High Risk Low Reward

Making insurers help pay the costs of other insurers’ high-cost policyholders.

ObamaCare is a huge and glorious success, and it’s the shining jewel in Barack Obama’s legacy. That’s what the Democrats have been telling us for several years, and for the most part the media have dutifully parrotted this talking point. But in recent months, it’s gotten harder for Obama’s media protectors to keep pretending everything is OK. Exchanges are in dire fiscal straits. Insurers are dropping out. Premiums are soaring. Provider networks are narrowing.

The left keep reaching back for what it thinks is the one saving grace of ObamaCare – that more people are “covered” than before. And that’s true, but the vast majority of these are just sopping off Medicaid, which is exploding both state and federal budgets, while just about everyone is spending more for the glorious privilege of being “covered,” not to mention paying higher taxes to pay for all the subsidies ObamaCare promises.

So no, this is not working out at all. And now that the media’s cone of silence is starting to break down and they’re admitting the problems, the Obama Administration has come up with a series of new regulatory changes they hope will stave off disaster. Especially check out Rule 3 below:

  1. Beginning with the 2017 benefit year, the rule proposes a modification to risk adjustment regarding the cost of enrollees who do not stay with an issuer for the full plan year.
  2. In order to help reflect enrollees with serious conditions like Hepatitis C, HIV, or others, the rule proposes to use prescription drug utilization data as a source of information about enrollee’s health and the severity of their conditions beginning with the 2018 benefit year.
  3. The rule also proposes to modify risk adjustment as to costs associated with the most expensive enrollees. Under this proposal, a portion of costs exceeding $2 million for an individual would be shared among issuers. This type of risk sharing would reduce uncertainty for issuers who are not yet able to reliably predict the prevalence and nature of high-cost cases.
  4. The proposed rule also asks for comment on a number of approaches for addressing the costs of healthier enrollees. Our goal is to update risk adjustment for all types of enrollees, to ensure that issuers can have confidence in the program as they design products to attract all types of consumers.
  5. Lastly, separate from the risk adjustment program, we are seeking comment on whether and how to further support the successful transition of former Pre-Existing Condition Insurance Plan (PCIP) Program enrollees into the Marketplace to ensure that they do not experience a lapse in coverage.

These proposals would bring more certainty into the Marketplace, as they would enable issuers to account for the risk of all enrollees in their bottom line, while continuing to ensure that all Americans have access to the care they need.

Basically, Rule 3 requires that when the cost of a policyholder’s health care exceeds $2 million, issues who didn’t even issue that person a policy must nonetheless share in the cost of caring for them.

How do high-risk pools work?

High-risk pools are private, self-funded health insurance plans organized by state to serve high-risk individuals who meet enrollment criteria and do not have access to group insurance. In most states, they are independent entities governed by their own boards and administrators, but in some states they function as part of the state’s department of insurance. You can apply for high-risk pool coverage through an insurance agent or directly with the state.

In auto insurance, where if you have a car it’s mandatory, if you have 5 DUI’s in 5 Years and the State still hasn’t banned you from the road no one wants that high risk so their is a High Risk Pool that is shared through the State. (The State getting the money from guess where?) 🙂

RIsk pool health insurance is more expensive than traditional individual insurance. This is fair because pool members, by definition, are those who are considered to be medically uninsurable. State laws generally cap risk pool rates between 125-150 percent of the base individual market rate

Example: If the average standard individual market base rate in a state for a 30-year old male is $100/month, a medically uninsurable male of the same age would pay $125-$150/month for comprehensive coverage in a risk pool.

Risk pool rates are determined by your age and sometimes by where you live in the state. Pool rates are fairly affordable nationwide because they are directly tied to the rates in each state’s existing individual market.

You generally have a choice of health plan options and will receive enrollment cards and other information just like any other health plan. High-risk pools normally contract with a health insurance carrier or third-party administrator to administer paperwork and claims, so your enrollment card and other paperwork may not even appear to be produced by the high-risk pool. Once enrolled, you use your benefits just like any other consumer of private insurance coverage.

So you’re socializing the costs in the hope you can stem the tide of the losses for those with the most disastrous cases. The problem with that, of course, is that all insurers have an overabundance of too-old and too-sick policyholders, because the incentives in ObamaCare guarantee it will work that way.

Taken together, the entire set of new rules serves as a tacit acknowledgement by the White House that ObamaCare has major structural and operational problems. That being the case, why not go to Congress and seek changes in the law that would solve the problems? Oh. Right. Because Congress is controlled by Republicans, and that would mean Obama would have to accept meaningful changes that would make the law less effective in propping up the political agenda he seeks to serve through it.   🙂


So instead, the administration will try in vain to save this turkey by tinkering around the edges through the administrative and regulatory state. It’s not going to work.

But they don’t care about that. It’s their baby and they are going to tinker with it untilo YOU die. It will work SOMEDAY, they hope.  Like the amputee that expects his limb will just grow back spontaneously because he wants it to.

Obama is fundamentally flawed and needs to be tossed out entirely, replaced with a market-based system that gets out of the way of the doctor/patient financial relationship as much as possible. Health care finance was messed up in this country well before ObamaCare because tax law incentivized too much reliance on third-party payers. ObamaCare doubled down on that problem and added a set of completely illogical requirements that made it that much harder for insurers and providers to control the cost and the quality of what they were doing.


Adverse selection occurs when a person buys health insurance only after he or she has a medical problem that will require the use of benefits immediately and at a higher cost. Say the person who gets insurance just as they are diagnosed with Stage 4 Terminal Cancer. They cost say, $250,000 in 6 months and then they are dead. Adverse Selection would weed those out as uninsurable because there is no premium possible that could pay for that.

ObamaCare did away with that. That’s why it fails so miserably.

You see the result. ObamaCare is a total disaster. If it was not, these changes would not be happening. Even the White House now acknowleges that with its actions, if not with its words. (Caintv & NAHU)

But I still say that it was design, fundamentally, to fail so that the Government could come in on their White Horses of Socialism and save everyone from the evil Insurance Companies.

At least that was the plan.