Federal reform: High-risk insurance pools

Legislation helps the uninsured in every state

By Steve Anderson
healthinsurance.org™ editor

A year ago, the Department of Health and Human Services announced that it would lower premiums for temporary high-risk pools in 18 states and ease eligibility standards in 23 states and the District or Columbia to make expand enrollment in the Pre-Existing Condition Insurance Plan (PCIP) that was created by the Patient Protection and Affordable Care Act.

Premiums were lowered by up to 40 percent in 18 states where the PCIP is administered by the federal government to bring the premiums closer to the rates in each state's individual health insurance market.

In the face of higher-than-expected costs, however, the government has increased enrollees' maximum out-of-pocket annual expenses for 2013 from $4,000 to $6,250. The rate increase took effect January 1, and applies only to plans administered by the federal government, which impacts 38,000 enrollees in 23 states.

Roughly 135,000 people have enrolled in PCIP plans nationwide since they opened in 2010. To qualify, people have to be without health insurance for at least six months and must have a pre-existing health condition or have been denied coverage as a result of a health condition. PCIPs were initially established to function as a bridge to 2014 when people will no longer be denied insurance coverage or charged more for a health plan because they have a pre-existing health condition.

The PCIP program's high cost has been attributed in part to the fact that the population served is disproportionately older. More than seven in 10 people enrolled are age 45 and above.

Nearly four in ten claims paid in 2012 were for one of four diagnoses: cancers, ischemic heart disease, degenerative bone diseases, and the follow-up medical care required after major surgery or cancer treatments. In 2012, the average cost per person was $32,108. However, just 4.4 percent of enrollees averaged costs of $225,000 accounting for more than half of all claims paid.

In addition to raising out-of-pocket expenses for enrollees, the government has taken additional steps to reduce the PCIP program's cost.

In August 2012, the federally-administered plans changed provider networks and in the process reduced reimbursement rates. They also lowered the rate of pay to hospitals treating large numbers of the program's enrollees. Three benefit plan options were consolidated into one, and pharmacy benefits have been changed; enrollees are now required to refill prescriptions for chronic illnesses by mail order after the second refill, and only pharmacies that have proven to be more cost-effective will be allowed to dispense specialty drugs.

Ultimately the program's high cost has led the Obama Administration to halt PCIP enrollment in the 23 states where the federal government runs the program. Enrollment for those plans closed on February 16, 2013, when the Administration first announced its plans. The remaining 27 states operating their own PCIP program have the option of continuing to enroll people through March 2, 2013.

How will people in the PCIP transfer to a private plan?

Shutting down enrollment now will help to ensure that enough funds are available to continue providing coverage to people already enrolled in PCIP plans.

Coverage will be available through the risk pools until 2014, when consumers will have access to health coverage through insurance exchanges established by the health reform legislation.

Traditional state health risk pools

Why were state high-risk insurance pools created?

By Chuck Smith-Dewey
healthinsurance.org™ founder

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 are 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 are 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.

State risk pools and where to contact them

Alabama Health Insurance Plan
Toll-free 1-800-513-1384 or (334) 353-8924

Alaska Comprehensive Health Insurance Association
Toll-free 1-888-290-0616

Arkansas Comprehensive Health Insurance Plan
Toll-free 1-800-285-6477

California Major Risk Medical Insurance Program
Toll-free 1-800-289-6574 or (916) 324-4695

CoverColorado
(303) 863-1960 or toll-free 1-866-787-9129 (M-F 8am–5pm)

Connecticut Health Reinsurance Association
Toll-free 1-800-842-0004 (M-F 9am-4pm EST)

Florida Comprehensive Health Association (closed to new enrollees since 1991)
(850) 309-1200

Idaho Individual High Risk Reinsurance Pool
(link is to a PDF on program)
Toll-free 1-800-721-3272 (In-state only)

Illinois Comprehensive Health Insurance Plan
Toll-free 1-866-851-2751 (in-state only) or (217) 782-6333

Indiana Comprehensive Health Association (click "guest" for access, then choose "ICHIA")
Toll-free 1-800-552-7921 or (317) 614-2000

Health Insurance Plan of Iowa
Toll-free 1-877-793-6880 (M-F 8am-5pm CST)

Kansas Health Insurance Association
Toll-free 1-800-362-9290 (M-F 8am-5pm)

Kentucky Access
Toll-free 1-866-405-6145

Louisiana Health Plan
Toll-free 1-800-736-0947 or (504) 926-6245

Maryland Health Insurance Plan
Toll-free 1-888-444-9016 (M-F 8am-5pm)

Minnesota Comprehensive Health Association
Toll-free 1-866-894-8053

Mississippi Comprehensive Health Insurance Risk Pool
Toll-free 1-888-820-9400

Montana Comprehensive Health Association
Toll-free 1-800-447-7828

Nebraska Comprehensive Health Insurance Pool
(402) 343-3574 or toll-free 1-877-348-4304 (M-F 8am-4:30pm)

New Hampshire Health Plan
Toll-free 1-877-888-6447

New Mexico Medical Insurance Pool
(505) 622-4711

North Carolina Health Insurance Risk Pool (NCHIRP)
Toll-free 1-866-665-2117

Comprehensive Health Association of North Dakota (North Dakota health insurance risk pool)
Toll-free 1-800-737-0016 or (701) 277-2271

Oklahoma Health Insurance High Risk Pool
Toll-free 1-877-885-3717

Oregon Medical Insurance Pool
Toll-free 1-800-848-7280 or (503) 225-6620 (M-F 8am-5pm)

South Carolina Health Insurance Pool
Toll-free Phone 1-800-868-2500, ext. 42757, or 1-803-788-0500, ext. 42757 

South Dakota Risk Pool
605-773-3148 (ask for a Risk Pool representative)

Tennessee's Tenncare Program
1-888-486-9355

Texas Health Insurance Risk Pool
1-888-398-3927

Utah Comprehensive Health Insurance Pool
Toll-free 1-800-705-9173 or (801) 442-6660

Washington State Health Insurance Pool
Toll-free 1-800-877-5187

West Virginia Health Insurance Plan
1-866-445-8491

Wisconsin Health Insurance Risk Sharing Plan
Toll-free 1-800-828-4777

Wyoming Health Insurance Pool (scroll down)
(307) 634-1393

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