Fake Plan in Repealing ACA

Here’s a writer that butchers the repeal of The Affordable Care Act with this piece last week.

Upon repeal of the ACA, she suggests addressing the loss of guaranteed issue (i.e., can’t deny coverage for those with pre-existing conditions) with the use of high risk pools.

The concept of high risk pools is not misplaced at face value but the costs are underestimated and more importantly not financed.

Kaiser Family Foundation reporting suggests that 27% of the adult population have pre-existing conditions… that’s 52MM people. These are not only patients suffering from chronic conditions, these are people who would have to disclose an elevated PSA, a family history of arthritis, has lower back pain, or is pregnant… some of these may develop into an expensive conditions, some will not.

It is important to clarify that 52MM represents all adults in the US. Only a portion of those will need access to individual (non-group) insurance. Nonetheless, it is still millions of people.

So, unlike the writer’s math, we aren’t talking about 500 Alaskans or $16B for a national high risk pool. It’s not clear what the number is in the absence of some actuarial diligence, but here’s some very rough math:

There were 12.7MM enrolled on the individual market in 2016. The portion with pre-existing conditions in this population is higher than the national average (it is the sustainability problem with the exchanges after all), so let’s say it is 40%. The average medical cost among those on the exchanges is about $350 per member per month; but again, this group will trend higher, call it $6000 per member, per year.


12,700,000 * 40% * $6,000 = $30B per year

This $6,000 figure does not include the cost of the most acutely ill. Frankly, whether it is $16B or $30B or higher, the problem is the same. What is an effective way to finance this?

The ACA had a multitude of funding sources (individual and employer mandates among others), but many were not thrilled with that. So if not mandates, then what?

Is it unreasonable to assume there is no protection for pre-existing conditions until that question is answered? The writer clearly had no plan (“fake plan”?). Her assertion throughout is that high risk pools are the answer. Fine. Yet, high risk pools won’t happen until there is a viable plan to fund them. OK, what is it?

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