High Risk Pools in Health Reform

As I said in my last post, the high risk pools provided for in the new healthcare law go into effect on July 1.  That's eight days from today.  When I wrote extensively about the new law during the debate earlier this year, I received many requests for information as to how exactly those high risk pools would work, who would administer them, and what the specific criteria are, and how one can take advantage of it should it be necessary. Today, I embark on an effort to provide as much information on this front as possible.

Structure and Administration: First of all, the structure works this way, as reported in a study published by the National Institute for Health Reform:
Program structure. HHS has indicated that states may operate a new high-risk pool either alone or alongside an existing pool—build upon other existing coverage programs for high-risk individuals or contract with a current carrier of last resort or other carrier to provide subsidized coverage. If a state does nothing, HHS will administer the coverage program in that state. As of May 21, 2010, 29 states and the District of Columbia had signaled an interest in operating their own programs, while 19 states declined to participate. Rhode Island and Utah were still deciding [as of May 21, 2010].
As you can see, it's a hodge podge of administration.  Who administers your program depends on where you live.  You can scroll down to Supplementary Table 1 in the above study and see detailed information about your state, including how much funding HHS is designating for the operation of these pools in your state.

Eligibility: HHS has provided fairly unambiguous information about who is and isn't eligible for the high risk pools.  You can read them here.  Basically, the criteria are: citizenship or legal residency of the United States, lack of "credible coverage" for more than 6 months, and a pre-existing condition which prevents one from obtaining such coverage.  What is this "credible coverage?"  It's defined (5 MB file) under Section 2701(c)(1) of the Public Health Service Act thusly:
CREDITABLE COVERAGE DEFINED.—For purposes of this title, the term ‘‘creditable coverage’’ means, with respect to an individual, coverage of the individual under any of the following:

(A) A group health plan.
(B) Health insurance coverage.
(C) Part A or part B of title XVIII of the Social Security Act.
(D) Title XIX of the Social Security Act, other than coverage consisting solely of benefits under section 1928.
(E) Chapter 55 of title 10, United States Code.
(F) A medical care program of the Indian Health Service or of a tribal organization.
(G) A State health benefits risk pool.
(H) A health plan offered under chapter 89 of title 5, United States Code.
(I) A public health plan (as defined in regulations).
(J) A health benefit plan under section 5(e) of the Peace Corps Act (22 U.S.C. 2504(e)).
Plans covering only "excepted benefits" (defined as anything that cannot be counted as real health care coverage - i.e. catastrophic coverage, medical coverage on an auto policy, workers' comp, etc.) are not counted as credible coverage under the law.  So, if you have medical coverage under auto policy, or catastrophic or accident only medical coverage, you are still eligible for the high risk pool, provided you meet the other criteria.

States with existing high-risk pools will be able to follow their own criteria, provided they are approved by the Secretary of HHS and at least comply with the above rules. Here are the states that have existing high risk pools.  Note that not every state with a high risk pool has agreed to operate or integrate the federal high risk program.  You may want to check this list against the table in the study by NIHR (linked above, under "Structure and Administration).  Only if your state both has a high risk pool and has agreed to run a federal one would that state's criteria apply to you.

Cost: The next question in the minds of people who are looking to buy this coverage is how much it will cost. Heck, that's probably the most important question.  According to the HHS fact sheet, costs for such plans will not exceed 100% of the standard non-group rate (i.e. individual rate).  Rates will not vary more than 1:4 on the basis of age.  Is that affordable?  No, insurance in the individual market is cost-prohibitive for a great number of people.  It does, however, bring the rates of someone with a pre-existing condition to that of someone without one.  According to the National Institute for Health Care Reform, people with pre-existing conditions are quoted rates of at least 150% of standard, if they are offered coverage at all.  Unfortunately, this particular provision is not designed to provide insurance to those priced out of the market.  It is there to provide coverage to those who are not accepted by insurance companies at any price.

Before we all go off the reservation about the affordability of this particular provision, though, there are some help coming to the affordability end as well - including for some who have pre-existing conditions.  Beginning in September, children can no longer be denied based on pre-existing conditions.  The 2009 expansion of the Children's Health Insurance Program, nearly 4 million additional children became eligible for CHIP.  Thus, the portion of the market for the high risk pool that would be children is completely eliminated.  About 14% of adults with pre-existing conditions are offered coverage through an employer plan.

At the end of the day, this program is not the answer to the prayer of Americans who are either denied or offered unaffordable premiums for coverage due to a pre-existing conditions.  It is, nonetheless, a stop-gap measure that will help people get covered - not with the greatest of coverage, but some coverage while the system transitions to one where no one may be denied coverage or priced out of the market for pre-existing conditions.

Ahead: Tomorrow, I will attempt to compile a list of states and contact numbers for those of you who are looking for that information so you can get coverage.  Stay tuned.


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