According to Medicare economists the Federal high risk pool's 5 billion dollars will run out quickly, they estimate they will last the fund into 2011.
Because They Lose A Lot of Money, Making Them The Most Expensive (non-corporate) "Welfare" Programs, High Risk Pools Are Designed To Exclude Many Who Need Care But Who Cannot Afford Individual Rates
But, without the safety valve for the well to do provided by high risk pools, by allowing the most affluent "uninsurable" sick to get individual insurance, the system's brutality would be spread across the income spectrum and would collapse even faster.
Currently, only around 5% all Americans can purchase non-catastrophic individual insurance. Most of them can't, not because of pre-existing conditions. They can't because for those who aren't in a group plan, non-catastrophic insurance is very expensive.
Why are many people wit health conditions going to be disappointed by the high risk pool?
The biggest reason is the reason why so few have individual insurance now, the cost is still going to be very high. Simply being able to buy insurance if you had the money doesn't give you that money.
Basically, like the rescission-protected individual plans in 2014, this program is for (the very few) who can afford individual plans pricing.. That is probably why they allocated so little money to it. They plan to make the hoops so difficult, that they don't expect many of the millions of uninsurable sick who need something like this will qualify.
Medicaid is the real "public option" for the poor and unemployed middle class, after medical bills have taken all their assets.
Once they have shown they have the money to buy individual insurance, (which can be two to four times as expensive as similar group coverage) they will be offered a chance to buy individual healthcare insurance at a price of one to four times that of comparable individual coverage, even with pre-existing conditions - at least until the money, which works out to $2.60 per American, per year, runs out.
In 2014, single people, and families with four members, will be given the opportunity to buy into a state individual coverage exchange which will again cost up to three times comparable individual coverage. There will be separate exchanges in each state for group coverage, which will be much cheaper.
To understand the financing of high risk pools, its important to understand the reasons for the two potential subsidy types, the underlying subsidy (which is typically 50% of the real cost) and the premium subsidy, which will probably be quite limited.
One type of subsidy ALL insured in high risk pools receive, but its invisible. Its basically half of their cost. Thats whats required to make the individual premium only slightly more expensive (less than twice as much) as individual insurance.
The OTHER premium subsidy is what would be required to take it from there, to something marginally affordable, say, $1000 a month. That, would only be available to middle class people who would probably not be able to afford it.
Lets say the policy really costs $4000 a month. But it needs to get to be subsidized down to $1000 a month to be seen as reasonably priced, and so look like a viable way to prevent single payer.
Because of these huge costs of sustaining an unsustainable system, which they REALLY want to keep out of the public eye right now, potential insured but sick individuals will not realize how much it costs to keep their option available to them. But politicians will, and THEY see it as a VERY expensive welfare program, one of the MOST expensive, so they will ask the sick to PROVE not only that they are sick, but also that they could have afforded to have bought individual insurance if they weren't.
The point is, the high risk pool is so expensive that politicians don't want to waste that money on the poor who couldn't afford individual insurance anyway. To them, that is a different problem.
So, the otherwise financially flush sick will clearly be asked to jump through a large number of hoops to qualify for the (quite expensive) pool and any premium subsidies available until the money runs out. The reason being that despite anything Obama or others said, the cost of insuring sick people is substantial and simply insuring more of them does not make a program self sustaining, not by a long shot. But they cannot admit that because to admit is is to admit that the so called reform scheduled for 2014 also cannot work, an admission which would risk losing their four year delay.
After all, healthcare is their issue. They own it. Why kill the goose that laid the golden eggs by solving it. So, they tell people to keep on voting Dem. To hope on.
They tell those folk who really are in serious trouble without single payer that there is hope. If, they say, Democrats win two more elections, individual insurance may be available for them again in 2014. However, they leave out the caveat, the big if. That IF is that most wont be able to afford it. For those above 3xFPL, there will be no help at all. So, individuals will be out of luck unless they pay the market rates at that time, plus up to 300% determined by age. And, for businesses, health insurance will still be priced based on the very specific risk profiles of their employees, with small and medium sized firms getting rate increases if even a single employee gets sick. That wont change in 2014, or later, without a national movement that demands it. People will still lose their jobs when they use healthcare that they will soon be forced to buy.
But, I'm getting off my original subject, the high risk pools.
Note: If you look at how the state high risk pools pre-qualify people, you can get an idea for how they prevent poor people from getting subsidies meant for rich people, and prevent potential profitable customers for insurance companies from evading that route. Its easy to see why. The cost of keeping a failing system afloat is huge.
The state subsidized risk pools are increasingly, to put it mildly, struggling to cover the inherent subsidies - which average half of their cost- a huge amount - As the economy changes, that money to keep a safety net there is getting harder and harder for them to come by. The same thing goes for the Federal government.
Crucial to understanding risk pools in general and their situation is understanding that there are two kinds of subsidies.
As the document (partly reproduced below) "What is a Risk Pool" stresses.. "All state risk pools inherently lose money and need to be subsidized. While the individuals in risk pools pay somewhat higher premiums, roughly 50 percent of overall operating costs need to be subsidized."
WOW. Now has the rosy film lifted from your eyes?
FIFTY PERCENT... Just mull that over for a few minutes.
Or, perhaps, for you public option folks, it might be better stated as "everything (many of you) know is wrong"
That is the unvarnished, apolitical truth.
But, they pay it, they keep the high risk pools going, because to stop would be to either admit the system was inherently impossible for anybody in a huge, growing group of people to EVER beat, (and be forced to switch to single payer) or just give up. (which they have already committed us to doing, it seems, as they claim that anything other than our current path is "politically infeasible".)
