LAWRENCE — When the Affordable Care Act was passed, one of the very first provisions to take effect was the establishment of a pool to cover individuals who had been denied coverage due to pre-existing conditions. A University of Kansas researcher has authored a policy brief showing that while the pool and similar state plans have been effective temporary measures, they are not feasible long-term solutions.
Jean Hall, director of the Institute for Health and Disability Policy Studies, a collaboration between the Center for Research on Learning and the Department of Health Policy and Management at the University of Kansas Medical Center, authored the brief on behalf of the Commonwealth Fund, a private foundation. Janice Moore of the Institute for Health and Disability Policy Studies is co-author.
"Whatever happens with the Affordable Care Act, one of the most common proposals from those opposed to it is 'let's just focus on helping these folks through high-risk pools,'" Hall said. "It's too expensive to run that way. You just can't segregate your sick and healthy populations. The whole purpose of insurance is to pool risk so it's cheaper for everyone."
The Pre-Existing Condition Insurance Plan, known as PCIP, has been in operation for nearly two years. It provides coverage to uninsured individuals until exchanges are established in 2014 and individuals cannot be denied coverage based on pre-existing conditions. Hall's policy brief compares the PCIP to state high-risk pools that existed before passage of the Affordable Care Act.
"Using high-risk pools as an alternative to the insurance market reforms and subsidies in the Affordable Care Act to cover the substantial remaining uninsured population with pre-existing conditions would be extremely expensive and likely unsustainable," Hall and Moore wrote. "In 2014, risk will be broadly pooled in both the expanded Medicaid program for individuals with incomes below 133 percent of poverty ($30,657 for a family of four) and in the state insurance exchanges that will include people with and without health problems."
Both PCIP and state high-risk pools operate at a loss by definition, Hall and Moore wrote. In both cases, insurers collect less in premiums than they pay in claims, requiring a large direct subsidy to keep the programs operational. When insurance companies can no longer deny coverage based on health history, federal subsidies will then be available to help pay for coverage for low-income individuals, broadening the pool and thereby lowering total costs.
Costs for hospitals, doctors and other health providers, insurers and individuals all continually increase when the uninsured seek medical care for which they are not covered. By the same token, many people who need coverage cannot afford to enroll in high-risk pools because of the pools' high premiums and out-of-pocket costs. Hall argues that, due to that unaffordability, placing everyone in a single pool would be more effective. Individuals have been denied coverage for numerous reasons, for everything from high blood pressure, body mass index and hereditary diseases to conditions such as cancer. Nearly one in four Americans have a condition that makes them uninsurable in the commercial market.
"Given the general lack of affordability of high-risk pool coverage at the individual level and the high costs of plan operation, the potential of high-risk pools as a vehicle for coverage expansion remains quite limited," Hall and Moore wrote. "In short, the only way to make insurance affordable for everyone is to make sure that everyone has insurance."
The policy brief will be distributed via the Commonwealth Fund to policy makers and those working in health care throughout the country. Its purpose is to provide information, background and to help guide decisions in health care at federal and state levels.