Discussion
For individuals deemed uninsurable by the private insurance market insurance, is often unavailable, and what is available is of low quality and high cost.
In many states, individuals considered uninsurable due to pre-existing health conditions have access to insurance through state run high-risk health insurance pools. Traditionally, these pools provide substandard coverage at exorbitant rates, but for many individuals suffering from diabetes, AIDS or other serious chronic health conditions they remain the only option.
Estimates from the
Heartland Institute show that approximately 1 percent of the US population is “uninsurable” because of pre-existing health conditions. This population is usually ineligible for public health care programs such as Medicaid (because of their income) and does not have insurance available from their employer.
One way in which states have attempted to insure this population is through state run high-risk pools. While these plans were created to increase accessibility, they are also characterized by high premiums, high deductibles, onerous coinsurance requirements, and restrictions on the coverage of pre-existing conditions. One study conducted by the
Commonwealth Fund estimated that high-risk pools enroll only 8 percent of the population that is eligible for such coverage.
To make high-risk pools a viable insurance product, states need to invest the funding necessary to create affordable premiums with minimum coinsurance and deductible provisions. This can be achieved by broadening the funding base of the program and by attaching high-risk pools to other state insurance pools, such as state employee health plans. This will spread risk and lower costs.
To make high-risk pools a viable public policy option the financial burden placed on participants must be lowered. Most state high-risk pools set premium rates at between 150 percent and 200 percent of the private market rate. A paper published in the
Health Care Financing Review reports that if rates were decreased to 125 percent, participation would increase by as much as 33 percent.
States should seek to bring high-risk pool premiums closer in line with the general private market rate and minimize other cost sharing mechanisms (deductibles, co-pays, etc.). This will make these plans a viable option for more individuals.
Costs
All states operate their high-risk pools at a loss. Statistics published by the
Kaiser Family Foundation found that the proportion of costs actually accounted for by premiums ranges from 97 percent in Iowa to 22 percent in New Mexico. Nevertheless, the
Commonwealth Fund finds that the costs of participation scare off all but 8 percent of the target population according.
States have a number of options for increasing the size of their funding base to accommodate a greater fiscal commitment to high-risk pools. Currently most states use a combination of premiums, general funds and assessments on insurance providers to fund their high-risk pools. Federal ERISA restrictions prohibit states from assessing taxes on self-insured employers which make up as much as 50 percent of insured workers in some states, according to Families USA.
However, there are several ways of assessing fees on this portion of the market. Kentucky and Wisconsin assess high-risk pool fees on the reinsurers (See text box)that self-insuring employers use to limit risk, and other states charge health care providers a fee based on the self-insured share of the market.
In addition to broadening the revenue base for high-risk pools, states may also be able to lower the overall costs of these plans by attaching their high-risk pool to lower risk plans like the state’s employee health plan. The resultant pool would be lower risk and thus lower cost for high-risk pool enrollees.
While the cost of insuring the uninsurable population will likely remain high, these options can soften the cost of making these plans more accessible.
Public Perception
Americans are worried about the cost of health care and a vast majority of them believe that the government should intervene to make it more accessible.
There is no polling specifically on high-risk pools. But it is well established that anxiety about the cost of health care is not limited to the uninsured. According to a
2008 Kaiser Health Security Watch poll, 72 percent of US citizens are worried about their ability to keep up with the cost of health care. Sixty percent are worried that they will not be able to afford the health coverage they need (See chart below). Obviously, the cost of health care is an increasing financial and emotional burden in American life. This reality is even worse for the uninsurable, who have the highest premium costs in the nation and often face impediments that do not allow them to earn a full-time income.
Chart: Concerns about Health Insurance
Source: Kaiser Health Security Watch
Talking Points
Wouldn’t the existence of an affordable High-Risk Pool policy deter people from purchasing health care before they get sick?
No. In fact, most participants in high-risk pools are not individuals who waited until they were sick to sign up for care. The majority of high-risk pool policy holders actually lost employer sponsored health insurance when they were laid off or left their job. These individuals are eligible for care through the Health Insurance Portability and Accountability Act (HIPAA), which guarantees access to coverage for individuals who lose their employer sponsored care and make a good faith effort to find other coverage. The majority of participants in the program will continue to be HIPAA eligibles who have lost access to health care despite their own responsible health care choices.
Won’t the cost of a more generous High-Risk Pool system increase taxes?
Revenues for high-risk pool systems usually come from dedicated funding sources that do not directly affect most taxpayers. States can use a number of other options to increase these revenue streams. For instance, Wisconsin and Kentucky have expanded their high-risk pool assessment to reinsurers of self-insured employers, and other states use a provider surcharge to capture the revenues they are unable to garner from self-insured employers. State general funds need not be affected by any expansion of high-risk pool programs.
Who Else Is Doing It?
While the majority of states have some form of high-risk health insurance pools, state plans vary greatly in regards to access and affordability.
· Five states have high-risk pool premiums for less than $350 (Florida, Maryland, Minnesota, New Mexico, West Virginia).
· Fourteen states have high-risk pool premiums between $350-$499 (Alaska, Arkansas, California, Colorado, Iowa, Kansas, Kentucky, Mississippi, Montana, New Hampshire, North Dakota, Oregon, South Dakota, Utah.
· Fourteen states have high-risk pools premiums priced above $500 (Alabama, Connecticut, Hawaii, Illinois, Indiana, Louisiana, Missouri, Nebraska, Oklahoma, South Carolina, Texas, Washington, Wisconsin, Wyoming).
Spotlight on Innovation
The
Minnesota Comprehensive Health Association (MCHA) plan organized under
Minnesota Statutes Chapter 317 is the most successful high-risk pool plan in the nation. MCHA covers more people than any plan in the nation and is one of only two plans in the nation that covers more than half of its “uninsurable” population. MCHA achieves this broad coverage by maintaining relatively low premium rates, between 101% and 125% percent of private market plans, and by offering presumptive eligibility for individuals with conditions that are typically deemed uninsurable.
What Can You Do?
Governors can encourage outreach and require that individuals are notified of the availability of high-risk pool coverage when consulting state social services workers, health care workers community health centers, or insurance agents. Finally, Governors may have the authority to implement “presumptive eligibility” for individuals with diseases such as diabetes and AIDS that normally preclude obtaining insurance in the individual private market.
Nevertheless, the primary means of making high-risk pools more accessible is lowering the cost of obtaining these policies. Through the legislative process, Governor’s can work to lower premiums, increase premium assistance, and expand the resources available to subsidize high-risk pools.
To fully fund a more generous high-risk pool system, states can follow the lead of
Wisconsin and
Kentucky and expand their fee assessments to reinsurers, or other states that have instituted provider surcharges. Both of these options capture revenue lost due to the fact that self-insuring firms are exempt from fee assessments under federal law.
Resources
Policy Reports
Opinion Polls
http://www.kff.org/healthpollreport/CurrentEdition/security/upload/HSW1008.pdf
State Legislation
Kentucky Legislature
Minnesota Comprehensive Health Association (MCHA)
Chapter 317
https://www.revisor.leg.state.mn.us/statutes/?id=317A
Chapter 149
http://www.legis.state.wi.us/statutes/Stat0149.pdf