The ACA marketplace is damaged and taking new hits...but it's not a high risk pool and probably won't be

Update, 3/8/18: Various analyses are now predicting steeper premium hikes and coverage losses than I anticipated here, resulting from the combined effects of mandate repeal and greenlighting of short-term and AHP plans. See Urban Institute, 2/26, and Covered California, 3/8.
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Since it first hit email boxes a few months (or maybe a year-plus?) ago, Vitals, Axios' healthcare e-newsletter, has beguiled its way into a first read. Editor Sam Baker, and Axios generally, have taken the holy grail (or shibboleth) of contemporary prose, concision, to a new level, sating our short attention spans while salting news aggregation with interpretation.  I find the trademark "be smart" tagline a touch patronizing, but the substance of that signposted takeaway is nearly always on point.

That said, I'm going to quibble with today's lead storylette, with a point behind the quibble that goes beyond Axios, I think.

The news item is HHS's proposed rule to allow loosely regulated short-term health plans to be sold for terms as long as a year rather than three months, the limit that went into effect last April. Since short-term plans are cheap, medically underwritten and not bound to cover Essential Health Benefits, they are poised to attract healthier buyers. With this rule, Trump's HHS punches one more hole in the ACA risk pool

Here's my quibble. According to Sam Baker, The ACA-compliant individual market is "sliding deeper into something a lot more like a makeshift high-risk pool, in which healthy people are absent and the government simply pays to cover sick people." I think that's overstated.

CMS's warmup for AHCA-world: Guidance on ACA innovation waivers

CMS recently issued guidance to states seeking ACA Section 1332 "innovation waivers," by which states can apply to alter or even thoroughly redesign their ACA marketplaces.

The checklist offers explicit encouragement to states to seek federal funding for reinsurance programs or high risk pools:

In particular we welcome the opportunity to work with states to pursue Section 1332 waivers incorporating a high-risk pool/state-operated reinsurance program. State-operated reinsurance programs have a demonstrated ability to help lower premiums, and if the state shows a reduction in federal spending on premium tax credits a state could receive Federal pass-through funding to help fund the state’s reinsurance program. 

Encouragement to states to implement a reinsurance program is good news, as reinsurance does keep down premiums, and the expiration of the ACA's federal reinsurance program after 2016 contributed to the 2017 premium spike. Including the high risk pool (HRP) option is a bit of a mystery, since 1332 waivers cannot be used to waive the ACA's ban on medical underwriting or guaranteed issue. (The waivers can be used to alter the ACA's Essential Health Benefits required of all qualified health plans, as well as subsidy formulas and the individual and employer mandates.)

High risk pools within 3 months? How?

Considering it will take four years to get the health insurance exchanges set up, I'm a little mystified how the Patient Protection and Affordable Care Act can get a program offering catastrophic coverage for people with pre-existing conditions up and running within three months, as the law mandates. Equally mystifying: how can the budgeted $5 billion cover the program?

The basics, as stipulated in Section 1100 of the PPACA and contextualized by Kaiser Health News, are as follows. People with pre-existing conditions who have been without coverage for at least six months can buy coverage in the high risk pool at rates comparable to those available to people without such conditions. The oldest people eligible may pay up to four times as much as the youngest (as opposed to a 3 to 1 ratio in the exchanges).  Their yearly out-of-pocket expenses are capped at  $5950 for individuals and $11,900 for families.  The plans must cover at least 65% of total costs. The program is a stopgap that will end in 2014, when people with pre-existing conditions will be able to purchase insurance from the exchanges on the same terms as everyone else. It is unclear whether the Federal government will set up a single pool or whether The National Association of State Comprehensive Health Insurance Plans will adapt and expand existing state plans.  Nonprofits may also be tapped to administer the plans.