Research

As new information is constantly coming to light about the unintended consequences of the Democrats’ new government-run health care law, more implementation problems caused by perverse incentives are being discovered. It turns out that sick people with very high insurance costs are caught in a Catch 22. They can sign up for new high-risk pools, but only if they have been uninsured for the past 6 months! So either they stay in their currently unaffordable plans, or they just go without insurance for the next 6 months to wait for new coverage. From the AP:

Suppose your cancer is in remission. You had to quit your job while you were having chemotherapy, and your employer coverage ran out. You can't find a private insurer who'll take you, but you're lucky to live in a state that has its own high-risk pool. Still, you have to struggle to pay the premiums, well above standard insurance because sicker people are in the group. Yet as the federal program is designed, you wouldn't be able to switch over and take advantage of significant savings. The reason: You have to be uninsured to qualify for the new plan.

And it gets worse. These high-risk pools were supposed to be a stop-gap measure before the new exchanges start paying out their budget-busting insurance subsidies in 2014. But the funding for these programs might not last past 2011, leaving those covered to be dropped if new deficit spending isn’t authorized.  

But the $5 billion that Obama and Congress set aside may not be enough to support even a basic program for long. A recent report by Medicare economists warns that the program could go through $4 billion in its first year, and run out of money as early as 2011. "These are some of the sickest people in the country, and therefore their costs would be dramatically higher — yet the law requires that they be subsidized to standard rates," said Robert Laszewski, a health care industry consultant.

High-risk pools are an important element of real health care reform to help provide low-cost care to those with pre-existing conditions. Too bad Congressional Democrats voted against the Republican alternative to ObamaCare that would have created a better funded, state-based system of high-risk pools.