risk-pools

Traditional state health risk pools

Why were state high-risk insurance pools created?

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A majority of Americans – 70 percent according to the U.S. Census Bureau – get employer-sponsored health coverage under group health insurance. Another 32.2 percent of the population is covered by government-sponsored health care – through Medicare, Medicaid, children’s health care programs (CHIP), military health care, and various state programs for low-income populations.

Those left over are the self-employed or those working for very small companies that don’t provide health insurance benefits. If that describes you, you must directly purchase coverage directly through private health insurance companies.

If you and your family have always been healthy, you should be able to do a quick online search for health insurance quotes and then choose from the variety of plans and benefits available in your state. However, if you’ve already been treated for a medical condition, or have a history of certain high-risk factors, you may be unable to find a health insurance company that will offer you comprehensive health insurance at any price.

That will change starting January 1, 2014. That’s when the most significant provisions of the Affordable Care Act take effect and when insurers will no longer be permitted to deny anyone access to an insurance policy or charge more for it because of a pre-existing health condition.

According to the latest Census report, 16.3 percent of all Americans are uninsured. State-sponsored risk pools were aimed at helping a small slice of those Americans: those who can afford to buy health insurance, but who are denied affordable health insurance coverage by insurance carriers because of a pre-existing medical condition.

Risk pools – started in Minnesota back in 1976 – created pools from individuals denied coverage by private insurance companies, then provide state-sponsored health insurance plans these individuals can buy into – albeit at a higher cost than if they were able to qualify for a private plan. Currently, 34 states offer some form of risk pool, and these risk pools cover about 225,000 people.

At their core, risk pools were state-created, nonprofit associations that – in most states – do not require tax dollars for their operational purposes. A risk pool can be a temporary stopping point for individuals who are denied health coverage – or for individuals who need to fill a gap in insurance coverage.

Some risk pools have done an excellent job of providing alternatives for their citizens, while others have done very little because their health insurance plans are not designed well, or are not funded properly by their states – or they were simply unaffordable.

In addition, the benefits offered are in many cases limited, with most state high-risk pools imposing waiting limits of up to a year for applicants with pre-existing medical conditions. Annual and lifetime limits on covered benefits are also imposed.

Federal risk pools – the Pre-Existing Condition Insurance Plans (PCIP) – created by the Affordable Care Act were intended to remedy these shortcomings. While they will remain operational through the end of 2013, enrollment in PCIPs is now closed.

The health reform’s law’s promise of guaranteed access to health insurance regardless of one’s medical condition will lead to the eventual closing of both the federal and state-based risk pools.