3 Recycling Blunders in Failed Healthcare Policy

Washington, D.C. denizens have done it again. Under the guise of innovative compromise, they have recycled Bush Jr.’s failed “Great Healthcare Bailout of 2002.” Never heard of it? Well, bailouts weren’t the Hollywood stars then that they are today. They called them strategies instead. This one went straight into the failed policy bucket.

Observe: In 2002, Bush tried giving away $40 million in grants to high-risk pools "as part of the Bush Administration's broad strategy for expanding access to health care for the more than 40 million Americans without health insurance." Um, the plan was to spend $1 per person? Really? But I digress.

First, what is a risk pool? It is an extremely expensive insurance option for those in less than perfect health, whom health insurers deem financially risky (read: ‘may cost them money’.) State-sponsored, it is typically administered by a large private insurer. It’s not just the disabled who need this option. Anyone with one or more of a long list of pre-existing conditions (pregnancy anyone?) can be shut out of the individual insurance market. As only those who need expensive treatment will fork over the exorbitant premiums, risk pools tend to become insolvent quickly.

So, what were the results of Bush’s brilliant plan? States used the grants to temporarily regain pool solvency. So 178,000 total enrollees across the country still paid 125-200% of normal premiums and most risk pools remained closed to new applicants.

That’s an early 21st century history lesson on how to waste $40 million. Now let’s take a look at the most recent proposed policy blunders.

1. John McCain’s Risk Pool Idea: During the 2008 presidential campaign, McCain proposed expanding states’ risk pools as a “guaranteed access plan.” If guaranteed access means mountains of red tape and ridiculously unaffordable premiums, he pitched it right. Better yet, he wanted to subsidize these insolvent programs by $15-20 billion. Yes, this is the Bush bailout plan on steroids. And Obama says it’s a good idea. Ouch.
2. Kent Conrad’s Co-op Proposal: In June, Conrad had the bright idea to replace the public option with non-profit co-ops. First, non-profit insurers have long competed with for-profits, and they are just as expensive. Second, small state-based co-ops with no experience and no clout do not spell success. Substitute "state-run co-op" for "state high-risk pool" and you have a crystal ball.
3. Maria Cantwell’s Compromise: Last week, the Senate Finance Committee passed Cantwell’s amendment to subsidize state-purchased coverage for people who don’t qualify for Medicaid. Billed as the “public plan compromise”, it is a public plan negotiated with the private sector. What? So the plan is to neuter the national public option by privatizing and fragmenting it 50 times?

If we want to solve our healthcare inequities, pitching 50 separate states and a divided population against a handful of the largest private insurers is not the way. Bush flushed enough ill-considered bailout money. Recycling is usually a noble activity—reduce, reuse, recycle. However, this is an instance where we should really reduce the reuse of recycling.

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