Been there. Done that. Tried it. It failed. So let’s do it again!
To paraphrase Einstein’s famous quote, stupidity is doing the same thing over and over again and expecting a different result.
In surfacing the concept of “high risk pools”, Congress is reusing an idea that has failed repeatedly in the past when used with either auto insurance or healthcare.
The idea of the high risk pool is to group people who are very ill and provide a special pool of funding for their insurance. With government subsidy, the pool would in principle provide “affordable” rates for these people.
The ACA in fact used a high risk pool for people with pre-existing conditions (PCIP) during the transition period between 2010 and 2014. It produced the result that high risk pools have always produced:
- Excessive costs to consumers
- Cost overruns requiring bailouts
- Fewer people being insured.
As Kaiser comments:
PCIP was operational in all 50 states by the fall of 2010. By late 2012, just over 100,000 individuals were enrolled and program expenses had consumed nearly half of the $5 billion appropriation. For the final 12-month period for which PCIP expense data were reported, net losses for the program were over $2 billion. (1)
State health insurance pools restricted access to only a small fraction of those needing coverage, and even then require huge bailouts from taxpayers.
New Jersey tried a high risk pool for auto insurance. It failed to prevent rates from soaring, and went bankrupt.
My interpretation: Basically, what Congress is doing in the AHCA bill is “passing the buck” either to future Congresses or to taxpayers.
- Karen Politz, “High-Risk Pools For Uninsurable Individuals.” Updated 22 February 2017. http://kff.org/health-reform/issue-brief/high-risk-pools-for-uninsurable-individuals/