Obamacare High-Risk Pools Are Proving to be Ineffective

The pathetically weak argument in support of Obamacare’s ability to reduce the deficit can not be ridiculed enough.  From the moment Obama made this announcement, reports emerged discrediting his words.  Lately, even left-wing sources have refuted this claim in a desperate effort to legitimize other aspects of the bill.  Though this conflicting research is proof enough to refute these claims, the most telling repudiations are the direct results of Obamacare legislation that has already been implemented.

Yesterday, we heard that Obama made the decision to ressurrect the idea of implementing “death panels” into the federal health care system.  While the idea itself is somewhat questionable, in a much more practical sense the decision to mandate the use of end-of-life counseling is highly contradictory in terms of deficit reduction.  Through new regulation, Obama ensures the use of death panels by providing monetary incentives to doctors who provide end-of-life discussion.  In terms of cost-savings, bribing doctors to participate in a controversial medical practice is both ethically questionable and contrary to promises of fiscal responsibility.

While the idea of deficit reduction is difficult to reconcile with this new regulatory scheme, new information regarding Obamacare’s high risk pool program is even more jaw dropping in light of deficit reduction claims.  This federal health care plan is a central aspect of Obamacare’s agenda, and it establishes federal funding for individuals making use of Medicare funds after being rejected by insurance companies due to pre-existing conditions.  Initially, Congress allocated $5 billion to fund the program, which was estimated to be just enough money to cover expenses.  According to the CBO:

In its analysis of PPACA released in March, the Congressional Budget Office (CBO) estimated that all of the $5 billion appropriated for the program would be spent. CBO concluded that the new pools would be more attractive than the high-risk pools that now exist in many states, both because the premium would be lower (state high-risk pools typically charge a premium between 125 percent and 200 percent of the standard premium) and because the new pools would provide immediate coverage for enrollees’ preexisting medical conditions (current high-risk pools generally do not do so). 

 However, the results of the program this year prove several important aspects of this analysis wrong.  For one, the CBO makes an important distinction that high risk pools already exist.  While there are some problems with the way they are operated, these problems do not necessarily mandate that the government should attempt to completely take over the market.  Also, the CBO seems to believe that $5 billion will be an appropriate amount of money to pay for this government takeover.  Unfortunately, this belief is unfounded in light of irresponsible estimates of enrollment produced by the federal government:

In the spring, the Medicare program’s chief actuary predicted that 375,000 people would sign up for the pool plans by the end of the year. Early last month, the Health and Human Services Department reported that just 8,000 people had enrolled. HHS officials declined to provide an update, although they collect such figures monthly, because they have decided to report them on a quarterly basis.

“Like the rest of the country, we thought we’d have pretty much a stampede. That obviously hasn’t materialized,” said Michael Keough, executive director of North Carolina’s plan. With nearly 700 participants, it is among the nation’s largest so far, but it has one-third of the people expected by now.

This poor estimate represents a deficit of 367,000 participants.  The expected “stampede” likely did not materialize because the two CBO predictions of the program are not accurate.  Apparently the immediate coverage provided by the federal high-risk pool is not a large enough draw to provide a massive surge of enrollment, and this result is likely the side-effect of a failure for the program to live up to the CBO prediction that federal premiums would be lower than private premiums.  The story of Wil Wilson underlines this misconception:

Will Wilson, 57, of Chicago said he is “really, really, really, really discouraged.” After he received an AIDS diagnosis in 2002, he discovered that his insurance at the time paid only $1,500 for medicine each year. His AIDS drugs cost $3,000 a month. He ended up in bankruptcy.Wilson, a tourist trolley guide, now gets help from the federal AIDS Drug Assistance Program, but he has no coverage for other kinds of care.

Wilson became an activist for health reform, circulating petitions, going to demonstrations. And the day after the president signed the bill into law, a Chicago Sun-Times column quoted him as saying, “I’ve had a grin on my face all day” at the prospect of the high-risk pool he could join. That was before the rates were announced in July and Wilson discovered that the premium – nearly $600 a month – “was almost as much as my rent. It was like, no way! I was floored.”

And here’s the kicker that really throws a monkey into the deficit reduction baloney:

In the meantime, in at least a few states, claims for medical care covered by the “high-risk pools” are proving very costly, and it is an open question whether the $5 billion allotted by Congress to start up the plans will be sufficient.

The federal government is finding out first hand how difficult it is to provide affordable, quality medical care.  Instead of understanding that a simple reform of insurance practices would have solved these problems, the government felt they would be able to do a better job of providing coverage than companies with decades of expertise in the field.  Obama thought he could just take over the market, provide significantly lower premiums, reduce the deficit, and maintain the quality of our healthcare system.  This delusional fantasy is leading our country down the road to financial ruin, and any assertion of deficit reduction is simply ignorant.



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