High-Risk Insurance

One goal of the federal health reform law was to ensure that all citizens had access to health insurance.  One group that had previously had difficulty finding coverage are those who sought individual coverage but had serious illnesses that fell under the category of pre-existing conditions.  In 2014, insurers will have to enroll these people and in the mean-time there was a special high-risk pool available to them, subsidized by the government.  In a foreshadowing of the burden to come, the cost of covering these people in the pools has been far higher than the administration projected, according to its own analysis.   (HRIP Report)   This analysis is largely a self-promoting puff piece designed to persuade us all how wonderful the administration is for addressing this terrible problem.  But the rhetoric can’t hide the reality that this group of individuals imposes a very significant cost on the rest of the population.

The Pre-Existing Condition Insurance Plan, as it is known, covers about 50,000 people across the country.  These people have three times as many ER visits, three and a half times more office visits and other outpatient services and eight times more hospital admissions than similar FEHBP enrollees and their average claim cost is twice as high.  Buried in the analysis, after a series of anecdotes about what a difference the program has made in the lives of its enrollees, is the fact that per enrollee costs are two and a half times higher than was projected, which is consistent with the administration’s constant underestimating of the costs of the reform law.  Originally, five billion federal dollars was allocated to subsidize the care of these people.  To serve the number they intended to serve would actually have cost $12.5 billion.   So the program can actually only serve a fraction of the people it was meant to cover.

The real problem is that the whole concept is flawed.  A portion of high-cost individuals endure illnesses over which they had little control–most cancer patients and suffers of genetic illnesses.  These people deserve subsidized insurance.  But the vast majority of high-cost, chronic disease patients bear individual responsibility for the genesis and progression of their illnesses.  It is the behavior of most patients who are overweight, eat poorly, exercise infrequently, smoke, drink and engage in other unhealthy behaviors, that then leads to heart disease, diabetes, high blood pressure, COPD, etc.   What can possibly be seen as fair about asking citizens who try to lead healthy lives, and who therefore don’t develop chronic diseases, to pay for their fellow citizens who are irresponsible?  And taking away the cost consequences of unhealthy behaviors only encourages more of the same.  A fundamental premise of the entire health system needs to be that individuals will bear the full financial consequences of their health behaviors, good or bad.