Health Care Reform Makes Temporary High-risk Pools for Those with Pre-existing Conditions

September 20, 2010

Federally mandated high-risk pools could provide coverage for those with pre-existing conditions

One of the first programs to be implemented from the federal health care reform bill, which was passed in March 2010, is the creation of a national high-risk pool. The temporary, national high-risk pool is meant to provide medical coverage to those who previously couldn't get health insurance because of a pre-existing condition.

High-risk pools offer medical insurance to people who have been denied coverage by private health insurers because they are pregnant, have cancer, or have another serious disease that deems them "uninsurable." Thirty-five states already have high-risk medical insurance pools for those with pre-existing conditions, but the new federal law extends high-risk pool protection to everyone in the country. This provision in the health care reform law forces some states to create pools and other states to modify or maintain existing programs.

The federal law also reduces the cost of the often-expensive risk-pool medical insurance coverage, and allocates $5 billion to subsidize the new program. States without high-risk pools were given 90 days to establish programs or to request that the Department of Health and Human Services administer one for them.

These temporary pools for more affordable health insurance are to be replaced in 2014 with insurance exchanges that allow Americans to shop for health insurance quotes and coverage.

The Impact on States

Although some states without high-risk pools are attempting to sue the federal government over the requirements of the new law, other states with existing high-risk health insurance pools are taking steps to modify their programs to meet the new federal requirements.

Illinois, for example, is likely to reduce the premiums charged for its two high-risk pools. Annual premiums range from $12,000 to $16,000 and cover two-thirds of the cost of the coverage. But under the federal law, premiums can't constitute more than 35 percent of the program cost. The federal law also bans coverage exclusions for pre-existing conditions for six months--something that the Illinois high-risk pool allowed.

In Nevada, which doesn't have a high-risk pool, state officials haven't announced how they may respond to the federal mandate. If officials in the state, where 525,000 residents don't have health insurance, decide they don't want to create a high-risk pool, the federal government creates one for them or hires a non-profit agency to create and administer a program. Currently, uninsured Nevadans often receive health care at hospital emergency rooms, and if bills are unpaid, the cost is absorbed by the hospital or charged to state programs covering indigent care.

Many Uncertainties Remain

Although the federal regulations surrounding high-risk pools limit the cost of medical insurance premiums to 35 percent of total costs, it is unclear how much participants may have to pay or how many may qualify. In order to qualify, a patient must have a pre-existing condition and have been uninsured for six months prior to applying for coverage from the high risk pool.

In states where a new high-risk pool has to be developed, questions remain about who may provide the actual medical services because it takes time to establish a provider network. One option, suggested in a report from the Kaiser Family Foundation (KFF), would be to use a state's existing Medicare network. Although doctors and hospitals might object because Medicare payments tend to be lower than those paid by commercial insurers, KFF researchers point out that in many cases doctors and hospitals are already caring for uninsured individuals and not getting compensated. A new high-risk pool would change that.

Jim Sloan

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