New Jerseyans with Pre-Existing Conditions Remain at Risk

Funding for high-risk pools in latest proposal is still less than what's needed.

Published on May 3, 2017 in Health

Today Rep. Fred Upton is reportedly proposing an amendment to Rep. MacArthur’s amendment to the American Health Care Act that would add $8 billion in federal funding, spread over 5 years, to help people with pre-existing medical conditions pay costly premiums in states that waive the current ACA protections for consumers with pre-existing conditions.

While the proposal still prohibits insurers from turning down anyone with a pre-existing condition, the MacArthur amendment gutted that requirement by including waivers that would allow insurers to charge whatever they want based on a person’s health history and to exclude the very benefit a person with pre-existing conditions would need – like high-cost drugs or cancer treatment.

Rep. MacArthur’s main rebuttal has been that insurers wouldn’t charge more for people with pre-existing conditions because high-risk insurance pools would compensate insurers for the higher cost of covering these individuals. Given the failure of high-risk pools in many states – mainly to a lack of sufficient funding – it stands to reason that, without enough money, these pools would once again fail. And sure enough, the MacArthur amendment – even with the Upton amendment – doesn’t include enough money for these pools.

It would take $790 million each year to assist 37,000 New Jerseyans with preexisting conditions who would apply for health coverage, according to a national analysis released earlier this week by the Center for American Progress. However, if even if the funds from the Upton amendment are added in, the bill would only allocate about $353 million on average – leaving a $437 million gap, the eleventh highest in the nation.

In total, the nationwide gap is estimated to be $20 billion a year – or $100 billion over the five years that Rep. Upton’s amendment would pledge an additional $8 billion. In other words, the Upton amendment fills just 8 percent of the gap.

And there are a number of reasons why this gap would likely be even wider. In most estimates there is a margin of error that is often expressed as a range between a lower and upper bound. The Center for American Progress uses the lower bound of 37,000. However, the upper bound estimate could be as high as 256,000.

In addition, the estimate assumes that the Senate would approve these funds when they consider the bill and that each year the funds would not be cut during the budget process, which may not be case at all. And some of the funds allocated in the bill for the pools still require a state match, which New Jersey may not be able to afford given its dire fiscal condition.