High-Risk Pools May Need Lower Expectations

High-Risk Pools May Need Lower Expectations

With days to go before uninsured residents can begin applying to new high-risk insurance pools, issues ahead of the program's launch have emerged as a microcosm of the past year's health debate.

There’s less than a month before the first major coverage expansion under the health reform law takes effect, when states are slated to begin opening temporary high-risk insurance pools. However, the ramp-up ahead of the pools’ launch has emerged as a microcosm of the past year’s health debate. Governors have split — largely along party lines — over whether their states will participate in the pools, analysts are concerned about the program’s unintended consequences and a new report suggests the program’s promise outstrips its funding.

Participation in Pools Splits States

State regulators have significant experience with high-risk pools — the model is three decades old and covers about 200,000 residents in 35 states — but typically high premiums and long wait lists render the option unreachable for many uninsured residents. Meanwhile, the premiums are not nearly high enough to pay claims, leaving states to typically cover about 40% of the cost.

California’s existing pool, the Major Risk Medical Insurance Program, is among the nation’s stingiest. The high-risk pool of the nation’s most populous state caps insurance benefits at $75,000 and enrollment at 7,100, less than 2% of its uninsured population, compared with more than 15,000 for Oregon’s high-risk pool.

The new federally funded pools are intended to run from July 2010 through January 2014, aiming to offer immediate relief to the most uninsurable people with pre-existing conditions before sweeping changes expand health coverage to millions in 2014. States’ proposals on how they would administer the pools were due to HHS this week, and the agency is expected to approve those proposals and begin disbursing $5 billion in program funds on July 1. The new pools might work side-by-side with existing state programs or, in some cases, absorb them altogether.

About two-thirds of the states, including California, will participate in the program, although there may be little technical difference in states that opted out of the pools, as the federal government says it will guarantee coverage for residents in those states. Moreover, some smaller states reportedly could benefit from participating in a larger, federal pool, which would spread the risk further. At the same time, the more states that operate their own pools, the less pressure on HHS to oversee the pools.

The decision to opt in or out could be “seen as a reflection of … support for the health law,” PBS notes. Most states that elected not to run their own pools have Republican governors.

Open Questions on Eligibility

Lawmakers have expressed doubts about the 90-day sprint from bill passage to pools’ implementation, suggesting that the tight timeline means key questions remain unanswered.

To qualify for the new pools, uninsured residents with pre-existing health conditions must be without insurance for six months and will be required to pay premiums that are similar to those paid in a “standard population” for insurance. However — with just weeks to go — HHS has yet to define what qualifies as a pre-existing condition, which could determine eligibility.

Analysts also have concerns over the fate of the nearly 200,000 U.S. residents covered under existing state-run high-risk pools, who might not be eligible for the new program’s lower-cost and more-expansive coverage. Because such individuals are currently insured, they would have to drop their coverage for six months to try to qualify for the new pools, which may carry premiums that are 10% to 40% less expensive.

However, patients who need continuous coverage — like those with cancer — would be unlikely to take that gamble, says Stephen Finan, senior policy director at the American Cancer Society’s Cancer Action Network.

California officials also are urging residents to halt applications to MRMIP and wait for the federal high-risk pool to open.

Fears About Cost

Meanwhile, the pools may cover just a fraction of the intended target population, barring an infusion of new federal funds or a severe cut in benefits.

The $5 billion that legislators set aside to fund the pools is likely insufficient to cover the cost of all U.S. residents who will qualify for the program, according to an analysis by the Center for Studying Health System Change and underwritten by the National Institute for Health Care Reform. Between 5.6 million and seven million U.S. residents with pre-existing conditions could be eligible for the new pools, but just 200,000 of these residents would be able to be covered under existing funds, says Mark Merlis, who authored the analysis.

To cover more residents, Merlis suggests that administrators could strip down the program’s benefits, such as offering catastrophic, as opposed to comprehensive, coverage. Congress also may need to revisit funding or the program’s structure — which would be another sign that the high-risk pools, like the reform law’s implementation, remains a work in progress.

Here’s a look at what else is making news across the nation.

Federal Role

Updates From HHS

On the Hill

Reform’s Impact

Exit mobile version