While getting little attention in the political debate, risk pools and specialty insurance plans have established a positive track record in providing health care for people with preexisting conditions.
Risk pools have been an option for states struggling with their Obamacare health insurance exchanges. Through Section 1332 waivers, states can divert some of the federal money allotted for Obamacare subsidies into reinsurance programs for people with high care needs. Separating this group puts insurers on the exchanges in a better position to attract healthier enrollees because premiums can be lower.
Fourteen states have sought waivers for reinsurance programs, according to the National Conference of State Legislatures.
Specializing for Excellence
Specialty insurance plans work on the idea that insurance coverage does not have to cover everything but instead can focus on special needs. Similar programs are now being used in Medicare through “Medicare Advantage” plans. The plans can focus on a specific health issue and offer care by “centers of excellence” which might be better equipped to tackle the problem.
Specialty plans make sense because “health insurance plans can perform better when they don’t try to be all things to all people,” states the “Health Care Choices 2020 Proposal,” a report on health care reforms written and signed by dozens of health care policy leaders (see related article, page 17).
So-called Special Needs Plans (SPN) already exist under Medicare Advantage. SPNs cover people with preexisting conditions such as diabetes or cancer by focusing care on the specific condition. Patients can often access “centers of excellence,” cutting-edge treatments, and specialty providers.
Advocating Structural Change
A leading pioneer of the concept is Regina Herzlinger, a professor at the Harvard Business School. Herzlinger, called the “godmother of consumer-driven health care,” advocates “focused factories of care.” Herzlinger’s 2007 book on Who Killed Health Care? argues powerful institutions stand in the way of health insurance innovation.
“Patients with chronic diseases need coordinated care for their primary disease and all its many comorbidities,” Herzlinger told Health Care News. “Instead, they typically receive fragmented care because health care is organized by providers—hospitals, various types of doctors, and different sites for therapy—rather than by the patients’ needs.
“The everything-for-everybody integration into ACOs (Accountable Care Organizations) continues this organization by sites rather than diseases,” said Herzlinger. “These sites are supported by an insurance system that pays for these fragments of care instead of the whole disease and its comorbidities. As a result, patients with chronic diseases receive fragmented, inadequate care that costs much too much.”
The current health care system fails to reward healthy behavior, says Herzlinger.
“Why not reward those who go to the gym every day, don’t smoke, and control their stress?” Herzlinger told Health Affairs in a 2007 interview. “Why don’t those people get rewarded? Why aren’t there insurance policies that say, if you stay healthy, I’m going to give you financial rewards?”
New providers are emerging in response to the policy changes, says Herzlinger.
“Fortunately, the advent of telemedicine firms, such as Livonogo, that focus on chronic diseases, can upend this destructive and costly form of organization,” said Herzlinger. “If it is successful in improving the health status and controlling the cost of chronic diseases, entrepreneurial providers will organize into providing coordinated care and entrepreneurial insurers will pay for them. I hope we are finally seeing a light at the end of this dark tunnel.”
Focusing on the Neediest
Risk pools work on the idea that only a small fraction of people, those who are very sick, are the biggest cost drivers in health care.
As the exchanges are populated predominantly by sick enrollees, insurers have to cut corners, says Doug Badger, a senior fellow at the Galen Institute who has long been a champion of risk pools.
“The ACA (Affordable Care Act) offers people with preexisting conditions inadequate coverage: premiums are too high, deductibles and other cost-sharing too burdensome, and networks too restrictive,” said Badger. “For example, MD Anderson Cancer Center, located in Texas, is perhaps the world’s premier cancer treatment center. Yet none of the Obamacare plans sold in Texas includes MD Anderson in its network.
“Policies subject to ACA regulations do a poor job of protecting people with preexisting medical conditions,” Badger said. “They deserve better.”
Testing the Concept
Badger says the most promising approach is embodied in the “Health Care Choices 2020 Proposal.” The plan calls for allowing states to design programs that could best meet the needs of low-income people and those with chronic illness.
“States would be required to devote a portion of funds to those in greatest medical need,” said Badger. “These can include high-risk pools, reinsurance arrangements, risk adjustment, and other similar arrangements.”
The proposal already shows promise, says Badger.
“The Trump administration has granted waivers to several states to test one of these ideas: reinsurance,” Badger said. “Waiver states have seen a substantial reduction in premiums for coverage, making it more affordable both to those with chronic illness and those in better health. Congress should revamp federal law to broaden state authority to reform their health insurance markets to the benefit of all their citizens.”
AnneMarie Schieber (firstname.lastname@example.org) is managing editor of Health Care News.