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1 State High Risk Pools –Bridges to Health Reform Richard Popper Executive Director Maryland Health Insurance Plan January 29 2010 Families USA Coverage.

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Presentation on theme: "1 State High Risk Pools –Bridges to Health Reform Richard Popper Executive Director Maryland Health Insurance Plan January 29 2010 Families USA Coverage."— Presentation transcript:

1 1 State High Risk Pools –Bridges to Health Reform Richard Popper Executive Director Maryland Health Insurance Plan January Families USA Coverage for People who are Uninsurable NASCHIP National Association of State Comprehensive Health Insurance Plans

2 2 Purpose of State High Risk Pools The purpose of state high-risk pools is to provide comprehensive health coverage for medically uninsurable state residents, and to maintain the overall affordability of individual insurance coverage Risk pools first began to be established in the mid-1970s, and have gradually grown to 35 states, with 10 being established since 1999 Risk pools had an average monthly enrollment of 200,991 in 2008, with nearly 300,000 individuals covered during the year Individual market premiums in 35 risk pools states are up to 35% lower than rates charged in other states with guarantee issue

3 3 Who enrolls in Risk Pools (2008)? Medically eligible 71% of enrollment - have been refused individual health insurance due to a health condition, or offered restricted coverage - have one of from a list of qualifying medical conditions (for example 67 in Maryland) HIPAA eligible 28% of enrollment - exhaust group coverage (COBRA, or employer drops coverage or closes), and - 18 months of creditable prior coverage, and - no more than 63 day lapse between prior coverage. - NOTE: unemployed who are HIPAA eligible dont receive 65% COBRA subsidy from ARRA Health Coverage Tax Credit eligible1% of enrollment - Lost group coverage due to international trade, or - Pension assumed by Pension Benefit Guarantee Corp. (Bethlehem Steel) - Such individuals receive 80% federal tax credit toward premium

4 4 Maryland Qualifying Medical Conditions AddisonsCOPDHIV PositivityParaplegia AIDSCoronary Artery DiseaseHodgkinsParkinsons AlzheimersCoronary InsufficiencyHuntingtonsPorphyria Amyotrophic Lateral Sclerosis Coronary OcclusionHydrocephalusPregnancy Angina PectorisCrohns DiseaseKidney w/ DialysisPsychotic Disorders Ankylosing SpondylitisCystic FibrosisLeukemiaQuadriplegia Aplastic AnemiaDementiaLupusRheumatoid Arthritis AscitesDiabetes (Type I & II)Major Organ Trans.Scleroderma Bantis Disease or Synd.EmphysemaMultiple MyelomaSickle Cell Disease Bipolar DisorderEsophageal VariciesMultiple SclerosisStroke Cancer w/in 5 yrs (ex. skin) Friederichs AtaxiaMuscular DystrophySyringomyelia CardiomyopathyGuillain Barre Synd.Myasthenia GravisTay-Sachs Disease Chemical DependencyHemocromatosisMyotoniaUlcerative Colitis Cirrhosis of the LiverHemophiliaNon-Hodgkins Lymphoma Wilms Tumor Congestive Heart FailureHepatitis B & CPalsyWilsons Disease

5 5 How are state risk pools currently funded? Member premiums fund approximately 54% of total plans costs among 35 state pools, with remaining funding coming mostly from assessments on state regulated insurance plans Policyholders pay premiums that vary from 105% (5% above standard) to 200% (100% above standard) of rates charged by commercial plans to those who pass individual medical underwriting. 12 state risk pools discount premiums for limited income members, from 18% to 67% individual monthly premium varies from $240 (New Mexico) to $752 (Wyoming) for most popular products

6 6 Risk pools provide comprehensive benefits With few exceptions, state risk pools provide comprehensive benefits which cover the following: Hospital Inpatient Hospital outpatient Emergency room and urgent carePreventive care Mental Health (except 1 state)Professional services Home health careDurable Medical Equipment Diagnostic and lab servicesTherapy (PT, OT, ST) Ambulance Hospice ChemotherapyPrescription drugs Organ transplantsSubstance abuse Skilled nursing facilities (except 1 state)Prosthetics Maternity (except 2 states)

