The most important concept in health finance is simple; sick people are expensive to cover. Let’s keep that in mind for the rest of the post.
The Independent Journalism Review captures the reaction of Rep. Mark Meadows (R-NC), head of the House Freedom Caucus, to the CBO score.
When reporters pointed out the portion of the CBO report saying individuals with preexisting conditions in waiver states would be charged higher premiums and could even be priced out of the insurance market — destabilizing markets in those states — under AHCA, Meadows seemed surprised.
“Well, that’s not what I read,” Meadows said, putting on his reading glasses and peering at the paragraph on the phone of a nearby reporter.
The CBO predicted:
“…the waivers in those states would have another effect: Community-rated premiums would rise over time, and people who are less healthy (including those with preexisting or newly acquired medical conditions) would ultimately be unable to purchase comprehensive non-group health insurance at premiums comparable to those under current law, if they could purchase it at all — despite the additional funding that would be available under H.R. 1628 to help reduce premiums.”
…..
The CBO analysis was likewise adamant that AHCA’s current high-risk pool funding isn’t enough to cover sick people if states use the mandate waivers.After reading the paragraph, Meadows told reporters he would go through the CBO analysis more thoroughly and run the numbers, adding he would work to make sure the high-risk pools are properly funded.
Meadows, suddenly emotional, choked back tears and said, “Listen, I lost my sister to breast cancer. I lost my dad to lung cancer. If anybody is sensitive to preexisting conditions, it’s me. I’m not going to make a political decision today that affects somebody’s sister or father because I wouldn’t do it to myself.”
He continued:
“In the end, we’ve got to make sure there’s enough funding there to handle preexisting conditions and drive down premiums. And if we can’t do those three things, then we will have failed.”
There is a plausible high cost risk pool design that could theoretically work. It just costs a lot of money. The Urban Institute provides an updated floor to that type of design.
Government costs for the coverage and assistance typical of traditional high-risk pools would range from $25 billion to $30 billion in 2020 and from $359 to $427 billion over 10 years. (Figure 2)
I think this is a decent lower bound as they don’t look at very high cost but uncommon conditions like hematological defects, cystic fibrosis, major gastro-intestinal conditions, slow progressing cancers or hundreds of other things. But Urban’s estimates points us in the right direction. Taking care of sick people costs somewhere between expensive and very expensive.
This is not new knowledge. Anyone of any ideological stripe who is actively trying to be a good faith broker of information on health care finance has been shouting this basic insight for months. And yet, the Senate just invited actuaries to talk with them for the first time this week. And yet, the House voted on this bill without waiting for expert opinion. The bill was written without a public hearing. The product is a consequence of a process that deliberately excluded even friendly experts who were having a nervous breakdown when they looked at the cash flows much less incorporating the criticism of unfriendly but knowledgeable experts.
Healthcare for people with high needs is expensive.
PPCLI
All sympathy to Representative Meadows’ for his grief, which is no doubt sincere. But if he really was carrying over that grief into sympathy for other people in the same situation, he would’ve actually taken the time to actually find out what this bill will actually do for people with pre-existing conditions. He couldn’t even be bothered to do that, so frankly this looks more like political posturing, cynically displaying his grief as a deflection. He will get behind some camouflage bill that kicks a couple of extra million into some high risk pool fund and then pose as Mr. Sympathy for his constituents.
NotMax
$30 billion.
5% of the military budget (if one tosses in the black budget, undoubtedly a significantly lower percentage).
ThresherK
IJR? Is that a regular part of a good* media diet?
I have read AJR and OJR, and continue to read CJR.
Spanky
Four posts in a row. You are on fire this AM, man. And justifiably so.
Not too practical, but I think that picture of them laughing at their little kegger ought to accompany every one of these posts.
Villago Delenda Est
Rethuglicans do not believe in health care for any but those who can afford it. Everyone else is demonstrating moral weakness by not being wealthy.
This makes me slappy, shouty, stabby, and shooty.
FlipYrWhig
@Villago Delenda Est: They are just an obscene, loathsome bunch of assholes.
gene108
@Villago Delenda Est:
If you can’t pay cash for treatment, you don’t deserve it.
Only the fit and wealthy deserve to live.
owlface
Eventually, everyone is sick. Eventually, everyone is disabled.
retr2327
It’s not just that health care for sick people is expensive; it’s that health care for the sickest 5% of the population is responsible for 50% of the costs. What does that mean for health care premiums and the AHCA? It’s (part of) the explanation for why, in the long run, the CBO says that premiums will go down under the AHCA. The mechanism is simple. Health care for everyone, no exclusions for pre-existing conditions, those likely to get sick for genetic reasons, etc., is fiercely expensive. But if you allow companies to write policies that will end up only being available to 90 or 95% of the population, you can try to write the policies so as to exclude that 5% that is responsible for 50% of the cost. The result? You can make good money selling a policy that costs slightly more than half of what true universal coverage policies would cost, because you’re now only covering 50% of the total health costs.
Great new for the young and healthy, and everyone else fortunate enough to not be excluded; sucks to be one of the 5%.
This cannot be explained enough. Republicans are going to do everything they can to get voters to focus on those “lower average costs,” and the media is all too likely to do a lousy job of explaining exactly how the AHCA (or any similar plan weakening universal coverage) actually makes lower premiums possible.
The other aspect that bears mentioning, in case one’s altruism is not quite up to the task of swallowing the higher costs of true universal coverage: you may be fortunate enough to be among the 90% who will qualify for the “lower” cost premiums now, but you cannot be sure you will remain in that fortunate group over your lifetime. . . . Then what are you going to do?