What's New with HCFO - April 14, 2006 (Print All Articles)
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
Institution: The Urban Institute
Time: June 2000-July 2002
Principal Investigator: Linda J. Blumberg, Ph.D.
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:
1) Who are the working uninsured?
2) Why do employer-sponsored coverage rates vary across the 50 states?
3) Have health insurance market reforms affected the composition of insured risk pools?
4) Did HIPAA have any effect in the small group market?
5) Why do so many workers in large firms lack health insurance?
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.
Title: Evaluation of State Risk Pools: The Current and Potential Experience
Institution: University of North Carolina, Chapel Hill School of Public Health
Time: December 1991 – November 1994
Principal Investigator: Sally C. Stearns, Ph.D.
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.
Click here for more information on this grant.
1 http://selfemployedcountry.org/riskpools/states.html
2 http://www.cmwf.org/usr_doc/Pollitz_highriskpools_875.pdf
3 http://www.kaisernetwork.org/daily_reports/print_report.cfm?DR_ID=6387&dr_cat=3
4 http://selfemployedcountry.org/riskpools/news/20060307ohio.html
5 http://selfemployedcountry.org/riskpools/states.html
6 http://www.cmwf.org/usr_doc/Pollitz_highriskpools_875.pdf
7 http://www.kaisernetwork.org/daily_reports/print_report.cfm?DR_ID=6387&dr_cat=3
8 http://www.cmwf.org/publications/publications_show.htm?doc_id=221291
9 http://www.cmwf.org/usr_doc/Pollitz_highriskpools_875.pdf
10 http://content.healthaffairs.org/cgi/content/full/hlthaff.w2.345v1/DC1
11 http://www.cmwf.org/usr_doc/achman_uninsurable_472.pdf
12 Stearns, Sally C., and Slifkin, Rebecca T., “The Structure and Experience of State Risk Pools: 1988-1994,” Medical Care Research and Review, Vol. 54, No. 2, June 1997.
13 Stearns, Sally C. and Mroz, Thomas, A., “Premium Increases and Disenrollment from State Risk Pools,” Inquiry, Vol. 32, Winter 1995/96.
14 Stearns, Sally C. and Slifkin, Rebecca T., “State Risk Pools and Mental Health Care Use,” Health Affairs, Vol. 14, No. 3, 1995.
15 http://www.cmwf.org/usr_doc/Pollitz_highriskpools_875.pdf
This Month in the News
This Month in the News
Sara Rosenbaum, J.D., a professor of Health Care Law & Policy at George Washington University, was quoted in a story for National Public Radio on March 13, 2006 that examined the Medicaid cuts included in President Bush’s 2007 budget. The article stated that “[the cuts] will reduce federal red ink by an estimated $39 billion over the next five years. But it will also make changes to the Medicaid health program that could have a bigger impact than the dollar amounts suggest.” Rosenbaum noted that, “this is the first time in certainly 30 years, that efforts to try to rein in Medicaid spending have been directed at beneficiaries, and the changes that are contained in this bill completely remake the Medicaid program.”
Roger Feldman, Ph.D., a professor at the University of Minnesota, will serve as a panelist at the inaugural Mayo Clinic National Symposium on Health Care Reform. The Mayo Clinic announced in a press release that Feldman will participate in a panel titled “Overspent, Overdrawn, Overwhelmed: Reducing Health Care Costs.”
Findings from a HCFO funded study, led by Helene Levens Lipton, Ph.D., a professor of health policy and pharmacy at the University of California, San Francisco, were featured on eMaxHealth.com on March 22, 2006. According to the article, the study found that, “providing financial incentives for doctors to rein in their prescription practices has not led to cost-cutting innovations.”
Peter D. Jacobson, J.D., director of the Center for Law, Ethics, and Health at the University of Michigan, will provide closing remarks at an event titled, “Does the Animosity Between the Legal and Medical Professions Undermine Patient Care?” Senator George Mitchell will deliver the inaugural Arthur F. Southwick Lecture at the event.
Stephen Parente, Ph.D., a professor at the University of Minnesota, was quoted in an April 1, 2006 article in the Milwaukee Journal Sentinel that examined the antitrust lawsuit against Aurora Health Care Inc. The article states that the lawsuit challenges Aurora’s negotiating tactics that “require health insurers to include all of its hospitals and doctors in every health plan they sell.” Parente states, “if a health system’s contracts required it to be in every health plan, it would be almost impossible to put together a narrow network.” According to Parente, this could result in less competition.
Grantee Spotlight – Jinnet Briggs Fowles, Ph.D.
