisible risk pool.

Dawn Pelej – 5/06/17

(This post is part 1 of a 3 part series.)

Like millions of Americans, I watched Thursday’s vote to repeal the ACA with a gnawing feeling of despair. Not because I was overly worried that the bill, as written, will be enacted. I watched enough School House Rock as a child to know that a very different bill will leave the Senate. What makes me angry is what this vote says about our country. The ACA, while imperfect, was a step towards making health care in this country an inalienable right. Because, how can you pursue life, liberty and happiness if you aren’t able to take care of your basic healthcare needs? What happened yesterday was the solidification of this pervasive Us vs. Them attitude that is taking over this country. The idea that good things happen to good people and that if you are poor or unhealthy or otherwise unable to find health insurance it is obviously in some way your fault and therefore you are less worthy of assistance.

But, the bill passed. And, as such, we need to address what it does and what it doesn’t do. Because like with anything, this isn’t black and white. And there is a lot of shit to cover. So, my plan is to cover a little bit at a time because otherwise it is overwhelming. Who knew healthcare could be so complicated?

(Everyone. Everyone fucking knew.)

Trumpcare hinges on “invisible high risk pools” so we are going to start there. These pools are managed by individual states and subsidized by the state and federal government. This is a new concept for most people because it has only been implemented in certain states on a very small scale. How it works is you have an open market, much like we have today. That market relies on a banded rating (individual premiums change based on factors like gender and age) versus the community rating model our exchanges currently use. Then, the health insurer determines, based on pre-set criteria, if the applicant is ‘high risk’. If the applicant is high risk, they are selected for the state funded pool. The insurance company agrees to take on some of the risk, and the state agrees to cover the rest of the claims. So, essentially, the state is subsidizing health insurance companies as an incentive to take on high risk individuals. In return, the insurance company turns the majority of premiums over to the state. The individual subscriber never knows if they are in the high risk pool or if they have received traditional insurance – that is the ‘invisible’ part. For a great primer on invisible high risk pools, I suggest you check out this article that is pro-invisible pools, and this one that explains just how expensive these pools are.

But, the concept is simple – isolate the people whose healthcare costs the most and direct all the subsidies towards them. It is healthcare triage.
How this differs from the ACA? The ACA also incentivizes insurance companies. They simply do it retrospectively. Knowing that someone who is healthy today isn’t guaranteed a healthy tomorrow, the ACA basically said “Hey insurance company. You take everyone and charge them the same amount. If you have an individual whose claims FAR exceed the premiums collected, we will pay you back.” So, why does the GOP think invisible high risk pools will work when retrospective subsidies didn’t. The answer is simple. Funding. They will lead you to believe that this isn’t a shell game and they are simply taking money that was previously spread out and allowing states to focus in on where the funding is needed.

That is disingenuous at best.

The ACA funded their subsidies through a variety of nominal taxes. However, when it came time to allocate these funds accordingly, the Republican led congress did not fully fund the promised subsidies. What essentially happened was this congress successfully hit their Go Fund Me goal and then didn’t spend the money on healthcare as promised. Because when democrats agree to offset private sector losses, it is a tax payor bail out that flies in the face of capitalism and when the Republicans do it, it is simply a stabilization of the free market. Or some bullshit. But the upshot is, this is not a matter of money shifting buckets to help those with higher health costs. This is the Republicans giving back some of the money they palmed in order to ensure the ACA imploded.

That 87% premium increase you saw? Blame it on congress only paying 13% of their bills. So, it would stand to reason that if they start paying their bills we will all see premiums go down. Can you take credit for fixing a system you intentionally broke? Paul Ryan is about to find out.

Stay tuned for my next post on how exactly these two bills differ in their funding. Or, as I call it, the Reverse Robinhood funding method.

 

Dawn Pelej, an executive in the healthcare industry, has spent over 15 years designing and implementing health insurance plans for small businesses. 

2 comments

  1. Carol I.

    When my husband was diagnosed with cancer (the first time, shortly before policy renewal pre-ACA) his premiums skyrocketed. As self-employed, small business owners already purchasing health insurance on the individual market, we quickly discovered that our only option was the high-risk insurance pool (in the state of Wisconsin). There was nothing ‘invisible’ about it and of course, we had no choice in the matter. Lose everything–our home, our business, and livelihood–or pay an outrageous premium with an annual, sky-high deductible. We were fortunate enough to be able to pay the premium but the cost of care after paying our deductibles year after year, set us back financially. We’re still paying medical debts incurred five years ago!

    Like

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