Nebraska Gov. Dave Heineman told U.S. Secretary of Health and Human Services Kathleen Sebelius in a letter sent this week that his state would not operate a new federal high-risk insurance pool for individuals with pre-existing conditions.
The program was included in the recent healthcare reform legislation and is designed to offer stop-gap coverage to high-risk individuals until 2014, when insurance companies will no longer be allowed to deny coverage based on pre-existing conditions. Nebraska is one of several states that already has a high-risk pool, which serves nearly 5,000 people.
Nebraska residents with pre-existing medical conditions will still be eligible for the federal high-risk pool, which is expected to have lower premiums than the Nebraska Comprehensive Health Insurance Pool. Heineman's decision simply means it will be run by the federal government, rather than contracted by the state government.
Heineman told Sebelius that even though Nebraska had a similar program, a new pool with a different plan design, pricing scheme, and funding requirements were needed, and he had questions about the value of adding a new layer of bureaucracy at the state level to administer the program.
"The proposed level of federal support and premiums will be inadequate to meet all expected obligations of this program," Heineman wrote. "Even with enrollment caps, we are very concerned that funding will not be sufficient to assure a solvent runoff of all claims when the program expires in three years. With so much financial uncertainty, the State of Nebraska cannot afford to subsidize a second high risk insurance program."
Other governors are still weighing similar decisions, and participation in the new high-risk pool may serve as an early litmus test of states' willingness to accept the sweeping new legislation.
Nebraska's Attorney General is one of 20 who has challenged the constitutionality of the new law, a fact that the governor noted in an accompanying letter to state legislators. He also pointed out his own concerns about the bill.
"As you know, most Nebraskans are opposed to this legislation because it will raise taxes, cut Medicare and premiums will continue to increase. I share their concern," Heineman said.
The federal pool is scheduled to kick off in July.