As we noted yesterday, the special high-risk pools created by the federal health law to cover some people with pre-existing conditions will end in 2014. The people covered by the pools will be eligible for coverage in the state exchanges (or some may qualify for expanded Medicaid).
But about 35 states have some form of high-risk pools of their own, most of which predate the health law. The approximately 200,000 people they cover also will have new coverage options under the Affordable Care Act. Insurers won’t be able to reject them or charge them more because of pre-existing conditions.
But will states shut down these pools as soon as the exchanges open on Jan. 1? That used to be the thinking – Jan. 1 or soon after. Then came a wave of second thoughts about that — worry that putting some of the sickest, most costly people in the exchanges at the very beginning would warp the risk pool and raise prices for everyone. The concern is particularly acute about the first year as there is a lot of uncertainty about how robust enrollment will be in these new markets, and how many relatively young, healthy and low-risk people sign up.
The law contains several risk adjustment measures meant to reduce the risk for insurers, particularly in the early more uncertain stages. (Look at the glossary section of our Health Policy core topic area for definitions of risk adjustment, risk corridors, and reinsurance.) But precisely how much market turbulence there will be in the first few months remains an unknown. As a result, some states are having more second thoughts – or third thoughts – about how quickly to phase out their pools. If they move too quickly, it could upset the market. But if they move too slowly, they may lose a chunk of the $20 billion in risk adjustment funds for health plans in the exchanges with high cost enrollees.
There isn’t a clear consensus on which strategy is smarter in the long run. Also, there are questions about whether it’s right or fair to leave these people out of the exchanges temporarily and have them pay much higher premiums in the risk pools – versus the risk of having them move into the exchanges quickly and possibly run up such high medical bills that the prices for everyone go up in 2015, creating the insurance “death spiral” that some fear.
This is an issue you can report on in your state. What’s the current timetable for phasing out the risk pools, and the pros and cons of the decisions? Who is pushing for what option – the insurers, the advocacy groups, the state officials? What studies and assumptions are they basing their decisions on? When the high-risk pools are phased out, what steps are being taken to shift the people in them into new coverage options? How much outreach? Is there some kind of auto-enroll option to shift them over at the beginning? If so, into what options?
