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April 19 2017

'Invisible High-Risk Pools' – An Explanation

One News Now
featuring Hadley Heath

An obscure policy mechanism in a healthcare bill from House Republicans continues to have people talking.

An amendment to the American Health Care Act (AHCA) has been offered by Representatives Gary Palmer (R-Alabama) and David Schweikert (R-Arizona). It's modeled after legislation in Maine and provides an additional $15 billion in funding for "invisible high-risk pools."

"There was sort of this unifying theory [asking] 'What are we doing to lower premiums for those individuals in that individual healthcare market?'" Schweikert said in a recent press conference announcing the amendment. "Five percent of our brothers and sisters who have chronic conditions are functionally 50 percent of our healthcare costs – and because of that, we have this hockey stick curve."

Hadley Heath Manning, director of health policy at the Independent Women's Forum, admits the idea isn't well known.

"We have to keep in mind that health policy is kind of on a spectrum when it comes to how much the government is going to be involved or not involved," she says. "Right now, Republicans are working very hard to try to find a compromise within the party so they can get a simple majority in the House."

Negotiations aside, Manning agrees that five percent of people amount to 50 percent of healthcare expenses. She believes that fact should be kept that in mind when health insurance regulations are being designed.

"Under the Affordable Care Act, one reason why many people have seen increased premiums is because the most expensive customers are essentially in the same pool with some of the less-expensive customers – people who are healthy and don't go to the doctor very often – and that's why premiums for everyone are pretty high," she explains.

"But if you use an invisible risk pool or really any kind of high-risk pool, you're drawing out the most expensive members of the pool and you're targeting usually government-subsidized relief to the people who need it most."

Manning considers that a totally different approach from the Affordable Care Act that sort of pools everyone together.

"The idea is, of course, if you use a high-risk pool and you draw out the high-risk customers, then most people pay a very affordable, pretty low premium in comparison to what we've seen today," she offers.

What about the $15 billion? Is Manning concerned that could become $25 billion down the road?

"I tend to believe the government unfortunately as a trend underestimates how expensive healthcare costs can be and how fast they can grow – so that's certainly a concern," she responds.

"The question facing policymakers today is 'What is the most cost-effective way to try to find balance between some of the promises that they've made about insuring that all people, including people with pre-existing conditions, can access affordable, private health insurance policies while at the same time trying to keep premiums low for everyone?'"

A recent report from Milliman finds that a risk-sharing program, such as the one in the Palmer-Schweikert amendment, could actually lower premiums while providing aid to people with pre-existing conditions. The Milliman report was commissioned by the Foundation for Government Accountability (FGA).

In an earlier report, however, a federal policy analyst at the Texas Public Policy Foundation criticized the proposed amendment, saying it mirrors current ObamaCare policy.

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Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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