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High-Risk Pools: An Illusion of Coverage That May Increase Costs for All in the Long Term

Restoring highrisk pools for preexisting conditions will be step backward

Background

The American Health Care Act (AHCA), recently passed by the U.S. House of Representatives, would segregate people with preexisting health conditions from the broader insurance pool and place these potentially costly patients into high-risk pools. Prior to the Affordable Care Act, 35 states had high-risk pools, but these programs were not effective in making insurance affordable or accessible. In a commentary for Annals of Internal Medicine, Commonwealth Fund grantee Jean P. Hall, Ph.D., considers the problems of high-risk pools and why restoring them would be “a huge step backward for American health care policy.” 

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Preexisting Conditions and the Inadequacy of High-Risk Pools

The U.S. Department of Health and Human Services determined that 51 percent of Americans have preexisting conditions that may force them into high-risk pools. These may include serious conditions like cancer, high blood pressure, asthma, or head injuries, but in the pre-Affordable Care Act era some people were even denied coverage for hay fever. One large insurer reported that a third of its applicants were denied coverage because of preexisting conditions.

High-risk pools have historically had very high premiums and deductibles, as well as annual spending limits and lifetime spending caps. Because the AHCA, as currently configured, does not fully fund high-risk pools, it is expected to have similarly stringent coverage limits—if not more stringent. “Higher premiums, deductibles, and out-of-pocket costs allowed under the AHCA will make high-risk pool coverage unaffordable for many people, cause enrollees to forgo needed care, and ultimately result in worse outcomes,” Hall writes.

Conclusions

High-risk pools do not work well because they concentrate costs in a small risk pool and require a level of subsidies that policymakers are likely unwilling to fund. Instead, Hall says, Congress should fund a robust national reinsurance program to reduce premiums in the marketplaces. “Insurance works best when it spreads costs across a large pool of people, limiting the effects of those with higher costs on overall rates,” she concludes.

Publication Details

Publication Date: May 30, 2017
Contact: Mary Mahon, Vice President, Public Information, The Commonwealth Fund
Email: mm@cmwf.org
Summary Writer: Deborah Lorber
Citation: J. P. Hall, “High-Risk Pools: An Illusion of Coverage That May Increase Costs for All in the Long Term,” Annals of Internal Medicine, published online May 23, 2017.

Experts

Professor, University of Kansas Medical Center