by Locker Room contributor
The Washington Post says people are surprised by the high costs of federal high risk pools “and it is an open question whether the $5 billion allotted by Congress to start up the plans will be sufficient.” These concerns come even though just 8,000 people have enrolled in the plans so far while Medicare’s chief actuary expected 375,000 would sign up.
North Carolina’s existing Inclusive Health pool was barely off the ground when the federal pool got added with lower premiums and more generous enrollment rules, but no ability to shift from the state plan to the federal plan.
“Like the rest of the country, we thought we’d have pretty much a stampede. That obviously hasn’t materialized,” said Michael Keough, executive director of North Carolina’s plan. With nearly 700 participants, it is among the nation’s largest so far, but it has one-third of the people expected by now.
One problem, in what has become a common refrain the past two years, is that the risk pools were oversold. One man in the Post story, Will Wilson, 57, takes $3,000 worth of AIDS drugs each month, ended up in bankruptcy, is now signed up with the federal AIDS Drug Assistance Program but has no other insurance.
Wilson remembers tears streaming down his face in February 2009, the night that he watched Obama vow to Congress, “Health-care reform cannot wait, it must not wait, and it will not wait another year!”
Wilson became an activist for health reform, circulating petitions, going to demonstrations. And the day after the president signed the bill into law, a Chicago Sun-Times column quoted him as saying, “I’ve had a grin on my face all day” at the prospect of the high-risk pool he could join.
Then Wilson discovered that insurance under the new risk pool would still cost $600 a month. It “was almost as much as my rent. It was like, no way! I was floored.”
But that is what the policy would have cost Wilson if he was completely healthy. The federal high risk pool sets premiums no higher than the “standard rate for a standard population.” Wilson’s problem is that he lives in Chicago where regulations and other factors make basic insurance up to $150 more expensive per month than in other parts of the state.
To encourage enrollment, Inclusive Health is spending more on advertising, and plans across the country are cutting premiums by 10 percent or more (for those over 55 on Inclusive Health, premiums will fall 31 percent)despite higher premiums for everyone else, which could mean people who went without insurance and got sick could end up with lower premiums than people who stayed healthy and insured.
Expect even more perverse incentives in 2011 when people need prescriptions to get over the counter remedies with their Health Savings Accounts (HSAs) and other rules kick in.