STATE HIGH RISK POOLS

Size: px

Start display at page:

Download "STATE HIGH RISK POOLS"

Andrea Farmer
5 years ago
Views:

1 STATE HIGH RISK POOLS Deborah Chollet, Senior Fellow Mathematica Policy Research October 3, 2008

2 Overview What is a high risk pool? Why high risk pools? Who can enroll? Why low enrollment? How could they work better? 2

3 What Is a High Risk Pool? High risk pools are insurance programs for uninsurable individuals that carriers will not accept. In states with high risk pools, carriers can deny individual applicants with current or past health problems. 32 states have high risk pools that accept new enrollment. 3

percent of the population accounts for half of health care spending.

4 Why High Risk Pools? Intended to keep premiums lower for healthy individuals Health care spending is very concentrated: 5 percent of the population accounts for half of health care spending. Denying coverage to the highest cost lowers average premium paid by others. Alternatives: Require insurers to sell some or all products to all applicants (NY, NJ, MA, ME, VT, ID) Carrier of last resort (MI, PA, DC) 4

5 Removing High-Cost Individuals from the Insurance Pool Reduces Average Cost for Others 100% 100% 97% $3,000 75% $2,500 64% 73% 80% $2,500 $2,000 50% $1,909 49% $1,500 25% 24% $1,271 $ $667 3% $1,000 $500 0% $0 Total population < 65 Top 1% Top 5% Top 10% Top 15% Top 20% Top 50% Lowest 50% Percent of total expenditure Example of average expenditure excluding this population segment Note: Population includes those with no health care spending. Health spending is measured as total payments for personal health care services from all payer sources. Source: Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey,

only offered coverage with a permanent exclusion (all) Have a qualifying health condition (half) Quoted a

6 Who Can Enroll in a High Risk Pool? State Rules Vary People who apply for individual coverage, and Are denied because of their health status, or only offered coverage with a permanent exclusion (all) Have a qualifying health condition (half) Quoted a high premium due to health status (some) Federally eligible individuals coming from group coverage HIPAA Health Care Tax Credit under the Trade Adjustment Assistance Act (HCTC/TAAA) 6

7 High Risk Pool Enrollment Has Grown, but Remains Very Low National enrollment, all states: 200, , , , , , ,000 88, , ,406 50, HIPAA Trade Act HCTC Source: National Association of State Comprehensive Health Insurance Plans. 7

8 Why Low Enrollment? Restrictions on Eligibility Enrollment caps (IL, CA) HIPAA only (AL, SD) Previous COBRA election required (TN) Minimum residency (1-12 months) Eligibility for other coverage disqualifies Disqualified if dropped high risk pool coverage 8

makes coverage for older adults very expensive Large initial premium

9 Why Low Enrollment? High Premiums Premiums are percent of standard rates Age rating makes coverage for older adults very expensive Large initial premium payment and mid-year premium increases Some states offer subsidy for very low-income, but too little to make a high premium widely affordable 9

10 Example: Annual Premiums in Missouri (150% of Market Rates) $1,000 deductible $5,000 deductible Age: Male Female Male Female 0-17 $2,148 $2,148 $1,368 $1, $5,504 $8,004 $3,432 $4, $13,836 $12,708 $8,496 $8,172 Median gross income, family of 4 (MO): $63,900 $15,975 per person 150% of fed. poverty level, family of 4: $31,800 $7,950 per person Sources:

11 Why Low Enrollment? Restrictions on Coverage Pre-existing condition exclusions, 3-12 months 9-12 month waiting period for maternity High cost sharing: deductibles, coinsurance Annual and lifetime caps on coverage Limits on Rx, mental health, other benefits 11

Strong incentive to minimize assessment, rely on premiums High

12 Financing Affects How the Pool Operates Most rely on premium assessment Carriers usually dominate high risk pool boards Strong incentive to minimize assessment, rely on premiums High risk pools attempt to balance premiums, benefits, outreach, accessibility 12

13 Sources of Financing, Selected States Assessments Premiums Other Maryland 65% 27% 8% Indiana 39% 58% 3% Oregon 28% 68% 4% Minnesota 19% 47% 34% Iowa 0% 49% 51% West Virginia 0% 89% 11% Source: National Association of State Comprehensive Health Insurance Plans

14 Balancing Premiums, Benefits, Outreach, and Accessibility in Maryland Maryland (MHIP) New Enrollment HIPAA option, benefits enhanced pre-ex moratorium Rate Cut Mini-App, benefits enhanced Pre-ex begins Direct Marketing 0 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04 May-04 Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05 Jul-05 Source: Karen Pollitz, Georgetown Health Policy Center. Presentation to NCSL, April

15 How Could High Risk Pools Work Better? Affordable Adequate Accessible Close to 100% of standard premiums and/or premium assistance to cap premiums Family coverage Short exclusions for pre-existing conditions Portability from all other coverage Rx, maternity, and mental health Standard conditions list for underwriting and eligibility No requirement to take other available coverage No minimum residency Automatic referral if denied commercial coverage 15

health status, age Consistent premium assistance, market and high risk pool Broad and stable

16 What Would It Take? Because high risk pools are built on the market: Attention to rating rules for market coverage: health status, age Consistent premium assistance, market and high risk pool Broad and stable financing Inter-state consistency and reciprocity Remove conflict of interest (NAIC Model Act states that the insurance industry should not dominate the high risk pool board.) 16

medicaid a n d t h e How will the Medicaid Expansion for Adults Impact Eligibility and Coverage? Key Findings in Brief

medicaid a n d t h e How will the Medicaid Expansion for Adults Impact Eligibility and Coverage? Key Findings in Brief on medicaid a n d t h e uninsured July 2012 How will the Medicaid Expansion for Adults Impact Eligibility and Coverage? Key Findings in Brief Effective January 2014, the ACA establishes a new minimum Medicaid