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Why High-Risk Pools Are Concerning

Although President Donald Trump’s health care plan to repeal and replace Obamacare has dominated the news circuit in recent days, there are still a lot of unknowns about how the American Health Care Act (AHCA) will impact Americans’ health coverage. For example, should the bill pass in the Senate, what will qualify a pre-existing condition? In short, a lot of things, including acne, pregnancy, and menstrual irregularities. And if you have a qualifying pre-existing condition and can’t afford your treatment — a likely scenario since a new amendment in the AHCA bill could allow insurers to charge more to those who need ongoing care to treat these conditions — there's another concerning question on a lot of people's minds right now: What exactly are high-risk pools?

Technically, insurance providers in any state can’t deny coverage to someone with costly medical needs under the most recent version of the GOP’s health care plan. But, what states can do is apply for a waiver — laid out under the MacArthur Amendment — to opt out of Obamacare protections, such as the current regulation that bars insurance providers from charging higher rates to those with pre-existing conditions. If that happens in your state and your health care plan becomes too expensive to afford, that’s where high-risk pools get involved.

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As NPR explained it, the idea of high-risk pools is to lower everyone’s premiums by putting people with pre-existing conditions in one category, in order to lower insurance costs under a "group rate" — at least, that's how it's supposed to work in theory. Those deemed “high-risk” might have to pay higher rates for health insurance, but federal funding is meant to be used to offset this cost. But, as CNN reported, historically, high-risk pools have not been as successful as intended. "They were typically severely underfunded, charged participants high premiums, excluded coverage of pre-existing conditions initially and had waiting lists for enrollment," CNN reported.

And history may repeat itself — because with only an additional $8 billion over five years to fund these high-risk pools, many are skeptical that it will be enough. "You just aren't going to cover many people with $8 billion over five years," Karen Pollitz, senior fellow at the Kaiser Family Foundation, told CNN. "These are expensive, expensive cases."

Prior to Obamacare, 35 states operated high-risk pools and combined enrollment reached more than 226,000 by the end of 2011. In the same year, according to a report by the Kaiser Family Foundation, participants claimed more $2.6 billion in medical expenses and their premiums were only able to cover about half of the bill, leaving the states to pay the $1.2 billion balance — or about $5,510 per enrollee — with the help of tax credits and general state revenue.

"[High-risk pools] were not a panacea for Americans with pre-existing medical conditions," Andrew W. Gurman, president of the American Medical Association, told CNN. "The history of high-risk pools demonstrates that Americans with pre-existing conditions will be stuck in second-class health care coverage — if they are able to obtain coverage at all."

In theory, the idea of high-risk pools seems very simple. But the problems with them have historically boiled down to a severe lack of funds, leaving the nation's sickest with costly medical bills and much higher premiums. If history has taught us anything, hopefully the Senate will take a hard look at the policies behind these pools before anything official happens.