The first major feature of Obama Care is being launched, high-risk health insurance pools, which cover citizens previously denied insurance due to prior conditions.
Congratulations, Republicans!
Yes, Republicans, because expansion of high-risk health insurance pools was the central element of the GOP’s common-sense alternative to the grandiosity of Obama Care, aka the Affordable Care Act (ACA).
And the emphasis should be on “expansion,” not “launch.” Long before Obama took office, thirty-four states, including Connecticut and New Hampshire, already had high-risk pools covering about 200,000 people nationwide. There are 35 today. In 2002 and again in 2006, the Bush Administration gave increased support and federal funding to these state HR pools.
Under ACA, a parallel set of 51 state-based “federal” HR pools with slightly different features are being launched.
HR pools have simple elements which recommend them strongly. They have integrity: most require proof of denial before enrollment.
They demand individual responsibility: they are not free. In 2008, enrollees in the state programs paid premiums covering slightly more than half the $2 billion cost of their care, although many states offer subsidies for poor enrollees. The new federal program charges much lower premiums — the same premium as charged healthy individuals in the regular health insurance market. Most of the remaining cost of the state programs is covered by assessments on health insurers; for the federal pools, the rest is paid by the federal government.
And, by segregating the chronically ill, the HR pools enable the regular health insurance markets to function properly. The purpose of insurance is to protect people from risk. If they are already sick, there’s no risk and there is no function for insurance. In many ways, “high risk” is a misnomer; the enrollees are beyond risk; they simply need care.
So, with all these positive attributes, it is no wonder that Obama Care’s first action is to launch “federal” HR pools, which are expected to cover an additional 200,000 chronically ill individuals, according to U.S. Health and Human Services spokesman Keith Maley.
But it is an absolute marvel that they are “temporary” — that, in three years, ACA terminates them along with the 35 state HR pools.
Has any of the 15 other states employed a better system?
Obama Care supporters think so, because, after scrapping the HR pools, ACA will move to a grand-scale version of the one-size-fits-all approach that several states (including, for the most part, the other four New England states) employ: “guaranteed issue” requiring health insurers to sell policies to everyone (deny no one) and “community rating” where everyone is charged a uniform premium regardless of individual risk characteristics.
Unfortunately, “guaranteed-issue/community rating” (“GI/CR”) has problems, the foremost of which is that it invites “free riders,” i.e. healthy people who decide not to buy health insurance until they aren’t healthy anymore, at which point, by law, insurers must sell them a policy — at the same price charged healthy people. No insurance system, private or public, can really work this way.
President Obama, recognizing the troublesome “free riders,” decided upon a summary approach: to outlaw them. He is relying upon the totalitarian “individual mandate” forcing everyone to buy health insurance… or else. But there’s a difference between outlawing a problem and solving it.
Are the “free riders” bad people? Some, but not all. Though much maligned by President Obama, many so-called “free riders” are actually people who object to one-size-fits-all systems for very valid reasons: (1) inexplicable, exorbitant and hidden costs and (2) lack of incentives. They resent paying more and more for something whose costs they cannot discern nor, in any way, control, and they resent paying for “free loaders,” i.e. people who live unhealthy life styles and rack up humongous health care bills.
Obama has been vilifying “free riders” while preparing to enable “free loaders.”
There may be fewer “free loaders” and less “free loading” than imagined, but under GI/CR and Obama Care, everything is opaque and there are no incentives to reward healthy behavior.
Americans believe in transparency, positive incentives and individual responsibility. These are the most fundamental elements of the American free enterprise system, and they are completely lacking under ACA.
That is why a clear majority of Americans still oppose Obama Care in every poll still tracking the issue — and why voters in Missouri just passed a ballot proposal (“Proposition C”) opposing the “individual mandate.”
And that is why Republicans will continue to oppose ACA – except for its new “temporary” federal HR pools, which should be made permanent. And the 35 preexisting state HR pools, which should be extended.
The rest of Obama Care? New Englanders should watch the region’s four GI/CR states, primarily Massachusetts which now has the highest health care costs in the nation, before deciding whether the rest of ACA should be implemented.
Red Jahncke is president of the Townsend Group, a Greenwich-based management-consulting firm. He can be reached at RTJahncke@Gmail.com