ObamaCare Tax Tips

High-Risk Pools and the Reviving on the AHCA in State-Level Form

House Republicans are considering high-risk pools (sick pools) as part of their ObamaCare replacement revival; we explain what “high-risk pools” mean.

An Introduction to the MacArthur Amendment

First off, the reason we are talking about this is because “the MacArthur Amendment” is essentially calling for the AHCA (AKA TrumpCare 1.0) to be revived, but this time with state-level waivers that let states offer less robust plans and implement a new type of “invisible risk-pool”.

For those who don’t want to read on, the main problem here is funding. Funding. Funding.

That is funding regarding taxpayers footing the bill, funding for the risk-pool, and funding regarding Republicans using a bunch of really clever tricks to starve progressive states of their funding. Funding. Funding.

Meanwhile, the secondary problem is also pretty important, that is that people in Republican led states (that end up embracing the waivers) are about to see more junk insurance and higher premiums for the sick and elderly.

With that said, despite any gripes one might have with the new Amendment, this new TrumpCare or RyanCare 2.0 (or whatever we are supposed to call it) might be slightly better in theory than the actual AHCA.

The AHCA tried to have a one-size-fits-all federal solution paired with tax breaks for industry and the wealthy, and the grand result was a projected 52 million uninsured.

This amendment doesn’t change that part, but gives states more options to trim down benefits on a state level instead of demanding it at a federal level, and that is a plus.

It means that it allows a little bit more room for state-based solutions for public options, single payer-like systems, and Medicaid expansion, like the ACA allows for.

In words, it means progressive states can save their healthcare while conservative states start ousting the sick and elderly. So, like with Medicaid expansion, it is good news/ bad news depending on your frame of reference.

This is, of course, unless of course the final bill says, “but were are going to starve funding of progressive states,” in fine print or, “we are going to take away 1332 and 1115 options which states already had under ObamaCare.”

With that said, the topic here is risk pools and not every complication with reviving the ObamaCare repeal and replace bill that didn’t pass the House.

About Risk Pools, ObamaCare’s Risk Pool, and Ryan’s “Invisible Risk Pool”

To talk about risk pools, we have first to note that “high-risk pool” (AKA “sick pool”) is a rather ambiguous term that can mean a variety of things and work in several ways.

Luckily for those who don’t want to learn about every way a risk pool could work, the current idea being considered is specific.

The risk pool being proposed is called an “invisible risk pool.”

This is essentially what Ryan had suggested for RyanCare in the first place, but wasn’t included in the AHCA. In words, Republicans are still trying to push their old Better Way plan through.

The Federal Invisible Risk Sharing Program (the Invisible Risk Pool) would establish a $15 billion fund to help offset insurers’ expenses for patients with high-cost health conditions, similar to the reinsurance program created by the Affordable Care Act, or ACA. – Center for American Progress

Of course, the problem is. Funding. Funding. Funding.

High-risk pools have traditionally been underfunded by states and the federal government, resulting in sub-standard coverage and high costs for those who need insurance the most. This was true before ObamaCare, in the year ObamaCare started in 2014 (it had called for a transitional risk pool), and will likely be true again.

With that said, this type of risk pool isn’t the only option.

Risk Pools in General

Since the bill is still in talks, it’ll help to do a primer on risk pools in general. These aren’t being considered right now, but they could be so let’s take a minute to discuss them.

Risk pools don’t just come in one type. They span a few different types. So, although the new risk pool seems specific, there are a few different ways it this could work.

Instead of explaining each of the ways it can work, I’ll let the Daily Signal article “Understanding High-Risk Pools as Part of Obamacare Replacement” explain.

The idea is:

  • Either the government funds the pool or insurers do collectively,
  • If the government runs the pool, it is either state, federal, or mixed,
  • If the private market runs it, either there is a literal pool, or it is more like risk adjustment (where the cost burden of the sickest patients is shared; to help offset premiums; Like an insurance for insurers), and
  • Either the sick pool is part of another insurance type (like Medicaid or private) or it is its own thing.

If we go with a separate insurance type and taxpayer funding, the question becomes “why are we doing this instead of expanding Medicaid?”

Meanwhile, the private market-based options have their own compilations.

All the variations have odd sticking points related to cost for consumers, problems with funding (in the case of tax dollars), and problems with compelling insurers to create fair pools (in cases where the private insurance do the pools).

Nothing is simple here, especially if the pools are erected at a state level with 50 different solutions. Every type has some serious complications that make the focus on them odd. They are a way to avoid a public option, single payer, and Medicaid expansion without tossing the sick and poor out on the street.

The ACA used high-risk pools in its first year as part of its transition, and they burned through their funding very quickly.

Likewise, risk pools were used in the past before the ACA, and it was a bit like COBRA (where the premium was so insanely high that the poorest needed their premium subsidized by the state anyway).

Herding a bunch of sick people into a single state-based insurance with a premium is strange morally and ethically. It’s better than the streets, but not exactly a feel good thing. There are also a host of complications economically.

We at ObamaCare Facts strongly prefer state-level solutions. Even though this can hurt some states and give other states funding issues, it eliminates the one-size-fits-all approach that tries to please the most liberal and most conservative Americans at once. This is impossible to do.

With that noted, any risk pool raises a cause for alarm. High-risk pools have traditionally been underfunded by states and the federal government, resulting in sub-standard coverage and high costs for those who need insurance the most.

We at ObamaCare Facts, more than supporting the concept of State-level legislation, support smart healthcare solutions. It is hard to see how “risk-pool” beats expanding access to coverage that already exists. Do we really need yet another government program when we could be consolidating via a public option or single payer? We don’t think so, but of course, that is why we want the freedom to be able to fix the problem at a state level.

TIP: See Some Republicans Think They May Have A Health Care Deal by the Huffington Post for more.

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