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April 2010 St@teside

High-Risk Pool Activity Marks the Start of Federal Health Reform Implementation

To gauge state interest in participating in the temporary high-risk pool (HRP) program established by the new health care reform law, U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius issued a letter on April 2 to governors and independent insurance commissioners asking each state whether they plan to pursue a temporary HRP.  States are given the flexibility to choose if and how they will participate in the program designed to provide coverage for uninsured people with pre-existing medical conditions, with the federal government providing $5 billion in federal funds to support this new program starting July 1, 2010. 

The pools are intended to open within 90 days of the bill being enacted, and are a stopgap measure that will last until Jan.1, 2014, when insurance companies will no longer be able to deny coverage to anyone based on pre-existing conditions.  State options for operating the HRP include:

  • Operate a new high-risk pool alongside a current state high-risk pool;
  • Establish a new high-risk pool (in a state that does not currently have a high-risk pool);
  • Build upon other existing coverage programs designed to cover high-risk individuals;
  • Contract with a current HIPAA carrier of last resort or other carrier, to provide subsidized coverage for the eligible population; or
  • Do nothing, in which case HHS would carry out a coverage program in the state.

Though more than 30 states already operate some form of HRP, most of them have suffered from poor funding and many have waiting lists.  Generally, states that permit insurers to decline applicants for health reasons have high-risk pools today.

While states await more detailed information to be included in the final regulations, there are a couple of resources that could be helpful in the planning process:

The first, Issues for Structuring Interim High-Risk Pools, written by Karen Pollitz of the Georgetown University Health Policy Institute for the Kaiser Family Foundation in January 2010, examines the role of high-risk pools as a coverage safety net today and reviews key issues involved in implementing a national high-risk pool.

The second, All High-Risk Pools Are Not Equal:  Examining the Minnesota Model, written by Courtney Burke and Lynn Blewett for the “Health Affairs Blog,” provides insight into why elected officials interested in participating in the temporary HRP program might want to replicate some features of the Minnesota HRP. The Minnesota pool has met with some success—particularly relative to many other states pools.