They say the definition of insanity is doing the same thing over and over again and expecting a different result. If that’s so, then we have a textbook case in the Trump transition team’s proposed “replacement” of the Affordable Care Act (ACA), posted recently on their website.
They provide almost no policy detail, but the top proposals are such tired retreads of failed ideas that we can quickly assess them.
The dumb idea that won’t go away
Anyone who suggests that allowing the sale of insurance across state lines is going to “create a dynamic market” doesn’t know much about health insurance. You don’t need to take my word for it. Just ask the conservative, free market proponents at the Galen Institute, which wrote back in February: “Any candidate that suggests such a scheme only shows how unsophisticated he and his advisers are when it comes to understanding how the insurance markets really work––or could work.”
At Georgetown, we did a study of states that had enacted across state line legislation on their own, to find out if those laws had, in fact, provided consumers with more affordable choices, as promised. The unequivocal answer? No. Not even close.
Even if across state line sales did work as intended, the outcome would worsen access to coverage for people with pre-existing conditions – people that Trump during his campaign promised to protect. Once you repeal the ACA, people with pre-existing conditions will lose the federal protections guaranteeing them access to coverage at non-discriminatory premium rates. Just as before the ACA, the only protections will be at the state level. But if you allow insurers to choose to operate by the rules of the least regulatory state, those with pre-existing conditions will be left without access to affordable coverage.
Seriously? High-Risk Pools?
Good grief, I can’t believe anyone still thinks returning to the days of high-risk pools is a good idea. They didn’t work before the ACA and they won’t work after it is repealed. Let’s review: Before the ACA, 35 states had high-risk pools. They were basically health insurance ghettos for people with pre-existing conditions – and expensive, poor quality ghettos at that. On the eve of the ACA market reforms, they enrolled 226,615 people, a tiny fraction of those potentially eligible. Here’s why:
1) Coverage was unaffordable. Nearly all of the high-risk pools had to set premiums at higher-than-market rates. Even though the high-risk pools were subsidized, those subsidies couldn’t cover the actual costs of this high-need population.
2) Coverage didn’t cover the care needed. To keep costs in check, nearly all the high-risk pools imposed pre-existing condition exclusions, meaning that even if you could afford the premiums, the insurer could refuse to cover any costs for your pre-existing condition for as many as 12 months.
3) Coverage was limited. All but two of the pools imposed lifetime dollar limits on coverage, usually between $1-2 million. Others imposed annual dollar limits on coverage, or limits on specific items or services, such a prescription drugs or rehabilitative services.
4) High out-of-pocket costs. Many of the pools offered plans with high deductibles, requiring people to spend considerable amounts out-of-pocket before coverage kicked in.
Even with these efforts to constrain costs, many states were forced to cap or close enrollment in their high risk pools in order to limit losses. And all of them experienced losses, even though they received billions in government subsidies. In 2011, net losses for the 35 state high-risk pools were over $1.2 billion.
There is no question that high-risk pools provided a source of coverage to a set of very vulnerable, high-need people in the days before the ACA, when the traditional insurance market was closed to them. However, they left millions of people out, the coverage was unaffordable and inadequate, and they were not cost-effective. Significant government subsidies would be needed – far more than some of the proponents of “replacing” the ACA have proposed – to ensure that all eligible for such a pool would be able to enroll in affordable coverage that meets their health care needs.
Giving the Rich a Helping Hand
The third part of the transition team’s replace plan includes use of Health Savings Accounts (HSAs). Of course, HSAs have been around for a long time, and are available to people buying on the health insurance marketplaces, but presumably the Trump team intends to expand them, perhaps as proposed by Speaker Paul Ryan in his health reform plan.
HSAs are accounts in which people with a high-deductible health plan can deposit money to spend on out-of-pocket medical expenses. They have been demonstrated to primarily benefit high-income earners with disposable income, and are often used by wealthy people as tax shelters. No other savings vehicle in the federal tax code allows your money to go in tax free, build up tax free and it come out tax free if withdrawn for qualified medical expenses.
If the federal government is going to subsidize health insurance for people, shouldn’t we focus those taxpayer dollars on low- and moderate income working families who really need the help?
The American people voted for change in this election. Unfortunately, when it comes to health care, the Trump transition team is offering them a set of tired, old, and failed policies.
Sabrina Corlette is a Research Professor at the Center on Health Insurance Reforms (CHIR) at Georgetown University’s Health Policy Institute.