State High Risk Pools A Viable Health Reform Tool?

Each bill approved in both houses of Congress includes a provision to establish a temporary national high-risk pool to provide health coverage to individuals with pre-existing medical conditions.. U.S. citizens and legal immigrants who have a pre-existing medical condition and who have been uninsured for at least six months might qualify. Furthermore, as discussed in a previous blog post, Republicans’ health reform proposals include federal funding for states to use for high-risk pools in the individual insurance market and reinsurance programs in the small group market.

State high-risk pools are state programs that offer health insurance to residents who, because of pre-existing medical conditions, are unable to purchase affordable, or any, coverage in the individual health insurance market. A paper issued in January by the Kaiser Family Foundation provides an overview of these types of pools. As of December 2008, 34 states have high-risk pools which collectively enrolled nearly 200,000 people. The only states that do not maintain a high-risk pool are Arizona, Delaware, the District of Columbia, Georgia, Hawaii, Idaho, Maine, Massachusetts, Michigan, Nebraska, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, and Virginia. Many of these states have alternative health insurance programs and Massachusetts has health insurance reform.

The majority of states (29) also use high-risk pools instead of reforming the individual health insurance market as required by the Health Insurance Portability and Accountability Act (HIPAA) to guarantee individual health insurance coverage for eligible individuals who lose group health insurance.

States’ high-risk pool eligibility, coverage, and pricing provisions vary significantly, and high costs for individuals, as well as pool waiting lists, pose a significant barrier to coverage. For example, Minnesota, with a population of 5 million, has more than 27,000 individuals covered through its high-risk pool, while Texas, with 24 million residents, covers nearly 27,000 individuals. In UnitedHealth Foundation’s Health Rankings for 2009, Minnesota ranked 6th in the top “healthy” states among the 50 states and the District of Columbia and only 8.5% of its residents were uninsured. In contrast, Texas ranked 39th and 25% of state residents were uninsured.

A look at these two states’ high-risk pool provisions provides some important perspectives as to the reasons for the difference between the two states’ healthiness rankings and rate of uninsurance. As of Jan. 1, 2010, preexisting condition waiting periods were 12 months in the Texas high-risk pool, but six months for the Minnesota one. Furthermore, the Minnesota pool gives insureds credit for prior health insurance coverage, while Texas does not.

The high-risk plan with the lowest deductible costs $498 in Minnesota for a $673 deductible, but $983 in Texas for a plan with a $1,000 deductible. In Texas, premiums have increased every six months and have more than doubled (from $478) since 2002, while at the Minnesota pool premiums have risen annually. In Texas, the annual coinsurance maximum ranges from $4,000 to $12,500; in Minnesota it is $3,000 to $10,000. Premiums cover 45% of the high-risk pool costs in Minnesota, but 70% in Texas. Premium subsidies are available under Minnesota’s pool, but not under Texas’ pool.

Some people think that health reform should be left up to the states. Which state would you choose to live in to obtain the best, most affordable coverage?