In the Shallow End of the (High-Risk) Pool

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As Supreme Court Mulls Health Care Act, Florida Emergency Room Tends To All In Need
Paul Ryan wants sick people in their own insurance ghetto. Photo: Joe Raedle/2012 Getty Images

One of the most popular parts of the Affordable Care Act is its prohibition on discrimination against people with preexisting conditions. That basically means you can’t deny health insurance to sick people, and you cannot charge them higher premiums (though you can get at the same problem by charging old people higher premiums, just not as high as before the ACA).

This provision is also the source of most of the ACA’s complexity, and of all the other stuff people complain about. The ACA is indeed aimed at "redistribution" of costs from sick people to healthy people. So, for that matter, is all insurance: Being healthy is kind of its own reward.

In any event, an awful lot of the people who say they hate Obamacare would hate it even more if that aspect of Obamacare was abandoned. So Republicans get asked about it a lot. 

And nine-and-a-half times out of ten they respond just as House Speaker Paul Ryan did:

U.S. House of Representatives Speaker Paul Ryan called on Wednesday for an end to Obamacare’s financial protections for people with serious medical conditions, saying these consumers should be placed in state high-risk pools.

As Mother Jones’s Kevin Drum somewhat impatiently pointed out, this is an old, bad idea. It’s what states did to paper over the problem of preexisting conditions before the ACA. And it’s never made much sense:

 It costs the same to treat sick people whether you do it through Obamacare or through a high-risk pool — and it doesn’t matter whether you fund it via taxes for Obamacare or taxes for something else. However, there are some differences:

  • Handling everyone through a single system is more efficient and more convenient.
  • High-risk pools have a lousy history. They just don’t work.
  • Implementing them at the state level guarantees a race to the bottom, since no state wants to attract lots of sick people into its program.
  • Ryan’s promise to fund high-risk pools is empty. He will never support the taxes it would take to do it properly, and he knows it.

In the end, if you are willing to spend the money to subsidize high-risk pools so heavily that the discrimination really does go away, you should be willing to use the same money to reduce insurance costs for people in need in the context of a single risk pool. But, as Kevin says, proponents of the ghettoized pools have no intention of spending that kind of money. As with a shocking number of other domestic priorities, Republicans generally want to dump the problem on the states and maybe give them a block grant that would mysteriously become the prime target of budget cuts before you know it. After all, it’s a “state responsibility,” right?

Like I said, it’s a merry-go-round.

In the Shallow End of the (High-Risk) Pool