Planning advances for high-risk pools, but not all states want it
States advancing plans for high-risk insurance pools, but not everyone is ready—or willing—to make the dive
One of the first tests of how well the new federal health reform law will extend coverage to the uninsured comes this summer.
As early as July 1, the uninsured with pre-existing health conditions will be able to apply for coverage through temporary high-risk pools. These pools will be run by either the states or HHS and be operational until January 2014, when insurance exchanges go online and other coverage provisions take effect.
This temporary high-risk pool program is widely viewed as crucial to getting the most uninsurable people some relief right away. But a lot of unanswered questions remain about how the pools will be structured, and whether everyone who needs coverage will be able to get it, and if the $5 billion allocated to the program will be enough.
Also of concern is what will happen to the nearly 200,000 people nationwide who are cov- ered today through existing state-run high-risk pools—and who likely won’t qualify for better, lower-cost coverage through the new pools.
“This program presents an opportunity for people who have just been shut out of health insurance, even if they could afford the premiums,” says Karyn Schwartz, senior policy analyst at the Kaiser Family Foundation. “It will hopefully decrease the burden of uncompensated care.”
On April 2, HHS Secretary Kathleen Sebelius sent letters to all states soliciting their interest in running a new high-risk pool with federal funding. According to HHS, 29 states and the District of Columbia have opted to run the program, while 19 states declined to participate, meaning that HHS will operate the program in those states. Two states—Utah and Kentucky—had not yet decided at press time (See map, p. 29).
States that chose to run the program had until the end of May to submit an application to HHS outlining how they will structure it. Utah and Kentucky have both requested applications, according to HHS. The federal agency is expected to issue further guidance on the program in June, with the goal of having the program up and running in July.
The parameters, so far, are fairly broad. Those eligible must be citizens, nationals or legal residents, have a pre-existing medical condition “in a manner consistent with guidance issues by the secretary” of HHS, and must have lacked “credible coverage” for at least six months.
What qualifies as a pre-existing condition or “credible coverage” are yet unknown — and both could determine how many people are eligible for the program.
For instance, what if a person has catastrophic coverage in the individual market, say in a state such as New York, which doesn’t allow insurers to deny people based on pre-existing conditions? It’s possible that someone in that situation could prove their coverage is not credible and switch into the new high-risk pool right away, says Sara Collins, vice president for affordable health insurance at the Commonwealth Fund. But Collins cautions that the intent of the program is not to give better coverage to people who already have it.
HHS “views this as an interim solution for people who don’t have coverage,” she says.
That could leave people already enrolled in existing high-risk pools paying higher premiums with skimpier coverage, according to disease advocacy groups. Currently, 34 states operate high-risk pools, covering nearly 200,000 people total. These programs differ from state to state in terms of eligibility requirements and cost of coverage. But by and large, the costs to enrollees are higher than they will be in the new pools.
Stephen Finan, senior policy director at the American Cancer Society’s Cancer Action Network, says the situation is unfair. “The new program was clearly intended to be a stopgap measure to provide some relief to the existing uninsured,” he says. “But they didn’t think it through carefully. I don’t think the staff members in Congress thought the inequity issue would arise.”
The minimum benefit package of the new pools will be determined by HHS, probably in June. Plans must cover at least 65% of healthcare costs, and premiums must be set as if they are for a “standard population,” not a high-risk one, according to the health reform law. Premiums can vary by age by no more than 4-to-1. They can also vary by family composition and geo--
Collins: HHS sees the program as an “interim solution.”