High-Risk Pools: How Temporary?
What happens when the money runs out?
The new health reform law provides $5 billion to states to create temporary high-risk pools until broader reforms take place in 2014. But health care experts warn that $5 billion should last one year at most.
HHS Secretary Kathleen Sebelius at the beginning of April asked governors and state insurance commissioners whether they wanted to form their own high-risk pools, or whether the federal government would need to do it in their state. One state already has indicated that it won't do it. Currently, more than 30 states have high-risk pools, although they are often underfunded and have long waiting lists and high premiums.
In theory, both Democrats and Republicans have supported the concept of high-risk pools. Will these pools, as they are envisioned in the health reform law, help? Is it better for states or the federal government to run them? And should Congress appropriate more money?
April 22, 2010 1:55 PM
Funding One of Several Problems
By Marilyn Werber Serafini
Joe Luchok, a communications consultant who has worked on health care issues for organizations including the March of Dimes and the now defunct Health Insurance Association of America, argues that temporary high-risk pools have several problems, "and funding is one. The either/or is that if the plan helps many people then $5 million will not last very long so more funding will be needed or if $5 million is enough the plan will not help many people.
"Current high-risk pools have not been that effective because the combination of premium cost and out-of-pocket costs are too expensive for many people and the overall cost of running the pool is so expensive that states have limited enrollment. The interim pool will minimize the individual cost problem by charging standard rates for the area and capping out-of-pocket expenses. Since states have limited enrollment in their high-risk pools there should be a waiting list of people who will flock to the temporary plans, pushing up the cost of running the plan.
"Who should run the temporary pools? 35 states ...
Joe Luchok, a communications consultant who has worked on health care issues for organizations including the March of Dimes and the now defunct Health Insurance Association of America, argues that temporary high-risk pools have several problems, "and funding is one. The either/or is that if the plan helps many people then $5 million will not last very long so more funding will be needed or if $5 million is enough the plan will not help many people.
"Current high-risk pools have not been that effective because the combination of premium cost and out-of-pocket costs are too expensive for many people and the overall cost of running the pool is so expensive that states have limited enrollment. The interim pool will minimize the individual cost problem by charging standard rates for the area and capping out-of-pocket expenses. Since states have limited enrollment in their high-risk pools there should be a waiting list of people who will flock to the temporary plans, pushing up the cost of running the plan.
"Who should run the temporary pools? 35 states have high-risk pools and could incorporate the new plan into the basic structure but that would create two a system with different standards as those in the current pools would pay more for their insurance than those entering the new pools. If states set up a separate pool that would increase administrative cost. If the federal government runs the plans they have to set up the infrastructure and that would be costly.
"Anyway you look at it, $5 billion will not last until 2014."
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April 19, 2010 11:22 AM
Risk Pools the Right Way
By John C. Goodman
President and CEO, National Center for Policy Analysis, and Kellye Wright Fellow
If you are going to have a risk pool, it seems to me that you ought to do it in a way that does not create perverse incentives. This is a hard topic to discuss these days because the White House and Congressional leaders are running around telling everyone that people should be able to get insurance after they get sick -- even if those people were uninsured for many years while they were healthy.
First, the only people who should be able to get unqualified, subsidized insurance in a risk pool are people who have been previously insured for some time and who have been paying premiums into the system and who lost their insurance, say, because of a job change. For the most part, these are people who are already protected under HIPAA. Second, others who enter the risk pool should be charged a penalty -- depending on how long they were willfully uninsured. Third, we should begin moving to a system under which the departed insurer pays something to the new insurer. We shouldn't have one insurer collecting all the premiums, while another has to pay all the bills.