The Wall Street Journal
May 2, 2017
Here’s how the House health reform will cover high-risk patients.
House conservatives rebelled over the original version of the American Health Care Act, which only partially deregulated insurance markets. The bill maintained the rule known as guaranteed issue, which requires insurers to cover all applicants regardless of medical history. It also relaxed community rating, which limits how much premiums can vary among beneficiaries.
The media and the left thus claim that conservatives want to allow insurers to charge sick people more, and some conservatives agree, which spooks the moderates. But the latest compromise between conservatives and centrists doesn’t repeal guaranteed issue or community rating. It keeps these regulations as the default baseline, and states could apply for a federal waiver if they want to pursue other regulatory relief.
But the waivers aren’t a license to leave cancer survivors without insurance. States can only receive a waiver if they avail themselves of the bill’s $100 billion fund to set up high-risk pools. These state-based programs, which were run in 35 states until they were pre-empted by ObamaCare, subsidize coverage for older and sicker patients. This helps these individuals and keeps coverage cheaper for everyone else.
Why might a Governor prefer such an arrangement over the ObamaCare status quo? Well, the law’s price controls are a raw deal for most consumers, which leads to a cycle of rising premiums and falling enrollment. Average premiums rose by 40% or more in 11 states this year, and insurance markets in states like Tennessee, Kentucky and Minnesota are in crisis.
Community rating and guaranteed issue also punish the sick by degrading quality. When insurers can profit by being the best plan for, say, cancer or diabetes, they invest in such care. When both the healthy and sick pay the same rates, the incentive is to load up on healthier people and discourage people with expensive ailments or chronic conditions from enrolling by using higher copays, narrow provider networks or tiered prescription drug formularies.
High-risk pools are a fairer and more equitable solution to this social problem, rather than hiding the cost by forcing other people to pay premiums that are artificially higher than the value of the product. The waivers also include protections for people who renew continuous coverage from major premium increases if they become ill.
Liberals are inflating the pre-existing conditions panic with images of patients pushed out to sea on ice floes, but the GOP plan will ensure everyone can get the care they need.