Carly Fiorina's Obamacare Replacement Plan Hasn't Fared Well With House Republicans

It's too expensive for their tastes. And experts doubt it would work.

Carly Fiorina Adds to the Crowded GOP 2016 Field

Carly Fiorina wants to repeal Obamacare and establish a health-care plan of her own. But the centerpiece of her proposal, outlined on Monday after she announced her presidential campaign, has been attempted by House Republicans in recent years, and gone nowhere.

"Obamacare needs to be repealed. The law itself is longer than a Harry Potter novel," Fiorina, a former CEO of Hewlett-Packard who is seeking the Republican nomination, told reporters on a conference call.

In its stead, Fiorina called for increasing federal aid to states. "I think the answer here is to allow states to administer high-risk pools to help those who are truly needy," she said. "Certainly I think the federal government can assist in funding."

It sounds simple enough: Have the feds subsidize state-run insurance programs for the Americans who need medical care the most and who don't have proper access. Numerous Republican presidential hopefuls have championed high-risk pools, including Florida Senator Marco Rubio and Louisiana Governor Bobby Jindal.

The problem is, it's extremely expensive—so expensive that House Republicans have balked at spending a small fraction of the necessary money.

A "comprehensive set of high-risk pool programs" would cost between $150 billion and $200 billion over a decade, conservative health policy experts James C. Capretta and Tom Miller estimated in a 2010 issue of National Affairs.

Republican leaders have been down this road before. In April 2013, then-House Majority Leader Eric Cantor of Virginia tried to pass legislation authorizing a total of $3.7 billion for high-risk pools by cutting money from an Obamacare program. But conservative Republicans rebelled and forced him to pull the bill because, as Idaho Representative Raul Labrador argued at the time, "Subsidizing health care is not what Republicans should be about."

"High-risk pools are not a new idea," said Tim Jost, a health policy expert at Washington and Lee University School of Law. "It's one of those chestnuts that has been around forever, but just keeps coming back."

So, what's behind the support for the idea?

"High-risk pools are attractive because they seem to magically solve certain problems without onerous requirements or lots of government funding," said Larry Levitt, a senior vice president at the nonpartisan Kaiser Family Foundation, which focuses on national health issues. "But it's a bit of a mirage because they're really not a solution for covering the uninsured."

The federal government set up a temporary high-risk pool before the Affordable Healthcare Act's insurance reforms took effect, and said the average enrollee's claims cost was $32,000 per year.

"There's no way those people with preexisting conditions could afford to pay their own insurance. So there needs to be some kind of subsidy to make coverage even reasonably affordable," Levitt said, adding that no state has ever succeeded at using high-risk pools to cover its uninsured residents for a sustainable period of time.

The other criticism of high-risk pools is the "adverse selection" problem—they attract a crop of very sick, typically poor people, while younger and healthier people avoid buying insurance. That in turn drives up costs. 

The Affordable Care Act, while offering subsidies to poor people and requiring insurers to cover them regardless of medical history, seeks to avoid the adverse-selection problem by requiring most Americans to buy insurance, the provision that Republicans despise most. "The way the ACA works is, it asks healthy people in the market to subsidize sick people," Levitt said. "So far that's worked pretty well."

Apart from high-risk pools, Fiorina said that if elected president she would "push decision-making as close to the people as possible" on health care and "try what we have never tried in the health insurance market, which is actually the free market."

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