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Health Reform Would Spend $5B to Create High-Risk Pools for Uninsurable

Cheryl Clark, for HealthLeaders Media, January 26, 2010

Both House and Senate health reform proposals would nationally standardize the widely varied "high-risk pools" that provide health insurance to 200,000 people who, because of pre-existing medical conditions, are shut out of the individual health insurance market.

Two reports from the Henry J. Kaiser Family Foundation released Monday describe these risk pools in detail and discuss issues that need to be considered in a national transition.

For starters, both bills would appropriate $5 billion over three or four years to pay healthcare claims and administrative costs that exceed premiums collected from those in the high-risk pool. But, says one of the Kaiser reports stated, "it is doubtful" that federal funding would support much more enrollment than exists today.

The first report, "State High-Risk Pools: An Overview" by Tanya Schwartz, said that these high-risk pools have existed since 1976, but "have received little national attention" until the recent focus on health reform. Both the Senate and House versions would create "a temporary national high-risk pool program to provide health coverage to people prior to the implementation of other coverage expansions included in the bills" which would be implemented by 2013 or 2014.

The Kaiser report, however, details the myriad differences among the high-risk programs in 34 states.

"Low enrollment in high-risk pools is primarily attributable to the high cost of coverage," according to the report.

Out-of-pocket costs for those in a high-risk pool can vary. According to the Government Accountability Office, "over half of all high-risk pool enrollees had annual deductibles between $1,000 and $3,000, and eighteen percent of enrollees had annual deductibles of $5,000 or greater," the report said.

The first report compares how high-risk pools would work under the House and under the Senate health reform proposal.

Affordable Health Care for America (H.R. 3962)
Under the House proposal, those eligible would include U.S. citizens and legal immigrants who have been denied coverage, offered unaffordable coverage or coverage that does not cover a pre-existing condition.

They may also have an eligible medical condition, are in the Medicare waiting period, and have retiree coverage but the annual premium increase exceeds a percentage set by the Secretary of Health and Human Services. They also may not be eligible for public programs or have not had employer-sponsored health coverage for at least six months.

The bill also would prohibit the exclusion of pre-existing conditions.

Premiums would be no higher than 125% of the prevailing rate for comparable coverage in that state. Premiums may vary by no more than 2 to 1 because of age, and are adjusted for geographic variation in costs. Annual deductibles would not exceed $1,500 for individuals and cost sharing would be limited to $5,000 for individuals and $10,000 for families, with no lifetime limits.

Patient Protection and Affordable Care Act (H.R. 3590)
Under the Senate plan, eligibility would be limited to those with pre-existing health conditions. U.S. citizens, and legal immigrants who have not had credible coverage for the previous six months and have a pre-existing health condition.

Premiums may vary by age by 4 to 1, geographic area, family composition, and use of tobacco. Health plans must limit out-of-pocket spending to $5,950 for individuals and $11,900 for families. And while this bill also would not exclude coverage of pre-existing conditions, the benefits level is not specified in the legislation.

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