The Pre-Existing Conditions Scam
The House vote on the GOP's Obamacare repeal bill vote is down to the wire, with dozens of Republicans waffling as "undecideds." What's the hold-up? Ninety-six percent of people who have to buy their own insurance stand to benefit from this bill, which will likely drive down premiums by double digits.
The remaining 4 percent -- those with pre-existing conditions -- will be protected by a federal fund to subsidize their insurance costs. They won't get priced out of the market, because the fund will pay the lion's share of their premiums.
But some Republicans are running scared. Although the bill solves two problems -- lowering premiums and protecting people with pre-existing conditions -- these fence sitters are worried about something else -- getting re-elected.
As a member of the New York delegation put it, the issue is "optics." They're cowed by the media's false reports that the GOP is abandoning people with pre-existing conditions.
In fact, no one wants to do that. There is a consensus that people with pre-existing conditions should be able to get insurance. The issue is who pays the hefty price tag. Obamacare forced healthy buyers in the individual market to foot the entire bill. That's why their premiums have doubled since the law went into effect.
The new House bill sets up a fairer way: a $130 billion pot of money, federally funded, to pay for people with pre-existing conditions. The entire nation chips in, not just people stuck in the individual market.
Under Obamacare, the healthy and the chronically ill paid the same premiums. It's called community pricing. Healthy people would never meet their sky-high deductibles. Instead the premiums extorted from them would be used to cover huge medical bills for the chronically ill, who consume 10 times as much medical care.
In fact, Aetna CEO Mark Bertolini reports that less than 5 percent of Obamacare enrollees consume over half of the health care.
Most healthy people saw that being charged the same as these sick people was fundamentally unfair and refused to sign up.
The GOP bill offers a solution. States can choose to get a waiver from Obamacare's community pricing rule, so that insurers can sell to healthy people at a far lower cost. States that get the waiver should see double-digit premium decreases for the healthy almost immediately. Obamacare's community pricing was the single biggest reason premiums have doubled since 2013, according to actuarial consultants at Milliman.
Naysayers claim the federal fund to subsidize people with pre-existing conditions won't be adequate. Nonsense.
How many people will need help? Not as many as Democrats claim. Before Obamacare, 250,000 people a year with pre-existing conditions were denied coverage for health reasons by major insurers. In 2010, when the ACA established a temporary program for people not being served by state high-risk programs, another 115,000 got help. Adding the two figures together, count on 365,000 people to need help paying for their premiums because of their medical histories. To be safe, call it 400,000.
Based on the $32,000 per person the ACA's temporary program spent insuring people with pre-existing conditions, the federal fund will need $128 billion a year. So the $130 billion a year the GOP bill provides is likely adequate.
New York, New Jersey and several other states ruined their individual insurance markets two decades ago by imposing community pricing, which drove out healthy buyers. Lawmakers in those states would be smart to wise up, get a waiver and offer low prices to most buyers. But don't count on it, at least not in New York.
But several states -- Alaska, Minnesota, Idaho and Oklahoma among them -- have already acted, without waiting for Congress. They used state funds to help cover the sickest people, and relieve pressure on healthy premium payers. Alaska averted a 40 percent premium hike that way last year.
To summarize: The funding is adequate and the approach works. Spineless politicians whining about "optics" should look in the mirror. What's they're really missing is backbone.
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