One of the most welcome elements of the health care reform package signed into law by President Barack Obama concerns the creation of high risk pools. For Americans with pre-existing condition who are unable to obtain insurance from the private sector and do not qualify for government programs like Medicaid, these pools are their only source for health insurance coverage.
According to an article by Sean Carr for A.M. Best Company, in 2009 35 states offered high risk pools enrolling roughly 200,000 people. To qualify for these pools, applicants have to first be rejected by commercial carriers on medical grounds. The coverage is more expensive than in the private market (not surprising since, by definition, the pool is made up of individuals with much higher than average usage and claims) and the benefits are leaner than generally available (to help keep the programs affordable). The Patient Protection and Affordable Care Act set aside $5 billion to establish new ones in states currently without them and to supplement existing programs. This aspect of health care reform is to take effect July 1st.
A safety net for those unable to get traditional coverage providing a bridge until exchanges are established in 2014. Whether you approve of the overall health care reform bill or not, this might seem like a good deal for $5 billion.
Well, not necessarily. For example, if you’re running for high office high risk pools can be an opportunity to score political points. And if you’re one of those 200,000 consumers already enrolled in a high risk pool, you might feel as if you’ve entered the Twilight Zone. And what if $5 billion isn’t enough?
There’s an underlying assumption, but not a requirement, that it would be state governments which establish these new high risk pools. But state governments are political beasts, so nothing is ever simple. So perhaps it’s not surprising that, as Mr. Carr reports, Georgia Insurance Commissioner and candidate for Governor, John Oxendine, has announced his state will not participate in the program in a letter, dated April 12th, to Health and Human Services Secretary Kathleen Sebelius.
Most “business mail” between government officials are boring, straight-to-the-point, well, business letters. This one is different. Commissioner Oxendine’s letter begins “I am in receipt of your April 2, 2010 letter detailing the first step in the recently enacted federal takeover of the United States health care system.” Not your typical opening for a formal inter-governmental missive. The letter then goes on to attack the Patient Protection and Affordable Care Act as a hastily drafted “government takeover of 17 percent of the United States economy, for being unconstitutional, and for eventually imposing an additional $1 billion burden on Georgia for Medicaid spending.
Commissioner Oxendine then questions whether the high risk pools, which are supposed to go away when carriers are obliged to accept all applicants regardless of their existing medical conditions will really be a temporary program. Consequently, he writes, “I cannot commit the State of Georgia to implement a federal high risk pool program that is part of a broader insurance scheme which I believe the Supreme Court will hold to be unconstitutional, leads to the further expansion of the federal government, undermines the financial security of our nation, and potentially commits the state of Georgia to future financial obligations.” He then ends his political attack on the health care reform plan Secretary Sebelius worked hard to enact as only politicians can: “With kindest personal regards ….”
My point for going into all this is not to comment on the merits of Commissioner Oxendine’s position (some of his arguments are overblown; some legitimate). Rather the letter strikes me as evidence that implementing health care reform – even the so-called “easy parts” – is going to be an extremely rocky road.
Keep in mind, Commissioner Oxendine’s letter does not mean Georgians in need will be denied access to a high risk pool. As Mr. Sean reports, the law allows HHS to contract with a qualified non-profit entity to run the pool if the state declines to do so. In this regard, Commissioner Oxendine is playing the equivalent of a candidate’s free card. He gets to use his state office to attack the federal government and the Administration’s health care reform plan without doing anything more than inconveniencing that federal government and some of his state’s citizens. What’s not to like?
Then there’s the coming Twilight Zone episode: Those enrolled in state high risk pools will be ineligible to participate in the new federally-funded program even though the coverage will be better than what they currently receive and less expensive than what they currently pay.
The reason, as reported by the Associated Press, is that only individuals who have gone at least six months without health insurance coverage are eligible for the federally subsidized high-risk coverage. Allowing the 200,000 individuals with coverage through state pools to move to the federal program would dramatically increase the cost of the new high risk pools. So unless they’re willing to drop their current coverage for six months (unlikely given that the high risk pool coverage is generally desperately needed to pay existing medical costs) current high-risk enrollees are “locked in” to their current coverage.
The good news, of course, if for the 375,000 people the Associated Press reports are expected to sign up for the new high risk insurance program. For them, the program could well be a lifeline that gets them to 2014 (when such programs will presumably be unnecessary) with their finances intact.
But will the $5 billion be enough to fund the program to 2014? Not likely. The federal pool will operate alongside existing state pools while HHS will create a national program to serve residents of states with no existing pools or who opt out of the program. Funding the program for nearly four years may prove a more extensive task than Congress has budgeted. The Associated Press article describes a letter from Medicare economists warning that “the program could go through $4 billion in its first year and run out of money as early as 2011.”
If correct there are three likely alternatives. Starting with the least likely:
- Require the states to pony up money (making Commissioner Oxendine a prophet).
- Reduce the benefits provided to enrollees and increase their premiums, making the federal high risk pool look more like the state versions.
- Pump more federal dollars into the program.
There are numerous moving pieces in the new health care reform legislation. High risk pools should be one of the easy ones. After all, high risk pools are a generally accepted, reasonably popular approach to reducing the number of uninsured Americans. As Commissioner Oxendine’s letter, the disappointment those in current state pools will feel, and the inadequate funding allocated to creating the new federal program all indicate, when it comes to health care reform, nothing seems to be easy.