High-Risk Pools

 VII. Key Issues: Regulation & Reform >> B. Health Care Regulation >> Health Insurance Regulation >> High-Risk Pools

Overview

High-risk pools first emerged in 1976 to address the roughly 1 percent of the nonelderly population that is denied private health insurance coverage due to poor health. While more than two-fifths of these ultimately find their way into public programs such as Medicaid (Beauregard 1991), the remainder would otherwise be uninsured. States have established risk pools under their general authority to regulate insurance coverage. As discussed earlier under HIPAA, some states use their high risk pools as the mechanism for guaranteeing group-to-individuality portability of coverage.

Such pools typically offer guaranteed coverage for individuals who have been denied private coverage for health reasons, at premiums typically capped at 125 to 200 percent of premiums charged for standard risks in the individual market. While a handful of states cover the inevitable losses from such pools through general appropriations or tobacco funds, in four-fifths of states these losses are financed through pro-rata assessments of health insurers in that state, typically in proportion to their market share. Before the Affordable Care Act, 32 states had high-risk pools for their medically uninsurable populations. The Duke Center for Health Policy has developed a draft working paper assessing the costs and benefits of high risk pools.

More information and literature on high risk pools can be found below:

• Health Insurance Market Reforms (Urban Institute: 1998)
• How to Implement Kassebaum-Kennedy (Heartland Institute: 3/25/97)
• Map of States with High Risk Pools (National Center for Policy Analysis: 1996)
• Risk Pools (National Center for Policy Analysis: 6/30/94)
• The Federal Invisible High Risk Pool (FIHRP): Effect on Premium Rates, Individual Marketplace Enrollment and Use of Federal Funds. (Milliman, 4.17.17)