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Insuring the uninsurable: GOP health plan draws on high-risk pool used in Maryland

Under the American Health Care Act, states can apply for waivers to allow insurance companies to consider a person's health status when determining premiums. (May 4, 2017) (Sign up for our free video newsletter here http://bit.ly/2n6VKPR)

Before the Affordable Care Act offered health care to all Americans, thousands of Marylanders who sought health insurance on their own were denied coverage because they had a pre-existing condition — cancer or heart disease, or, in some cases, simple high blood pressure.

To help them, state leaders in 2002 created what became one of the nation's most successful "high-risk pools," covering more than 20,000 people who otherwise might have been bankrupted by medical bills.

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Now, congressional Republicans are looking to high-risk pools created in Maryland and other states to help guide their efforts to drive down health insurance premiums. The idea is a central component of the legislation approved by the House on Thursday to overhaul the 2010 law known as Obamacare.

"Our high-risk pool system was a good system," said Rep. Andy Harris, a Baltimore County Republican who supported the House legislation. "I'd be very happy with going to pre-Affordable Care Act times when insurance was affordable and we took care of the people with medical conditions with a high-risk pool."

But as the pools draw new attention in Washington, those who managed and used the Maryland program say the state's experience shows the pros and cons of the approach.

A high-risk pool amounts to a separate insurance system for the sickest patients. Maryland's program, which received praise from members of both political parties, will likely inform the debate over the future of health insurance as the GOP's Obamacare repeal effort moves to the Senate.

One of the top concerns, analysts say, is cost.

"There is a huge price tag associated with it," said Michele Eberle, who ran the state's pool, known as the Maryland Health Insurance Plan. "The question is where the money comes from."

Funding to create high-risk pools was a major part of the compromise that allowed Republicans to narrowly approve their bill, the American Health Care Act.

Obamacare prevents insurers from charging higher premiums to people with pre-existing conditions. The Republican legislation would allow states to lift that prohibition.

That made centrist Republicans, and those in blue and purple states, jittery.

A last-minute $8 billion increase in funding proposed by Republican Rep. Fred Upton of Michigan for the high-risk pools was the key that brought enough moderates aboard to pass the measure. The House approved $138 billion overall that could potentially be used to cover the cost of health care for people in those programs over five years.

"Not enough," said Karen Pollitz, a senior fellow at the Kaiser Family Foundation who served on the board of Maryland's high-risk pool.

Under the American Health Care Act, states can apply for waivers to allow insurance companies to consider a person's health status when determining premiums. (May 4, 2017) (Sign up for our free video newsletter here http://bit.ly/2n6VKPR)

Pollitz said high-risk pools can be effective, as long as there is a commitment on behalf of policymakers to fund them.

"Absolutely you could scale this," she said. "You just can't do it on the cheap."

While the Senate is expected to change the legislation significantly before voting, the House bill — and the inclusion of high-risk pools — could serve as a starting place.

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The theory behind the pools is relatively simple: Removing high-cost policy holders from the standard insurance market should drive down premiums for everyone else, making the market more attractive for healthier and younger people.

The much harder part is figuring out how to pay for the people with chronic conditions who are moved into the high-risk pools.

Thirty-five states created high-risk pools before Obamacare was implemented in 2014, according to Kaiser. In most states, enrollment was low: In 11 states, fewer than 2,000 people took part. Only four states — Maryland, Minnesota, Texas and Wisconsin — enrolled more than 20,000 people in 2011.

The features of the programs varied. Ten states had a $5,000 deductible in the plan with the highest enrollment, according to Kaiser. Most of the state-run high-risk pools had lifetime caps on coverage, ranging from $1 million to $2 million — a threshold that patients with cancer or other serious illnesses can reach quickly.

Pools in Maryland and other states were dismantled after Obamacare was implemented. The federal law required insurers to cover patients with pre-existing conditions.

The GOP bill retains that requirement, but would allow states to let insurers charge those patients more.

Harris, who as a Maryland state senator in 2002 supported the legislation that created the state's high-risk pool, has been an outspoken booster of the approach.

The Johns Hopkins-trained anesthesiologist envisions a hybrid system that includes elements of both the Maryland program and the one created by Maine.

Maine's "invisible" high-risk pool grouped patients together in a class that was funded by premiums and a $4 assessment on all insurance policies.

Unlike in Maryland and other states, high-risk policy holders in Maine didn't pay a higher premium in the pool — thus its "invisibility" — and the state set up incentives to ensure that insurance companies were judicious about which people were placed in the system.

Many Democrats are wary of the ability to scale high-risk pools up across the nation to meet the need.

Dr. Leana Wen, Baltimore's health commissioner, said plenty of people wouldn't be able to afford the coverage. The Maryland Health Insurance Plan cost people with pre-existing conditions 33 percent more than healthy people, according to plan managers, and "they could literally die without coverage."

Relying on federal funding in the long term would require high-need patients to have faith that Congress would continue to reauthorize that spending.

"These high-risk pools across the country functioned unevenly," said Rep. John Sarbanes, a Baltimore County Democrat. "No one who understands them would assert that they can solve the problem of people with pre-existing conditions having access to affordable coverage."

Maryland's program took all comers, but some people could not afford the premiums, which averaged $150 to $300 a month for low-income participants who received subsidies of up to 50 percent. Many people paid hundreds more.

The health care consulting firm Avalere estimates that 2.2 million Americans with chronic, pre-existing conditions, including 37,000 in Maryland, are now covered by Obamacare.

But if every dollar set aside by House Republicans for patients with pre-existing conditions went to the high-risk pools, only 600,000 would be covered.

The money amounts to about $15 billion in 2019, the first year states could launch a high-risk pool. That's enough for only a few small states to tap the money, according to Avalere.

"That's because they'll likely get a lot of burning buildings," Richard Popper said.

Popper helped launch the Maryland program in 2003 and ran it until 2012, when he took over a federal high-risk program available before Obamacare exchanges opened.

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He was referring to patients with high-cost needs such as cancer treatments, surgeries, pregnancies and untreated conditions who who could end up in the new high-risk pools.

Avalere estimated those patients each cost around $25,000 annually. As patients stabilized over time, they cost the Maryland program closer to $5,000 annually.

Maryland paid for its program with revenue from an assessment on hospital bills, which generated more than $100 million annually.

The program was a lifesaver for Susan Getka. The Catonsville woman lost her health insurance when she quit her job in a bookstore in 2008 to care for two sick family members.

A heart valve disorder prevented her from getting private insurance on her own. She joined the high-risk pool but said she could not afford premiums of a couple hundred dollars a month.

When Obamacare expanded Medicaid, she signed up. Now 63, she had hoped to stay on the federal health insurance program for low-income patients until she qualified at age 65 for Medicare, the program for seniors.

"Now I'm concerned what might happen every day," Getka said. "I was devastated as a full-time caregiver and I'm trying to get back to work part time ... to prepare for possible huge increases in my coverage and prescriptions."

Bradley Herring, a health care economist in the Johns Hopkins Bloomberg School of Public Health who once chaired the Maryland high-risk pool, said cuts to the Medicaid program under the House bill could mean that people across the country lose benefits or coverage.

The nonpartisan Congressional Budget Office has not yet estimated the impact of the bill. It pegged the number of people who could lose coverage under an earlier version at 24 million.

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