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High-Risk Pool Changes First Reforms on Tap in California

If national health reform works as planned, it will mean the demise of a 20-year-old state program designed to serve the hard-to-insure in California. The director of the agency overseeing the program is thrilled at the prospect.

“I think it would be a wonderful thing if there were no need for high-risk pools at all and that is exactly what is envisioned in this reform package,” said Lesley Cummings, executive director of the California Managed Risk Medical Insurance Board. MRMIB manages the Managed Risk Medical Insurance Program, or MRMIP.

One of the first changes California and other states will see as a result of national health reform is the creation of a new insurance pool for “high-risk” patients. Within 90 days, people with pre-existing medical conditions who have been unable to obtain coverage on the individual market will be eligible for insurance from the new, national pool.

In government bureaucratic-speak, 90 days is like tomorrow.

“This is definitely among the first issues this state — all states — will face, and it is an ambitious timeline,” Cummings said. “A lot of things have to happen in the next three months.”

No matter how the changes are brought about, they represent good news, Cummings said.

“This is fabulous news for people with high-risk conditions. There’s more money, and there will be more coverage,” Cummings said.

MRMIP’s Days May Be Numbered

Since 1991 in California, high-risk candidates who have been turned down for health insurance on the commercial market have turned to MRMIP .

It’s not clear yet how the new national pool might affect MRMIP. One could absorb the other, they could co-exist separately or they could act as partners.

But no matter how they interact over the next three-and-a-half years, both programs — federal and state — are supposed to become extinct in 2014.  The need for high-risk health insurance pools will theoretically end when insurance companies will no longer be allowed to deny coverage because of pre-existing conditions. One of the many reforms health insurers face as a result of this legislation is welcoming all comers into the pool — pre-existing conditions, high risks and all — by 2014.

The national high-risk pool, funded with $5 billion, will offer subsidized premiums to people who have been uninsured for at least six months. For states that already have high-risk pools, including California, that raises the question of how to define “uninsured for the past six months.”  Technically, the 7,100 people currently covered through MRMIP do have insurance. Whether they will be eligible for subsidized premiums remains to be seen.

How much of that $5 billion flows into California and how exactly it will be spent are still up in the air, like dozens of details to be dealt with in coming weeks.

Canary in the Coal Mine?

Many California health programs and agencies eventually will face questions similar to those now confronting MRMIB — questions about how state agencies interact with new federal policies. It’s too early to say whether MRMIB’s soon-to-be shaped relationship with federal policy will set a tone, but it is safe to say the process of defining and then negotiating this new national high-risk pool will be closely watched by many in the health care arena in California.

The other programs managed by MRMIB — Healthy Families, the state’s Children’s Health Insurance Program; the County Health Initiative Matching Program; and Access for Infants and Mothers — may also see reform-related changes but not as quickly as MRMIP.

In some ways, MRMIB’s high-risk program will be the canary sent into the coal mines of health reform.

“I definitely think people are very interested in how this element will unfold,” Cummings said. “A lot of what happens will be determined by how the secretary (HHS Secretary Kathleen Sebelius) decides to structure the federal presentation. We have to really wait and see what kind of guidance comes to the states,” Cummings added.

That same waiting-for-guidance will be repeated in several California agencies and health department offices this spring and summer.

New federal oversight of health insurers could be particularly thorny to navigate in California, which has two state agencies dealing with health insurance — the state Department of Insurance, headed by Steve Poizner, and the Department of Managed Health Care, headed by Cindy Ehnes. California’s managed care agency is the only stand-alone state-run HMO watchdog in the nation.

Similarities to California’s Attempt at Reform

Many of the reforms signed into national law last week resemble similar reforms mapped out for California three years ago — expanded, mandatory coverage, guaranteed issue of health insurance and new attention to prevention and wellness. Governor Arnold Schwarzenegger’s (R) big push for reform failed in 2007 largely because legislators decided the state couldn’t afford it.

Now the Republican governor’s administration is saying California may not be able to afford national reform. California HHS Secretary Kim Belshé said Schwarzenegger administration estimates suggest California could face new costs of several billion dollars a year, mostly due to expanded Medicaid coverage. Medi-Cal is California’s Medicaid program. She said states still need support for significant costs ahead.   

“Our state health policy experts are in the process of analyzing the final version of the legislation to refine our fiscal estimates and better understand the significant work that will be required to implement reforms this year and in the years ahead,” Belshé said in a prepared statement.

“We look forward to continuing to work with Congress and the Obama  Administration to ensure that states like California have the fiscal, technical and  administrative resources required to effectively implement federal health reform  and the expansion of these new federal benefits,” Belshé said.    

Reform Welcome in Trenches

Despite long-term costs and short-term headaches of dealing with new mandates and policies, many — perhaps most –workers in California’s health care trenches welcome the sweeping changes called for in the new law.

“Many, many are the times that this day has come close, but not really arrived,” Cummings said. “It’s hard to not just be awestruck that this day has actually come. I’m gratified that something finally happened.”

Cummings said the changes for high-risk patients are particularly welcome.

“I know there are people who have criticisms of elements of the overall reform bill, but in this case, high-risk people will definitely be better served because of this act. They will get relief in the short term and in the longer run they’ll have stability and a guarantee of coverage,” Cummings said.


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