If the Democrats, who WON the last election, CAN'T change this, WHO CAN?
Its that huge, 50%, invisible subsidy that keeps the dysfunctional system looking civilized..
Thats the real reason we can't have a public option.
It would also have to be subsidized at a huge amount, for almost everybody, (except the very rich) in order to be affordable.
We REALLY NEED THE SAVINGS OF SINGLE PAYER. WE NEED TO STOP PAYIG 1700 different insurance carriers. We need to end the billing waste-land.
Its a known fact that no for profit insurance can operate at cost, and eliminate the entire billing apparatus, AND take everybody and still pay the currently going rates..
The way single payer systems lower costs is by cutting out the middlemen. THEN and only then can they pay doctors a decent wage..
Which is WHY the WTO, through GATS, is at war with public healthcare systems all around the world, by the way. THEY ARE TOO DAMN EFFICIENT!
Any insurance that takes everybody is either going to have to be very expensive (for example, by charging the older folk three times more, an expense they know most wont be able to afford...) That means both public option (which, if you believe that insurance companies only add 20% overhead.. ha - is basically just a years worth of premium hikes cheaper- not enough) Both the current reform and public option will both be ludicrously inable to attain a goal of affordability.
"Choice"..
"But, I guess I just didn't make the right one, I got the only one I could afford. Oh my."
Thats going to mean its going to fail at the goal of making healthcare affordable..
....
Guess what..We already know that NOW. We've known it ALL ALONG.
But, they need to downplay that now, and keep people who could never even remotely afford it thinking that a public option would be affordable to them, to prevent discussion of single payer-
So, obviously, healthcare insurance of acceptable quality in an environment that shares the playing field with 1700 insurance companies, which have to remain profitable can;t be too good of a deal.
So, those who could never ever be able to afford it need to get some help. But, not enough so they will actually be able to afford it, because those OTHER subsidies are substantial and they would cost an astonomical amount of in REALITY, millions who are not currently insured became insured.
The idea is to create the illusion of choice. Just enough to make it not "impossible".
To do that, build on the prevously well swallowed lie..
As Reagan said, "the magic of the marketplace." Choice.
Premium subsidies are separate from the premium subsidies that only some states provide to the poor..
The expenses must be made, because the illusion is an expensive one to preserve. Prices must not be allowed to fall - something that happens naturally everywhere else with national buying and especially with single payer.. (nations negotiate prices down)
But, here in the USA, we;ve seen that being an ideological purist nation is expensive.
providing decent health care to all in the insurance-centric world of no cost control is impossible. Because it would be REALLY REALLY EXPENSIVE, impossibly so, without the savings of single payer.
Again, they had to lie to prevent our realizing the truth, that the current system is completely doomed. That it can't last, even four more years.
That public option was clearly based on lies.
Can you now see that without the ability to bypass the rampant corruption, without a streamlined program to buy services and drugs via a central authority, "increased competition" won't, can't make unaffordable unprofitable care affordable.
There are 1700 insurance companies in the USA. That situation also adds so much complexity it adds tremendously to costs.
We know from the huge losses that make the existing high risk pools so expensive without the ability to control costs that it could never have worked, nothing they could do would save enough money.
Optional means expensive. Any marketer could tell you that.
Thats how they hide the lack of choice. No marketplace without choice, can mask the problems.
The fact that you have to pay more for acceptable quality, and that most people who need it wont be able to, is a deal killer. That they avoided the imperative that they should have realized after the 2008 election and failed to eliminate the insurance "wasteland" doomed the health reform's chances of success.
Because their "optional" is meant to conceal.
There wont be an acceptable, affordable choice when half the money is wasted.
It wont happen without huge, completely politically infeasible subsidies. That won't ever happen.
Or single payer. That will happen.
The only question is WHO will be the ones to deliver it to us.
Its a trap, can't you see, and thanks to bad leadership, we are falling into it.
............
When asked (about the lack of funding) HHS spokesman Nick Papas sought to downplay concerns about the funding. "We are confident that the resources provided in reform will help provide coverage to Americans in need," he said. (Huffington Post)
This is from "What is a Risk Pool"
Risk pool insurance generally costs more than regular individual insurance, but the premiums are capped by law in each state to protect the individual from exorbitant costs. The caps range from as low as 125 percent of the average for comparable (individual) private coverage in some states, up to 200 percent of the average or more in other states. Most states offer coverage at less than 150 percent of the average.
All state risk pools inherently lose money and need to be subsidized. While the individuals in risk pools pay somewhat higher premiums, roughly 50 percent of overall operating costs need to be subsidized. Subsidy mechanisms also vary from state to state -- some states assess all insurance carriers, HMO's and other insurance providers; others provide an appropriation from state general tax revenue; some states share funding of loss subsidies with the insurance industry using an assessment of insurance carriers and providing them a tax credit for the assessment, or other states have a special funding source, such as a tobacco tax, or a hospital or health care provider surcharge.
It is important to note that risk pools are not created expressly to serve the indigent or poor who cannot afford health insurance.
Risk pools are designed to serve people who would not otherwise have the right to purchase (individual) health insurance protection.
The indigent can access coverage through state medical assistance, Medicaid or similar programs. However, some state risk pools do have a subsidy for lower income, medically uninsurable people.
For information about your state, see:
A KFF issue brief discusses the structure, operation, benefits and challenges of state high-risk pool programs and describes how a temporary national high-risk pool would be created to allow financially qualified but uninsurable individuals to purchase market rate individual insurance if they had applied for and been rejected by individual insurance providers on the basis of their health conditions.