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8 8 Why arent current state risk pools larger, or more affordable? Most uninsured are not high risk Of 47 million uninsured, CPS data indicates only 1.3 million report poor health, and such individuals have average income of $8,614 in million report fair health, with average income of $13,794 In Maryland, only 18% of individual insurance applications are denied or ridered annually. Estimate that 35 to 40% of such individuals go into risk pool. State risk pools have limited funding Risk pools receive only $50 million in federal funding, for $2 billion in costs, states and member premiums must cover the remaining $1.9 billion in risk pool subsidies. Most states can only impose risk pool funding assessments on individual insurance market carriers (which subsidize losses), and in some states the small group market. The individual market is only 6 to 10% of insureds in states, while employer coverage (that do not fund risk pools) is approximately 75% of insureds. Congress/Obama Administration acknowledge funding is key for risk pools, since both Senate and House reform bills dramatically expand federal risk pool funding for losses ($5 billion) Funding limits and existing individual market structure require pools to impose preexisting condition exclusions and surcharge premiums, which can reduce enrollment demand

9 9 Congress & Administration Interest in High Risk Pool Expansion has Grown Initial reform proposals did not include high risk pools First idea was to immediately require guarantee-issue, but industry and NAIC responded that it would drive up costs of all individual market participants Otherwise, no coverage expansion till 2013 or 2014 Natl risk pool association (NASCHIP), Maryland Governor OMalley and other states advocated for interim expansion of shovel ready state high risk pools, which will allow those with preexisting conditions to get coverage starting in President Obamas Sept. Speech to Congress, proposed immediate coverage of those with preexisting conditions as bridge to reforms

10 10 Similarities in House & Senate Passed Risk Pool Proposals $5 billion in one-time funding for an interim expansion of risk pools through 2013 Risk pool expansion begins providing coverage in 2010 No preexisting condition exclusions No lifetime benefit limitations Broad authority for HHS Secretary to establish a national pool, or contract with state high risk pools or other state mechanisms HHS Secretary may delay transition of risk pool enrollees to health insurance exchanges HHS defined appeal process

11 11 Senate ApprovedHouse Approved Start date90 days from health reform enactment January 2010 Eligibility- Uninsured for 6 months, and - Has a preexisting condition, as determined by HHS - US citizen or lawful alien - No employer coverage for 6 months - Denied coverage due to preexisting condition, or charged higher premium due to condition, or has a condition specified by HHS Secretary, or - Has not had coverage for 6 mths - Not eligible for Medicare, Medicaid, employer coverage Benefits- Plan bears at least 65% of covered costs (65% plan actuarial value) - Member OOP limit no more than under federal high deductible plan rules for health savings accounts -consistent with essential benefits package that covers 70% of covered costs (actuarial value - no more than 30% member cost sharing) - Deductible limit of $1,500 - $5,000 OOP max Risk Pool Expansion: House vs. Senate

12 12 Risk Pool Expansion: House vs. Senate, contd Senate ApprovedHouse Approved Premiums- Standard rate for a standard population (100% of premiums charged to healthy individuals) - 4 to 1 age bands -125% of individual market rates - Geographic variation - 2 to 1 age bands Appeals & regulation - HHS defined appeal process - HHS has anti-dumping protections of insured individuals into pool - HHS defined appeal process - HHS has anti-dumping protections of insured individuals into pool State Maintenance of effort States that administer new federal pool cannot reduce expenditures level from prior year State or carriers must continue risk pool funding as of July 09

13 13 Outstanding Issues With Federal Risk Pool Expansion Is $5 billion adequate? Estimated to cover 300,000 more uninsured with preexisting conditions. CMS actuary projects funding exhausted by 2011 or No income subsidies: GAO estimates 4 million eligible for high risk pools nationally, however their average income is very low ($9,000 to $14,000 mean annual income). No premium subsidies for low income individuals. 26% of Maryland members enroll thru low income subsidies, most of whom pay below market rates. Significant premium inequity for new vs. existing risk pool members: Federal risk pool premiums cheaper for new enrollees, compared to rates charged to current risk pool members, or new HIPAA eligibles who will be ineligible for federal pool (you must be uninsured for 6 months to get federal rate). Outreach is key: Many unaccustomed to seeking/referring individual health insurance coverage Dormant risk pools in large states (Florida, California) with significant enrollment demand could grow dramatically. How handle 15 non-risk pools states? HHS contract with Blue Cross plans, or HIPAA guarantee-issue plans, or states create risk pools? Some states will move faster than others (90 days vs 1+ year). Remember SCHIP startup in late 90s? Will risk pools negatively impact exchanges in 2014? How attractive will health exchange be in 2014, since initial enrollment will be transfers from high risk pools?

14 14 Richard Popper, Executive Director When other health plans say no.... MHIP says yes! National Association of State Comprehensive Health Insurance Plans at

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