The American Health Care Act, passed by the U.S. House, offers high-risk pools to insure people with pre-existing conditions. Although the definition of a pre-existing condition varies by who is writing the report, everyone can agree that at a minimum those patients with high-costs and high health care utilization should be included in this group.

The National Review recently published an excellent article by Michael Tanner, senior fellow at the Cato Institute, on the specific options to deal with these high-cost, high-users of health care. (here)

Option one is to have these patients pay the entire bill for their health insurance and care. Hard core Libertarians may find this option attractive, but the majority of Americans would find this unsettling. Virtually everyone has certain egalitarian ideas, plus people don’t know when, or if, they personally would become seriously ill.

Option two functions like the Obamacare exchanges, where ideally the original risk pool is large enough and has enough healthy people to pay for those who become sick. The lesson with Obamacare, however, is that not enough healthy people have enrolled to offset the costs of those with illnesses.

Option three would be to isolate high-cost patients. They would be taken out of the insurance market and placed in their own program, something like Medicaid. Funding would be directly through taxes, with an undetermined impact on government spending and the national debt.

Option four is essentially a high-risk pool, where everyone pays a little. For example, this could be a small (several dollar) excise fee on everyone’s health insurance premiums. The high-cost patients would remain in their original risk pool and would not necessarily pay higher premiums.

High risk pools have a poor reputation, mainly because of unreliable and insufficient funding. If structured properly, high-risk pools can be effective at providing for high-cost and high-users of health care, without causing them financial hardship. (here)