High Risk Pools

Overview

• Mark Pauly estimates that the total population with pre-existing conditions is roughly 4% of the population.
• Cancellation of someone’s coverage because they got sick has been illegal for nearly 2 decades. The law does allow insurers to retroactively cancel health coverage, but only if the consumer has committed some sort of fraud, such as willfully making a “material misrepresentation” (lying or omitting key facts) on the application form. Such cancellation of health coverage is rare – less than 0.5% of all policies are cancelled each year.

Resources

• Capretta, J., and Miller, T. (2010). “How to Cover Pre-Existing Conditions.” National Affairs.  2010 (4): 110–126.
• Centers for Medicare and Medicaid Services. Pre-Existing Condition Insurance Plan Data as of September 30, 2013. PCIP is a temporary program that covers a broad range of health benefits and is designed as a bridge for people with pre-existing conditions who cannot obtain health insurance coverage in today’s private insurance market. A range of professional, inpatient and drug treatments were provided to these individuals.  The PCIP program is administered by either the state or the federal government: Until June 30, 2013, 27 states ran their own programs, while 23 states and the District of Columbia elected to have their PCIP program administered by the federal government. In 2013, 17 of the state run programs transferred administration to the federal program. There are currently 40 states and the District of Columbia in the federal program.
• Milliman (4.17.17) The Federal Invisible High Risk Pool (FIHRP): Effect on Premium Rates, Individual Marketplace Enrollment and Use of Federal Funds. “We expect that the number of uninsured individuals will decrease with the FIHRP. Reduced premiums provide additional incentive to uninsured individuals to obtain coverage, which leads to enrollment growth in the individual health insurance market. We anticipate that greater premium reductions will lead to an increased number of individuals who purchase coverage.”
• Schwartz, Tanya (January 2010). State High-Risk Pools: An Overview. Washington, D.C.: Kaiser Commission on Medicaid and the Uninsured. State high-risk pools are state programs that offer health insurance to residents who, because of pre-existing medical conditions, are unable to purchase affordable coverage in the individual market. High-risk pools operate in 34 states1 and provide health insurance to nearly 200,000 U.S. residents. High-risk pools share a common structure and some similarities but differ by state in many ways including: eligibility, benefit design and pre-existing condition exclusions, premium costs, cost-sharing, subsidy programs, administration, and funding sources. In turn, enrollment numbers vary across states (Table 1). This issue brief provides an overview of the primary components of state high-risk pools, discusses their benefits and challenges, and concludes with a discussion of high-risk pools in national health reform.