One of my hobbyhorses of late is to illustrate – at the institutional party level (i.e., the “sphere”) – that progressive policies are simply superior to conservative ones at this point in history. It’s not merely that I subjectively prefer the former, or that the dueling policy approaches present equally plausible options. It’s that recent events have vindicated progressive assumptions of the world, and illustrated why modern conservative policies are often based on factually inaccurate – or dreamworld – assumptions about how the world actually works. See, e.g., global warming, stimulus effectiveness, financial bailout, etc.
Today, let’s add high-risk pools to that list, because they illustrate this larger point perfectly. Yesterday’s WP examined Minnesota’s high-risk pool and explained why programs like these are central to McCain’s health care “policy.”
Here’s the nickel version. McCain’s proposal seeks to push more people into individual plans (rather than employer plans). The problem, however, is that lots of people would be disqualified on the individual market on the basis of, say, pre-existing conditions. In response, some states have established programs where the government subsidizes insurance companies to take on these higher-risk, high-cost individuals. McCain has made these pools a lynchpin of his larger plan – indeed, he has to, given that he’s otherwise doing literally nothing for people with pre-existing conditions. (Jonathan Cohn has a more extensive background on these programs here).
Sounds not terrible, right? Well, wrong. These high-risk pools are essentially big jokes. More precisely, the idea that high-risk pools adequately deal with the needs of the uninsurable is a joke. And it’s a joke for two reasons – (1) they have proven wretchedly deficient in practice; and (2) they are also a conceptually flawed idea. I’ll examine both after the jump. Take it to the chorus.
First, the things just don’t work. The Post article itself lists several of the key flaws – e.g., many states don’t even have them; they have extremely high deductibles; there are gaps in coverage; they are underfunded; etc. The Minnesota program is the most successful, and even it has serious problems. Writing on this same Post article today, Cohn explains:
Insurers who agree to sell policies through high-risk pools reserve the right to offer sub-standard coverage. And they use it. That's why coverage through Minnesota's high-risk pools is still more expensive than average individual policy (which, in turn, is more expensive than the comparable employer policy). Partly as a result, many enrollees end up opting for coverage with extremely high deductibles (like $10,000). And the coverage of pre-existing conditions doesn't even kick in for six months, except for drugs.
But probably the most devastating indictment of high-risk pools is the fact that Minnesota's, for all of its flaws, is far and away the country's best. As noted here previously, the programs in other states have even skimpier benefits, higher premiums, and longer exclusion periods. Many also have as lifetime benefit limits. Typically, only people with really serious medical problems hit those limits. But those are precisely the people who tend to enroll in these pools.
Lovely. On that note, I was curious how a less progressive state might deal with its pool program. So I looked at my new adopted state of Texas. As you might expect, it's not a pretty picture. In addition to paying significantly higher premiums, to be eligible, you must:
1 – Pay out any COBRA you were offered, or at least wait until your period of COBRA eligibility expires (can be up to 3 years, as I understand);
2 – Wait out a 12 month period for certain pre-existing conditions (good luck with that cancer in the meantime -- chin up!).
It’s absurd. But of course, McCain’s argument is that these types of pools can be improved. Even if they’re currently implemented poorly (or not at all), he would argue that they’re still a good idea in principle. But again, that’s just wrong. The programs are also rotten at the conceptual core.
The main reason is simply that (similar to Medicaid) these programs would require vast amounts of government spending to benefit people with the least amount of political power (e.g., poor people). It’s no accident that Medicaid spending is perennially on the budgetary chopping blocks. The beneficiaries don’t exactly have a powerful lobby. Maybe if all broadcasters had Medicaid, it wouldn’t be a problem, but until that day….
On this same point, Cohn adds:
The only reason Minnesota's pool works as well as it does--and, remember, it doesn't even work that well--is that it's benefitted from relatively generous funding in a traditionally progressive state. Are we supposed to believe that McCain, who famously disdains government spending and whose budget is already deep in the red from tax cuts, would put up enough money to make the GAP work?
I go out on a limb and say . . . no. But even assuming he would pay for it (which he wouldn’t), Cohn adds that it’s ridiculous to keep carving people out, adding layer upon layer of administrative costs. Instead, we should be moving in the opposite direction – towards a more universal, integrated system.
But again, the larger point here goes well beyond the high risk pools themselves. The Republican presidential candidate has announced a health care plan that depends heavily upon these types of pools. These pools, however, have proven woefully inadequate, and are based on unrealistic factual assumptions about how markets and the larger political economy works. The real lesson here is that the institutional Republican Party has nothing whatsoever to say on health care, among other things.