Grantee Spotlight – Jinnet Briggs Fowles, Ph.D.
Jinnet Briggs Fowles, Ph.D., is a senior vice president at the Park Nicollet Institute. Fowles’ research addresses the use of measurements for quality improvement and public accountability. She specializes in the reliability and validity of differing data sources, including administrative claims data, patient self reports, and ambulatory medical record information. Fowles has served as a measurement consultant for the Institute for Clinical Systems Improvement, the leading quality improvement organization in Minnesota.
After receiving her B.A. in Art History from Wellesley College, Fowles earned her M.S. in Library Science from Simmons College, and her M.S. in Health Services Administration and Ph.D. in Communications Research from Stanford University.
Under the HCFO initiative, Fowles has worked on three projects that examine the use of measurement in the health care market. Most recently, Fowles and principal investigator David Knutson studied the adoption of health-based risk adjustment tools beyond direct health plan payment. Findings from this study indicate that every major national and regional health plan is using health-based risk adjustment for medical and financial applications, with medical management applications most often leading the diffusion. Furthermore, all health benefit and actuarial consulting firms were using health-status based tools for risk assessment and risk adjustment to support purchaser clients. Knutson and Fowles also found that there is an emerging methodological debate about transparency and standardization.
This research is particularly timely, says Fowles. “Increasingly, the health care delivery system relies on measurement in Disease Management Programs, Pay for Performance Programs, and to meet public reporting requirements. As this happens, issues surrounding the integrity of measurement become more and more critical and risk adjustment is part of the story for what makes measurement valid and reliable.”
Knutson and Fowles have also explored the impact of risk adjustment tools on the purchaser-health plan relationship. “The Implementation and Impact of Health Based Risk Adjustment,” a HCFO funded study, evaluated the implementation of risk-adjustment mechanisms in the following eight markets: Minneapolis, St. Paul, Sacramento, Seattle, Denver, Portland, Phoenix, and Miami. From surveys and interviews with purchasers, the investigators drew three conclusions. First, purchasers can work effectively with plans, making compromises while keeping their primary policy objectives in sight. Second, plans that have or that anticipate low risk scores will launch resistance campaigns or will drop out of the program. Third, specialty providers cannot survive under capitation without health-based risk adjustment.
An earlier HCFO project, led by Fowles, examined the effects of consumer survey-based report cards on the health care market place. She investigated the impact of a Minnesota-mandated report card initiative that began in 1991 and required all health plans selling policies to state employees to participate in a consumer survey-based report card. Fowles found that the introduction of the report card increased attention given to quality improvement and service initiatives within the health plans. What plans valued most—and reacted to most significantly—was their reputation. Concern about reputation was the largest driver of health plans’ response, even when they saw that consumers were not likely to react to the report card information.
For more information on Jinnet Briggs Fowles, Ph.D., and a list of selected publications please see: http://www.parknicollet.com/Institute/
Spotlight on Grantee Publication
Susan Bartlett Foote, J.D., M.A., an associate professor in the Division of Health Services Research and Policy at the University of Minnesota, is the co-author of an article that appears as an online early publication, and will be published in HSR, titled “Rules for Medical Markets: The Impact of Medicare Contractors on Coverage Policies.” The article details HCFO sponsored research examining Medicare’s local contractors’ role in medical markets and nationally consistent payment rules.
Current HCFO grantee publications and recent grant findings will be regularly featured in the results section of our Web site.
New Data Available for Researchers
New Data Available for Researchers
New data from the National Center for Health Statistics (NCHS) on health insurance coverage is available for use. Last month, NCHS published "Health Insurance Coverage: Estimates from the National Health Interview Survey, January-September 2005." The report presents three key measures of health insurance coverage: persons who currently lack coverage; persons uninsured at any point in time in the previous year; and, persons who have experienced lack of coverage for more than one year. In the first three quarters of 2005, 14.1 percent of persons were uninsured at the time of the interview, 17.7 percent had been uninsured for some part of the previous year, and 10.1 percent had been uninsured for more than a year.
NCHS publishes each of these estimates quarterly, within six months of the close of each quarter. Complete calendar-year data from the National Health Interview Survey (NHIS) are released during the summer following the end of each data collection year. Currently, users can access calendar year 2004 questionnaires, data and related documentation
on the web at http://www.cdc.gov/nchs/about/major/nhis/quest_data_related_1997_forward.htm. The health insurance segment provides a full range of data items addressing health insurance, including type of health care coverage and managed care arrangements, that can be analyzed in relation to health behaviors, health care access and utilization, poverty status, and a variety of demographic variables.