Where Are the Sick People Who Can’t Get Insurance?

by Veronique de Rugy

That’s the question asked by Megan McArdle over at The Atlantic. The idea that there were thousands of sick people who were being denied access to health insurance because of a preexisting condition was one of the most appealing cases for the health-care bill. It appealed to me, even though I thought the bill wasn’t the right way to address it.  A report recently released by the Department of Health and Human Services states that if the GOP succeeds at repealing Obamacare, “1 in 2 non-elderly Americans could be denied coverage or charged more due to a pre-existing condition.” Yet, as John Goodman of the National Center for Policy Analysis noted, “The Medicare program chief actuary predicted last spring that 375,000 would sign up for the new risk pool insurance in 2010. But by the end of November, only 8,000 had done so.”

That leads McArdle to ask:

. . . if the problem’s so big, where are all the victims? I’m not saying that they don’t exist, but if they do, we should really be trying to find them.  We’re not talking about a program that isn’t serving quite as many people as expected.  We’re talking about a program that was supposed to serve almost 400,000 people, and is instead serving around 2% of that number.  Nor have these people been turned away due to budget constraints; they don’t seem to have applied in the first place.  This leads us to one of two conclusions:

1. Pollack’s study, and others like them, have massively overestimated the population of patients who would like to purchase insurance at market rates, but cannot do so due to their pre-existing conditions; most people with pre-existing conditions who needed coverage were managing to find it one way or another under the old system.*

2. There are huge numbers of people out there who cannot access critical services, yet for some reason, they have not been able to negotiate their way into the new program.

One reason for the lack of enrollment by those with a preexisting condition is that even these highly subsidized high-risk premiums remain super expensive. It makes sense — by nature, high-risk pools are bound to be expensive and hence unworkable. Over at Slate, Timothy Noah had a pretty good piece a few days ago about how high-risk pools are, in fact, a terrible solution to the health-care crisis. He also writes that:

But they happen to be the terrible solution Republicans most favor (along with tax breaks) whenever they’re forced to state their preferred alternative to last year’s Patient Protection and Affordable Care Act. They were the central idea in the health plan proposed by Republican presidential nominee Sen. John McCain, R-Ariz., during the 2008 election. They were the central idea in the House leadership’s proposed substitute for the Democratic plan in 2009, and they played a major role in the alternative plan set forth that year by Sen. Tom Coburn, R-Okla., a medical doctor who became the GOP’s lead opponent to Obamacare. They were the central idea in a 2010 repeal bill introduced in May by Rep. Wally Herger, R-Calif., that would have replaced the health reform bill that became law with the 2009 House leadership bill. They’re absent from the current leadership repeal bill, introduced Jan. 5 by House Majority Leader Eric Cantor, R-Va., but only because Cantor’s bill proposes no substitute at all.

I am assuming he is right about this, even if I do think it a little harsh to argue that the responsibility for these high-risk pools falls exclusively on Republicans when none them ultimately voted for the bill.

I disagree with his conclusion that the predictable failure of high-risk pools is an argument in favor of Obamacare. It’s just one more argument for getting rid of most of the federal and state governments’ interventions into the health-care industry altogether, for putting an end to the protections that insurance companies get so they don’t have to compete with one another at the national level, and for ending the subsidies that health-care providers receive every year. Instead, we could have a voucher system or lump sum of money to pay for the health insurance (not the health care) of those who really can’t afford it. I am sure there would be some frauds and abuses in such a system but it would beat what we have today, wouldn’t it?

I would be interested to hear your suggestions on this issue.

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