The passage of health reform will extend coverage to a vast majority of the currently uninsured over the next decade. But if you’ve been paying attention to the various health care reform implementation timelines floating around, you know that the health insurance exchanges won’t start until 2013 or 2014 for the House and Senate bills, respectively. (Though there are a number of immediate benefits available in both bills.)
So how is health reform going to get insurance to those who can’t wait another few years? The answer lies creating a national high-risk insurance pool, which Karen Pollitz describes in a recent Kaiser Family Foundation issue brief, Issues for Structuring Interim High-Risk Pools.
What is a high-risk pool? High-risk insurance pools actually already exist in many states (35, according to Pollitz). State high-risk pools serve as a safety net -- those who are denied coverage in the individual insurance market because of a pre-existing condition can still buy into the state-sponsored high-risk pool.
How will risk pools work under health reform? Both the House and Senate bills will create a temporary national (rather than state-based) high-risk pool as soon as reform passes. As we’ve mentioned before, high-risk pools work better as a temporary stopgap rather than a plan for providing health insurance coverage in the long term. The national high-risk pool will extend state high-risk pool protection to a national level. Unlike the state high-risk pools, that tend to charge higher premiums than most plans, the national risk pool will be more balanced and less costly. Pollitz describes a number of policy strategies those designing a national high-risk insurance pool should consider:
Eligibility. Most state pools admit individuals who either a) submit proof that they have been denied coverage due to a pre-existing condition, or b) show they have applied recently for insurance and been subjected to ‘adverse underwriting actions’ such as limited benefits or excessively high premiums. Some states accept enrollees based on a general list of conditions that make people uninsurable (such as diabetes or pregnancy). Pollitz suggests a similar list for the national pool would ease transition, and save people from the trouble of applying for and getting rejected from a private insurer. Additionally, most states use the state high-risk pool to provide mandatory coverage to HIPAA-eligible individuals or those eligible for the federal Health Coverage Tax Credit. Pollitz suggests extending this practice into the national risk pool, to maintain stability.
Crowd Out. High-risk pools must strike a careful balance -- accepting individuals who can’t get adequate coverage (or any coverage at all) -- while at the same time discouraging health plans and employers from entirely avoiding expensive customers. Different states have different standards for admittance to risk pools. For example, some states allow employees to enroll in the high-risk pool during the waiting period before their employer based coverage starts. Pollitz supports a similar provision that exists in the House bill -- if the goal of the risk pool is seamless coverage, the national risk pool should provide coverage to individuals who are still waiting for their employer-based insurance to kick in. Other ways to fight crowd out include an ‘anti-dumping’ provision in the House bill that allows the HHS Secretary to investigate allegations employees are being inappropriately pushed into the national risk pool. Pollitz cautions against the Senate provision that requires everyone in the national risk pool prove they have been uninsured in the past, as it may discriminate against those who are sick but only recently lost their coverage.
How much will it cost? State high-risk pool premiums are calculated based on the “standard rate” of what most private health plans charge for a similar type of coverage. The risk pool premiums tend to be 125 to 200 percent higher than the standard rates, which deters some individuals from entering the pool. Pollitz encourages a review of the methodology used to calculate the standard rate and the pool rate: policymakers could either prioritize ample enrollment and lower pool premiums to promote affordability, or prioritize low program costs for the national risk pool by charging high premiums.
Subsidies and funding. The House and Senate bills both provide about $5 billion dollars to subsidize the cost of coverage in the national high-risk pool. Neither bill specifies whether or not individuals in the pool will be able to get the same kind of low-income subsidies that will be provided in the new health insurance exchange, but the uninsured often have low-incomes and will probably need assistance purchasing insurance. Pollitz suggests the national pool could offer premium cost sharing -- letting a third party like a community health center, hospital, or even the state pick up the tab for some patients. Pollitz writes that additional funding for the national risk pool could be appropriated from money set aside to assist current state risk pools ($75 million per year), or national risk pools could be granted access to the prescription drug discounts in health reform. Additional changes, such as suspending enrollment or altering benefits, could be made at the discretion of the HHS Secretary.
Consumer protection and benefits. Pollitz suggests that the temporary high-risk pool should feature the same consumer protections made available by health reform, such as prompt payment of claims, clear and understandable language explaining health plan policies, and an appeals process that makes sure consumers can fight back if they are being taken advantage of by their insurer. The national pool is required to include the same benefit standards guaranteed by health reform, so Pollitz suggests a tiered system, where people in the risk pool can pay more to get greater benefits.
The national high-risk pool presents a good opportunity for learning about how the provisions of health reform due to be implemented in a few years will work in practice, Pollitz concludes. Through information sharing, we can carry on any policy successes in the national risk pool to later stages of reform, and discard any failures -- especially those that are shown to harm the vulnerable populations health reform seeks to help.
For a more detailed look, check out the full issue brief here.