Premium Reduction Approved for State High-Risk Coverage

Change is coming for the 5,823 current enrollees in California’s Major Risk Medical Insurance Program, and it’s change they’re going to feel in their pockets.

Premium rates are about to go down to match the rates paid in the similar federal program, the Pre-Existing Condition Insurance Plan.

The Managed Risk Medical Insurance Board, which oversees the state plan, voted last week to adopt the new premium rate cut that was made possible by a new state law.

Under AB 1526, authored by Assembly member Bill Monning (D-Carmel) and signed three weeks ago by Gov. Jerry Brown (D), the new rate goes into effect Jan. 1 and will remain in effect for the 2013 calendar year. It sets a premium rate that is 100% of the commercial rate charged for insurable people, instead of the 125% rate that has been previously charged to MRMIP subscribers.

“Many people are having a hard time, as premiums and health care costs keep going up, so whatever we can do to help our subscribers is important,” said MRMIB member Ellen Wu. “Especially since these are people who need more care, and have been left out of the system. They can’t go six months without care.”

In the past, if high-risk subscribers wanted to opt out of MRMIB coverage to sign up with the less-expensive federal PCIP program, they had to spend six months without any coverage at all before becoming eligible for PCIP. Now the rates will match, and there will be no incentive to take that risk.

“If you have a condition that needs regular care, and most of these people do, and you’re waiting for PCIP, you’re going to take a significant hit — either healthwise or financially,” Wu said.

The difference to the state is minimal, with no general fund hit, according to legislative analysis, since MRMIP currently is far below enrollment capacity and budget. So for Wu, last week’s approval of the premium rate cut didn’t take much deliberation.

“It’s one of the more positive things that we’ve been able to do,” Wu said, “after so many bleak things that have happened this year.”

Currently, 59% of premium cost is borne by subscribers, with 41% paid through a tobacco surtax fund created by voters through passage of Proposition 99 in 1988.

It is a one-year rate reduction, because high-risk coverage will become unnecessary in 2014 when national health reform goes into effect. High-reisk subscribers in the federal and state plans will be able to get coverage through the state Health Benefit Exchange.