President-elect Trump recently announced that, while he still plans to repeal Obamacare, he’ll continue to guarantee coverage to those with pre-existing conditions and allow children to stay on their parents’ plans until age 26.
The first revelation has some insurance companies worried. As they see it, once the individual mandate is eliminated, healthy individuals will drop coverage, creating an insurance market dominated by patients with expensive, chronic conditions. This scenario would exacerbate Obamacare’s “death spiral,” leading to even higher premiums and even more substantial insurer losses than today’s exchanges.
But patients and insurers can all rest easy. Both Trump and Speaker of the House Paul Ryan, R-Wis., have proposed a way to cover the sickest Americans without laying waste to the individual insurance market. Their solution? High-risk pools.
High-risk pools are state-based, heavily-subsidized insurance plans intended specifically for Americans with expensive chronic conditions who can’t afford traditional coverage. By separating individuals with costly pre-existing conditions from the rest of the insurance risk pool, they help keep premiums down throughout the coverage market.
Trump included high-risk pools as part of his healthcare plan. Ryan’s “A Better Way” healthcare proposal commits $25 billion over 10 years for state high-risk pools.
It’s important to note that the population of patients with costly pre-existing conditions in the individual market is smaller than many realize. In the 35 states that offered high-risk pools prior to Obamacare, combined enrollment peaked at nearly 230,000 participants in 2011 — just over 2 percent of the individual market that year.
Another key component of Ryan’s plan, the so-called “continuous coverage protections,” would make the death spiral insurers fear even less likely. This provision forbids insurance companies from imposing severe rate hikes on individuals who experience major medical events, as long as patients have maintained continuous coverage. In this way, the policy gives healthy consumers a strong incentive to get insured and stay insured.
Indeed, the days of Obamacare’s insurer death-spiral may soon be behind us. Both high-risk pools and continuous-coverage protections ensure that affordable health plans will be available to Americans with pre-existing conditions in a way that won’t send the individual market into a tailspin.