Even though it currently appears that the Cassidy-Graham bill won’t pass, it seems to me that there’s a point worth making about how putting people with pre-existing conditions into a separate risk pool might affect their insurance premiums.
Not long ago House Speaker Paul Ryan gave a speech in which he suggested it’s not fair for healthy people to pay for the medical needs of sick people. But sharing risks and costs is, of course, the whole point of insurance.
I can see some argument in favor of charging people more if they foolishly put themselves in danger by taking stupid risks. But there are practical problems with that, and except for charging smokers more, there are few proposals to base health insurance premiums on behavior. Instead, insurance companies have raised rates or denied coverage to those with pre-existing conditions.
The Cassidy-Graham bill would allow states to put people with pre-existing conditions into one or more separate risk pools from those who are currently healthy, resulting in higher health insurance premiums.
How much higher? Sam Berger and Emily Gee at the Center for American Progress recently did the computations. You can find their report here and a summary here.
Persons with asthma or diabetes without complications would expect to pay around $4000 to $6000 more per year above the premiums for healthy people. Those with serious types of cancer would be charged more like $28,000 to $140,000 more, and heart disease would cost $18,000 to to $58,000 more annually.
An obvious response is that it’s unlikely people would be assigned to separate risk pools based on their specific current or past illness. But why not? If it’s unfair to put healthy people in the same group as those who are or have been seriously sick, why isn’t it just as unfair to put, say, asthma patients with those who have metastatic cancer? And even if there were just two pools, with those having pre-exising conditions paying a weighted average of those higher rates, the result would still be unaffordable for most people, leaving uninsured everybody but the well-off and those in Medicare, Medicaid, or other government programs.
That just isn’t realistic. As it apparently still needs mentioning, the rest of the developed world has figured this out and has comparable or better outcomes with lower costs. Some employ a single-payer system (Canada, Taiwan, the UK, Italy, et al) and others use a tax-subsidized system with sensibly regulated independent insurance companies (as in Germany, Japan, Israel and elsewhere). The Netherlands and Switzerland have had pretty good results with programs not all that different from Obamacare.
As Senator McCain points out, there’s no reason the United States can’t do as well or better than other countries. But people from across the political spectrum will have to come together to do it in a way that’s based on what works rather than rigid ideology. Most Democrats and some Republicans seem willing. Opposition comes mainly from a subset of the extreme right and the GOP leadership, and a few far-left Democrats who won’t settle for anything but single payer. (I personally think Medicare for all isn’t a bad idea, but insisting on that or nothing risks leaving us with nothing.)
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