AHCA high-risk pool funding may fall short

The current version of the American Health Care Act (AHCA) allots approximately $128 billion in federal and state-matching funds over a nine-year period for high-risk pools, but researchers have calculated that the cost for all states to set up the pools would be $359 billion over ten years. The Urban Institute, supported by the Robert Wood Johnson Foundation, released a brief describing the researchers’ estimate titled High-Risk Pools Under the AHCA: How Much Could Coverage Cost Enrollees and the Federal Government? The $359 billion estimate is the figure associated with the least expensive approach with the lowest enrollment, leaving the highest number of uninsured individuals.

The AHCA provides for grants to states to support high-risk or reinsurance programs, and many alternatives to the Patient Protection and Affordable Care Act (ACA) have offered some sort of state-based high-risk pool funding. The AHCA provides for federal funding levels allocated to the establishment of a high-risk pool, but like other ACA alternatives, no details as to structure of the pool are provided.

High-risk insurance pools predate the ACA and were designed to enroll only individuals who had been denied coverage in the non-group insurance market or had a condition that would likely result in outright denial of insurance coverage. ACA preexisting conditions protections made high-risk pools largely obsolete and the brief notes that as of 2016, most pools had closed or stopped accepting new enrollees. The pools pose a financing challenge because they cover a high-cost, high-need population-substantial government assistance would be needed to make the cost per person affordable.

Using two levels of coverage and household subsidies and two options for identifying eligibility (narrow eligibility which includes those who experience high claims under standardized coverage and broader eligibility which adds those with chronic conditions), the researchers made their estimates. They found:

  • Depending on the eligibility option used, 2.5 million or 7.6 million people could be eligible under the AHCA high-risk pools.
  • An estimated 6.2 million high-need individuals may remain uninsured, depending on the option taken.
  • Average health care costs per person could be over $22,000 or $11,000, for the narrower and broad eligibility, respectively.
  • If the least expensive approach is taken, resulting in the lowest enrollment, highest cost to high-risk enrollees, and the highest number of uninsured, it would cost $359 billion over 10 years.

SOURCE: http://www.urban.org
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