Hiltzik: Trump and Vance would take health care back to the Dark Ages

Donald Trump’s claim during a debate with Kamala Harris that he had a “vision plan” for reforming America’s health care system raised eyebrows and drew ridicule, as if he was simply trying to fool voters into thinking he had actually thought about the issue when he hadn’t paid any attention to it at all.

It was up to Trump’s running mate, J.D. Vance, to flesh out those bones. What he offered was hard to digest.

This is also a common story: it’s a revival of “risk pools,” isolating people with certain pre-existing conditions into their own insurance market, so that healthy participants can pay less because they are less likely to cost insurers money. The argument is that sick populations can be protected separately, but as we’ll see, this is false.

“I think it’s a very important role to play in the defense of the defense,” Vance said in a Sept. 15 interview with Kristen Welker on NBC’s “Meet the Press.”

“Younger Americans don’t have the same health care needs as 65-year-old Americans. A healthy 65-year-old American has very different health care needs than a 65-year-old American with a chronic condition. We want to make sure that everyone is covered.”

“But the best way to do that is to have more choice in the health care system and not have a one-size-fits-all approach that puts a lot of people into the same insurance pool, the same risk pool, which then makes it harder for people to make the right choice for their family,” he said.

Vance has since repeated this contradictory claim. But the Affordable Care Act did not make it harder for people to “make the right choices” about health care, as he claimed. The act opened up health insurance to millions of families who had been previously excluded. As of this year, 45 million people are enrolled in Obamacare exchange plans or expanded Medicaid. The uninsured rate in the United States has fallen from 16% in 2010, before the ACA was enacted, to 7.7% by the end of 2023.

The ACA is not a “one size fits all” program — it offers families and individuals a wide range of choices at a variety of prices and types of coverage — but it does mandate that essential coverage be guaranteed to everyone.

In theory, Vance is right: putting sick people in their own risk pool means healthy people outside of that pool can pay less, so everyone wins. But he’s lying. We know this because Republicans in Congress, under then-House Speaker Paul Ryan (R-Wis.), pushed this exact same idea in 2016. I called the idea a “scam” then, and I still call it one.

Vance is trying to assure Americans that people with pre-existing conditions will still be covered — he knows that rekindling public concerns about coverage for pre-existing conditions could hurt the election — and he may be hoping people will optimistically remember what life was like for Americans in the dark days before Obamacare was enacted in 2010.

The ACA so decisively eliminated the ability to deny insurance to people with pre-existing conditions or to tax premiums to discourage them from signing up, leaving many Americans with what KFF’s Larry Levitt calls “amnesia.” Levitt worries that this amnesia is an obstacle to warning voters about what’s in store for them under Trump.

Here’s a reminder: Before the ACA, the business model of the individual insurance market was to deny enrollment to prospective policyholders based on their medical history, to exclude coverage for their medical conditions, or to raise premiums so high that prospective policyholders could not afford them.

Insurers were ruthless in narrowing their customer base to the youngest and healthiest prospective policyholders, who were expected to have the least medical expenses unless a meteorite struck.

The guidelines issued by Blue Shield of California are 25 pages long. “Deniable conditions” — conditions that can result in an application being rejected without further medical testing — include broken bones, kidney stones, depression, arthritis and psoriasis. People with a medical history of 21 types of cancer may be automatically denied or offered coverage only at higher premiums.

It is not surprising, therefore, that Vance sought to frame his prescription in terms that would suggest protection for coverage for pre-existing conditions. At this point, a bit of history on risk pools is in order.

Before the ACA, 35 states, including California, had established some form of risk pool. All we know is that they were a huge failure.

Ryan intervened at several points in the debate about risk pools. He blatantly underestimated the number of people who would be affected. He estimated the percentage of Americans with pre-existing conditions to be 8% of adults under 65.

By contrast, in 2011, the Department of Health and Human Services estimated that between 50 million and 129 million Americans under age 65—half of the nonelderly adult population—had some kind of pre-existing condition. Of these, up to 20% were uninsured, a percentage that rose sharply with age: 86% of 55-64 year olds were at risk of being denied insurance because of their health.

Ryan also portrayed risk pools as a novel, free-market alternative to the ACA, when in fact it was an outdated idea that has already proven inadequate.

California’s pooled Major Risk Medical Insurance Program (MR. MIP) is an example of this problem. When the program began in 1990 with a $30 million budget funded by tobacco taxes, that amount covered only 10,000 of an estimated 300,000 eligible Californians. By 2009, that number had been reduced to 7,100. Premiums were set 37% higher than the market price for individual insurance. The plan had a $75,000 annual benefit cap, which was insufficient to cover treatment for some serious illnesses.

One state risk pool is often cited as a success story: Maine’s Guaranteed Access Reinsurance Assn. (MGARA). The pool was advertised as an “invisible” pool, where participants didn’t know they were in it. Instead, all policyholders were required to fill out a survey that insurance companies and the state used to determine who would join MGARA. As far as they knew, they were lumped in with everyone else.

MGARA was funded by collecting 90% of the premiums paid by pool members to private insurers and imposing an additional $4 per month on all policyholders. The plan was in place for only 18 months or until it was revoked by the implementation of the ACA.

Importantly, during the existence of MGARA in 2012 and 2013, insurers were permitted to offer scaled-back health insurance plans. For example, they were not required to provide coverage for maternity care, a major cost center. This was clearly discriminatory against many women of childbearing age and their families. The ACA mandates maternity and newborn coverage.

MGARA’s supporters claim that its success was due to how well-funded it was, but a 2017 analysis of the program by the Maine Legislature found that it collected $41.2 million in premiums and levies over its lifespan but paid out $66 million in benefits. That means the program was in the red from the start, and would surely have been in the red from the get-go if it hadn’t been replaced by Obamacare, which would have been in the red and in need of revision.

A federal version of the risk pool outlined by Vance would face the same challenge: how to pay for it. Although Vance did not address the issue, a national risk pool to cover people with illnesses could cost as much as $650 billion a year, approaching the cost of our nation’s defense posture.

In fact, deregulation is at the core of the Vance-Trump plan: “Of course Trump has a plan to fix America’s health care system, but a lot of it hinges on deregulating the insurance market so people can choose the plan that really makes sense for them,” Vance told NBC’s Welcker.

Welker responded with a shockingly ignorant statement: “So that means Obamacare will stay in place.” Of course, Vance said the exact opposite. He was talking about gutting Obamacare’s individual market protections. In fact, that has been President Trump’s record as president.

He allowed short-term health insurance to be renewed indefinitely, which meant allowing those bare-bones plans to siphon younger, healthier customers from the overall health insurance pool: lower premiums for them because their insurance would cover less, but much higher premiums for everyone else, including people with health conditions that wouldn’t otherwise be covered.

Trump also supported the Reprise and Replace Obamacare plan, which the Republican-controlled House of Representatives passed in 2017. According to the Congressional Budget Office, the bill would have taken away health insurance from 23 million Americans by 2026. Trump also advocated replacing the ACA’s premium subsidies and Medicaid expansion with block grants to states. As Levitt noted, the plan would have “cut federal spending on the ACA and Medicaid by more than $1 trillion over 10 years.” But millions of Americans would be left behind.

The impact of losing insurance on Americans would be devastating. Studies have consistently shown that uninsured adults have a higher mortality rate compared to the privately insured population. A landmark 2009 paper found that uninsured adults have a mortality rate 40% higher than privately insured adults.

That’s the world that Trump and Vance are trying to return us to. Is America really ready to return to the Dark Ages?