As President Trump and Republican leaders in the House and Senate grapple with how to make good on their promise to “Repeal and Replace” Obamacare, a key sticking point for any alternative will be the sickest Americans.

According to the Kaiser Family Foundation healthcare think tank, the sickest 10% of Americans account for nearly two-thirds of our nation’s total healthcare expenditures. An even larger number, approximately one quarter of Americans, have pre-existing medical conditions that are severe enough for insurers to deny them coverage, or significantly raise their premiums, should Obamacare’s ban on the practice be repealed.

Republicans will certainly not repeal Obamacare to the point that it would leave ill Americans without affordable healthcare options, something President Trump has explicitly stated. On the other hand, without the individual mandate to force healthy Americans into the insurance pool, guaranteeing coverage for the sickest Americans would drive premiums even further through the roof.

Hence there is a lot of talk about “high risk insurance pools” in a post-Obamacare world. Those who are deemed too ill to purchase insurance on the ordinary market would purchase on this separate market. Premiums would be higher than on the conventional market, but federal government “State Innovation Funds,” perhaps coupled with state government funds, would subsidize some of the costs so that coverage is within reach even for moderate income Americans.

Health and Human Services Secretary Tom Price is reportedly in favor of a compromise policy, where those who maintained continuous coverage for a minimum of 18 months before being afflicted with a medical condition would be guaranteed coverage on the ordinary market. Those who did not would need to purchase coverage from the high-risk pool.

However, the high risk pool concept is not without its own questions. In an article in Health Affairs, Jeanne Lambrew and Ellen Montz, healthcare advisors in the Obama administration, contend that the “Pre-existing Condition Insurance Plan,” a high risk pool established before Obamacare was fully in effect, had a rocky run despite $5 billion in federal funding. The average cost per enrollee during some periods were gapingly uneven between states, as low as $1,600 in North Carolina, and as high as $135,900 in Vermont.

It is unclear how much the federal government and states would contribute to subsidize these pools, and how costs would hit taxpayers and health insurance consumers. Additionally, even with the high risk pools, the sickest Americans would likely see a sizable premium increase over what they enjoy under Obamacare, which prohibits insurers from charging them any more than they do for the healthiest Americans. The political backlash could be very strong.

An alternative idea proposed by some healthcare wonks is called “reinsurance.” Under this structure, high risk patients receive insurance in the ordinary market but insurance companies have their own federal government corporate “insurance” fund to help offset the costs of their most expensive patients. Proponents argue that this structure will cost less, and will even out as more predictable, for both insurers and government funds.

Details of Republicans’ health reform plans are still in the works, and no one knows how the subsequent political tug of war will play out. The one thing that is certain is that health care policy is highly complex, and there are no magical solutions from either side of the political aisle to ensure quality affordable coverage to all, especially to those who need it most.

Stay tuned…    

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