Covering high-risk insurance pools: Dave Hage
The federal government and states are scrambling now to create temporary high-risk pools for the medically uninsurable by July 1. As one of the first provisions of the Patient Protection and Affordable Care Act to go into effect, it will serve as a test case for implementation of the new law and it should be closely followed.
Some states with existing high risk pools are passing laws to ensure their programs comply with the new federal rules and are eligible for some of the $5 billion in federal funding. Other states are refusing to alter their programs and ceding responsibility to the federal government. But apart from being a policy story, it’s of great interest to all your readers, viewers or listeners who have pre-existing conditions and are struggling to find coverage.
AHCJ has asked some reporters covering the topic for story tips, suggestions and resources. We expect to add more tips and resources to this package as the story develops. If you have something to contribute, please send it to firstname.lastname@example.org.
By Dave Hage
Minneapolis Star Tribune
Minnesota has the nation's biggest state high-risk pool, and perhaps the oldest. The Minnesota Comprehensive Health Association (MCHA) was created by the state legislature in 1976 and today insures 27,000 people, though enrollment has climbed as high as 35,000.
MCHA done a good job of covering people who cannot obtain coverage in the individual market - for example, people over age 45 with pre-existing conditions as simple as depression or diabetes.
But it's not cheap. Premiums are about 20 percent higher than for comparable coverage in the private individual market – easily $10,000 a year for a family policy with big deductibles. I know one person paying $1,000 a month for an individual policy.
Even so, premiums cover only half the pool's costs; it requires a state subsidy and has had chronic budget problems.
Questions to ask:
Is the coverage affordable and attractive? (Assuming people have a choice in the matter.) In the past year about 5,000 people have dropped their MCHA coverage, and 11 percent said it was because they couldn't afford it.
Is the pool financially sustainable? Minnesota's pool is subsidized through an assessment on health insurers, which they pass on in the form of higher premiums, mainly to employers who offer group coverage to employees. But that pool of employers is shrinking as more and more companies opt to self-insure and don't pay premiums subject to the assessment. That leaves a shrinking number of employers to pay the state assessment, which forces the state to raise the assessment periodically, which drives more employers toward self-insuring. In other words, a death spiral.
Is the pool positioned to flex with ups and downs in the economy? Historically MCHA enrollment expanded during recessions, when people lost employer coverage, and shrank during expansions. Enrollment did not grow during the 2009 recession, but that might reflect the high premiums.
The MCHA executive director, Lynn Gruber, is a good source on how states will respond to the new federal law.