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Stay Away From That Pool

Harold Pollack is the Helen Ross Professor of Social Service Administration at the University of Chicago and a Special Correspondent for The Treatment.

There's been more positive attention of-late to the idea of high-risk pools. Some concrete numbers underscore why the idea doesn't deserve it.

Most recently, Ross Douthat responded to a nice Treatment piece in which Jonathan Cohn explained why high-risk pools are an infeasible and inhumane response to the lack of health insurance coverage. Douthat concedes Jonathan's point that the $4 billion yearly budget envisioned by current Republican proposals is far too low, but argues that a properly-funded pool ("$15 or even $20 billion annually") is a "potentially sensible investment."

I like Douthat's work. Like Michael Gerson and some others, Douthat speaks from within a group of substantive conservatives with whom Democrats should work after the current partisan health reform fight. Unfortunately, he is wrong about the pools. Even as a stopgap measure, Republican (and Democratic) high-risk pool proposals don't add up.

Nationwide, almost 200,000 Americans are being served by these programs. This is nowhere close to addressing the need. As Katherine Swartz explained in these pages, even these limited programs present huge fiscal challenges to the states that offer them. Many have capped enrollment in these programs or otherwise imposed punishing fiscal constraints.

If we bagged comprehensive health reform and used high-risk pools to fill the worst gaps, how many people would we need to serve? To gauge the scope of an adequate high-risk pool program, I examined data from the 2005/06 National Health and Nutrition Examination Survey (NHANES). NHANES ranks among the very best available study of American population health. These data provide the basis of key studies examining the health benefits of Medicare and many other matters.

Properly analyzed, these NHANES data capture information corresponding to 47.6 million uninsured Americans. Within this group, I examined how many people have experienced the kinds of serious illness that make them un-insurable within the individual market, or at least makes these men and women plausible candidates for a high-risk pool.

I counted people who reported that they were ever told by a doctor that they have diabetes (1.67 million), cancer (1.26 million), heart attack (538,000), congestive heart failure (504,000), emphysema (456,000), angina (455,000), stroke (440,000), or heart disease (352,000). Accounting for people facing multiple health challenges, about 4.06 million uninsured Americans would be plausible participants in an high-risk pool across the nation. For reasons obvious to Treatment readers, these numbers are likely to grow in future years.

There is an arbitrary element in all such estimates. The Government Accountability Office reports that they performed the same exercise, using different methodologies and different data. They obtained reassuringly similar results, estimating "nearly 4 million additional individuals to be potentially eligible for enrollment in an high-risk pool based on their uninsured status and preexisting health conditions." In other words, an effective national high-risk pools would be about twenty times the size of our current efforts.

These estimates are especially striking when one considers who is left out. I did not count people with severe mental illnesses and substance use disorders, traumatic injury, HIV infection. I did not count people with undiagnosed diabetes and cancer, or those living with various disabilities. According to the NHANES data, more than three million uninsured people were hospitalized in the past year. I didn't count them, either.

Many studies indicate health coverage has the greatest impact on well-being and survival among men and women with chronic cardiovascular diseases and accompanying risk-factors. NHANES data indicate that about nine million uninsured people have diagnosed or undiagnosed hypertension. About 18 million have elevated total serum cholesterol. Almost by definition, a high-risk pool is precisely the wrong vehicle to address preventive care in this large group.

High risk pools are not cheap. In 2008, average annual claims in current programs were about $9,436 per person and is markedly rising with medical inflation. A national high-risk pool serving four million people would require annual expenditures on the order of $40 billion, not the $2 billion currently being spent.

Such a large and costly program would bring inevitable accompanying complications. hgih-risk pools would require intricate phonebook-sized rulebooks akin to the current House and Senate bills. Messy questions inevitably arise regarding the links between hish-risk pools and Medicaid, hgih risk pools and private coverage. How would this program actually be run? Who would be eligible for what medical services by which providers? Republicans envision delegating key decisions to the states. Many state programs are administrative disasters serving the tiny populations now being served. Could states field larger programs reliably and well? What would they do during economic downturns, when the need is greatest precisely when states face the greatest fiscal pressures?

There is another awkward question: Would future high-risk pools provide the same, rather crummy coverage that high-risk pools provide today?

Douthat follows Douglas Holz-Eakin in suggesting that federal expenditures of $15-20 billion could finance this program. That's only true if future high-risk pools were run as ungenerously as the current programs are. GAO reports that 54 percent of current program costs are financed through health insurance premiums. High-risk pool premiums average about $5,800 per year in a population of very sick people who have average household incomes of only $41,000. Not surprisingly given the segregated risk pool, these policies cost high-risk pool participants more than healthy individuals pay within the private markets. Most high-risk pools charge high deductibles and have annual or lifetime expenditure caps.

Absent an individual mandate, expanded high-risk pool programs would likely impose mandatory waiting periods and other measures to prevent patients from gaming things by going uninsured. For more complicated reasons, these same measures may also be important to discourage patient dumping by insurers. It is a feature not a bug of such programs that patients must prove their un-insurability by enduring months or years of real hardship before they can obtain health insurance coverage.

To glimpse the inhuman face of such policies, read this account by Karen Tumulty. Then imagine that you are uninsured, recently diagnosed with lung cancer. Alternatively, imagine that you just suffered a spinal cord injury in a car wreck. As you desperately seek medical care, you accumulate huge bills while you wait six months to enroll in a better-than-nothing HRP program.

(Incidentally, waiting-list horror stories are not unique to high-risk pools. Two years ago, I was canvassing for Barack Obama in a fairly conservative Indiana community. One of the few Obama supporters I met was holding a garage sale for her son-in-law. He was on the liver transplant list, receiving very costly care while he waited out the Medicare waiting period for people receiving federal disability benefits.)

An effective high-risk pool would be more than a small add-on filling a few gaps in the existing insurance system. The program would serve millions of people, spending tens of billions of dollars annually. Yet it would bring no guarantee that participants would truly be protected against crushing financial burdens. In presenting high-risk pools s as a viable alternative to comprehensive reform, Republicans would leave tens of millions of Americans uninsured, including millions of people with serious health conditions we know would be healthier and would probably live longer if we provided them with basic health coverage.

President Obama put things well. "We can debate whether or not we can afford to help them, but we shouldn't pretend somehow that they don't need help." That anyone would seriously present high-risk pools as more than a limited Band-Aid measure is one more reason for Democrats to hold a final vote already.