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States Decide on High Risk Pools

The choice of whether or not to establish high-risk insurance pools represents the first major decision that states are facing with the March 2010 passage of the Patient Protection and Affordable Care Act (PPACA). While twenty-nine governors -- 22 Democrats and 7 Republicans -- decided to create the pools themselves, most conservative governors failed to take advantage of the option to shape health care for their constituents and instead just kicked the issue back to the federal government, which will establish its own high-risk insurance pool in states that fail to take action.

While temporary in nature, lasting only until 2014, these high risk pools are designed to help people with pre-existing and chronic health conditions who cannot find affordable health insurance. But the decisions the governors are reaching are revealing with respect to whether or not states intend to foster a collaborative relationship with the federal government in implementing the vast array of PPACA provisions.

How the States Responded: The federal law allocated $5 billion to the high risk pool programs which are scheduled to begin July 1 of this year and last until through January 1, 2014, when the state insurance exchanges begin to operate. With last Friday as the deadline for states to respond to HHS, 29 states plus the District of Columbia said they would operate the pools themselves (not all of the rest have made a final decision). Of those twenty-nine, only seven are led by Republican governors in Alaska, California, Connecticut, New Jersey, Rhode Island, South Dakota and Vermont.

While it was conservative governors in the eighteen states who turned down the opportunity to administer the pools, the irony is that expansion of high risk pools was one of the major proposals promoted by conservative Members of Congress. Some state leaders raised the concern that the $5 billion set aside for the pools would be insufficient to assist the potential number of beneficiaries, but the continued pattern of non-cooperation highlights the suspicion that conservatives leaders have just made saying no an ongoing obstructionist tactic.

HHS told state officials in a recent conference call that states will not be asked or expected to contribute any state dollars, since there is absolutely no provision in the PPACA that even hints at such a possibility. But it's critical to remember that the most important feature of the temporary risk pools is that uninsured people around the country, who have been denied coverage for years, will soon have access to an affordable coverage option.

State Allocations: Each state’s allocation is based on population and need, not on whether it’s a state or federally operated program. California would receive the largest allocation of money, $761 million, while North Dakota, Vermont and Wyoming receive the smallest, each getting $8 million. An HHS website details the amounts of each state’s allocation for funding the high risk pools. Examples of Implementation include:

  • Iowa:  Governor Chet Culver decided to accept the federal funds. Iowa already was one of 35 states with high risk pools prior to enactment of the PPACA with about 3,000 members, most of whom have serious medical conditions, such as kidney disease, cancer or hemophilia.  HIP Iowa is currently financed by members’ premiums, plus payments from every company that sells health insurance in the state. By state law, HIP Iowa premiums may not be more than 150 percent of standard insurance rates for an Iowan of the same age and gender as an applicant, although the rules for the federal pool may require new standards for additional folks covered by the federal funds.
  • Ohio:  While it's too soon for patients to know what Ohio's new program will look like, Gov. Strickland says he would like to build on an existing private-sector program, with the potential for up to $152 million in help from Washington. Seeking guidance from HHS before deciding on specifics, Ohio Department of Insurance Director Mary Jo Hudson presented several potential ways in which Ohio might design its own program. One would be to expand Ohio's "open-enrollment" program, which kicked in this year as an alternative to high-risk pools. The program requires private carriers who sell insurance on the open market to also sell to people who don't have other available coverage -- these are people who don't qualify for low-income, government programs -- and to limit their premiums, although they still can be 150 percent above others' premiums. To pay for the program, other clients who buy insurance on the open market are charged with a small rate hike.

Resources:
US Department of Health and Human Services - Fact Sheet on Temporary High Risk Pool Program
Kaiser Health News - Some Republican States Opting Out Of High Risk Health Insurance Pools
Kaiser Health News - States Decide On Risk Pools As First Major Health Law Decision
Washington Post - 18 states refuse to run insurance pools for those with preexisting conditions
Politico - Party Line Split on High Risk Pools
NCSL - Coverage of High-Risk Individuals: State and Federal High-Risk Pools
The Hill - GOP governors opting out of health reform pool for high-risk uninsured