What's New with HCFO - 04/14/2006 (Plain Text Version)In this issue: State High Risk Pools
On February 10, 2006, President Bush signed into law the State High Risk Pool Funding Extension Act of 2006. The Act authorizes appropriations for grants to states for the establishment and operation of high-risk health insurance pools. In addition, in his January 31st State of the Union address, the President proposed providing $500 million per year to encourage states to test innovative methods for covering those with chronic illnesses. He suggested that grants, awarded by the Secretary of the Department of Health and Human Services, could help cover the chronically ill by helping up to 10 states build on their existing high-risk pools or test other innovative approaches such as risk adjusted subsidies or plans designed to manage chronic illnesses. High-risk health insurance pools provide a safety net for the “medically uninsurable,” people who have been denied health insurance coverage due to a pre-existing condition, have restrictions placed on their insurance benefits, or are faced with higher than usual premiums. Risk pools typically have premiums that are higher than those for individual insurance, but the premiums are capped by state law to protect the individual from unaffordable premiums. Despite collecting somewhat higher premiums from enrollees, high-risk pools need to be subsidized to remain solvent. The subsidy mechanisms differ from state-to-state. As Bruce Abbe, board member of the National Organization of State Health Insurance Risk Pools, noted in his March 7, 2006 testimony before a committee of the Ohio legislature, “at its core…a state risk pool is a risk-spreading mechanism designed to enable a state's health insurance system to function better by broadly sharing the costs of insuring high-risk, high cost people in the more fragile individual market, sometimes with public funding support.”4 Currently, approximately 30 states operate high-risk health insurance pools.5,6,7 But enrollment is very limited, with 1999 data showing that the states covered only about 113,000 people,8 and 2003 data indicating that enrollment had grown to only 178,000 individuals, less than 2 percent of individual market participants.9 Evidence about whether state high-risk health insurance pools are likely to be an effective tool for expanding health insurance coverage is mixed. Some argue that the ultimate success of the pools rests on increasing subsidies through additional federal support,10 while others contend that risk pools’ relatively high premiums, large deductibles, caps on benefits, waiting periods for pre-existing conditions, and limits on coverage for maternity care and mental health services limit their desirability.11 Findings from a HCFO project conducted by Sally Stearns, Ph.D., in the mid-1990’s found that the pools had high enrollee turnover and a small proportion of enrollees accounted for a large proportion of expenditures. The pools all experienced financial insolvency.12 Many people disenrolled from risk pools within several years of their initial enrollment, and evidence indicated substantial increases in voluntary disenrollments in response to premium increases such as those implemented by the plan or which occurred naturally as enrollees aged into higher risk categories. “Nonpayment of premium” was the most frequent reason for involuntary disenrollment according to claims administrators in the states examined.13 Despite high-risk pools’ goal of insuring the mentally ill, only a very small proportion of state risk pool enrollees used a high level of mental health and substance abuse services, and there was increased disenrollment among those who used these services, particularly in risk pools with limited inpatient benefits.14 More recent analysis found that federal matching payments, enacted in 2002, to support high-risk pools and promote coverage expansions did not result in making these plans more accessible, with only one state using the funds to reduce enrollee premiums, expand covered benefits, or enact changes to promote enrollment. There is concern that without further guidance about or restrictions on additional federal subsidies, their impact will be minimal.15 Whether current efforts by Congress and the President will ultimately lead to the success of state high-risk health insurance pools remains unclear. But, it is apparent that research has and will continue to play an important role in the debate about high-risk pools in particular, and coverage expansion, more generally. HCFO Funded Research Title: Studies of the Working Uninsured, Their Dependents and Insurance Reform on Their Behalf What are the effects of certain insurance market reforms that were designed to expand coverage? Researchers at the Urban Institute conducted several analyses looking at the working uninsured using the Current Population Survey (CPS), the National Survey of America’s Families (NSAF), and the National Health Interview Survey. In particular, they aimed to answer the following five questions: The objective of this series of studies was to provide a better understanding of the working uninsured in order to better inform the policy debate about coverage expansions and identify those interventions most likely to work. Click here for more information on this grant.
How have state risk pools for the medically uninsurable addressed the insurance needs of these individuals to date, and how are they likely to address their needs in the future? This study assessed the enrollment and utilization experience of state risk pools that had been in operation for at least three years in order to help determine the extent to which they increased access to health insurance. The project used program records and claims and enrollment data from each pool to examine the characteristics and experience of each pool; each pool’s disenrollment experience and the previous coverage status of enrollees; the utilization patterns and expenditures over time, including those related to enrollees’ “uninsurable” conditions; and, the current and potential effects of managed care techniques (e.g., high-cost management) used by the pools. Stearns SC, RT Slifkin, K Thorpe and TA Mroz. "The Structure and Experience of State Risk Pools: 1988-1994." Medical Care Research and Review. 54(2):224-238,1997. Stearns SC and TA Mroz. "Premium Increases and Disenrollment From State Risk Pools." Inquiry. 32(4):392-406, Winter 1995/96. Stearns SC and RT Slifkin "State Risk Pools and Mental Health Care Use." Health Affairs. 14(3):185,221-231, Fall 1995.
1 http://selfemployedcountry.org/riskpools/states.html |