High Risk Pools
The Patient Protection and Affordable Care Act, signed by President Obama on March 23, 2010, creates a temporary national high-risk pool to provide health coverage to people with pre-existing medical conditions who have been uninsured for six months or more. This high-risk pool is intended to be implemented quickly and will attempt to provide many individuals with temporary coverage until the broader coverage provisions, including the Health Insurance Exchange, take effect in January 2014.
The new law law establishes basic requirements for the high-risk pool program that are to implemented ninety (90) days after enactment, on June 21, 2010. Each state has the choice to either work with the federal government in establishing or expanding a high-risk pool program or a state can design one on their own. On April 2, 2010, the Department of Health and Human Services (HHS) Secretary Kathleen Sebelius communicated the basic requirements of the temporary high-risk pool to states and solicited their interest in operating the coverage program.
Who is eligible for coverage through the temporary high-risk pool?
U.S. citizens and legal residents who have a pre-existing medical condition and have not had creditable health coverage for the previous six months are eligible for coverage.
What benefits will high-risk pool enrollees receive?
The Secretary of the U.S. Department of Health and Human Services (HHS) is considering establishing a minimum set of benefits that must be included in the health plans. The health plans will be required to cover pre-existing medical conditions upon enrollment. The high-risk pool programs must cover at least 65 percent of the health care costs for a standard population.
How much will high-risk pool health coverage cost?
The premium cost for high-risk pool coverage will be established for a standard population in the non-group market and will not be based on the health status of enrollees. Premiums will be allowed to vary by age (by a 4 to 1 ratio), geographic area, family composition, and tobacco use. Health plans must cover 65 percent of health care costs for a standard population and yearly out-of-pocket costs will be limited to $5,950 for individuals and $11,900 for families, excluding premiums.
How will the high-risk pool be funded and administered?
The health reform law allocates $5 billion to administer the national high-risk pool. This funding will go toward health care claims and administrative costs that exceed the premiums collected for the high-risk pool.
On April 2, 2010, U.S. Department of Health and Human Services Secretary Kathleen Sebelius issued a letter that gives states the following options for operating the temporary high-risk pool:
- Operate a new high-risk pool alongside an existing state high-risk pool
- Establish a new high-risk pool if the state does not currently have one
- Build upon other existing coverage programs designed to cover high-risk individuals
- Contract with current HIPAA insurance carriers or insurers of last resort to provide subsidized coverage OR
- Do nothing, in which case the U.S. Department of Health and Human Services would carry out the coverage program in the state.
The Secretary’s letter asked states to submit a letter of intent regarding which option they will pursue by April 30, 2010. Ohio has not submitted a letter of intent.
When does the high-risk pool go into effect?
The temporary national high-risk pool goes into effect in June 2010, ninety days following enactment of the health reform law. The high-risk pool will terminate on January 1, 2014 when the state-based Health Insurance Exchanges are established and other insurance market reforms go into effect, providing new coverage options for people with pre-existing health conditions.
Given that this is a temporary form of coverage, what happens to people when the high-risk pool terminates in 2014?
When the temporary national high-risk pool terminates on January 1, 2014, high-risk pool enrollees will transition into receiving health coverage through the state-based American Health Benefit Exchanges. Procedures will be developed in the future to ensure that there are no lapses in coverage. Individuals without employer health coverage and small businesses with up to 100 employees will be able to purchase coverage through the Exchanges. As of 2014, insurers will not be able to deny people coverage or charge higher premiums based on health status.
How many high-risk pools currently exist in the United States and what will happen to enrollees?
Currently, 34 states operate high-risk pools that provide health coverage to nearly 200,000 individuals. State high-risk pools share a common structure and some similarities but differ by state in many ways including eligibility, benefit design, pre-existing condition exclusions, premium costs and cost sharing, and administration, among other areas.
Ohio does not currently have a high-risk pool in operation. In place of this pool, the state has made rate-controlled coverage available through the Ohio Open-Enrollment option. This is a rate-controlled option that each health insurance company is required to offer to a certain number of Ohioans. More information is available HERE.
In 2014, these individuals will likely transition into the state-based American Health Benefit Exchanges. Given that the Exchanges would prohibit people from being denied coverage or charged more based on health status and would limit cost-sharing, current state high-risk pool enrollees may receive more affordable coverage in the Exchanges than they currently have in the high-risk pool.
For more information:
Secretary Sebelius’ April 2, 2010 letter.
HHS high-risk pool fact sheet.