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Not Enough Money for High-Risk Pools, CBO Says

Elyas Bakhtiari, for HealthLeaders Media, June 25, 2010

The high-risk insurance pools established by the Patient Protection and Affordable Care Act, which are supposed to be ready to launch by July 1, could cost three times as much as initially planned, according to new analysis from the Congressional Budget Office.

In a letter this week to Sen. Michael Enzi (R-WI), ranking member on the Senate Committee on Health, Education, Labor, and Pensions, CBO Director Douglas Elmendorf said that the high-risk insurance pools could cost the federal government $10-$15 billion through 2013, significantly more than the $5 billion that was appropriated in the initial legislation.

The spending estimate is difficult to gauge and depends on how many people enroll and how much of their expenses will be covered, he said.

"If the program covered about 65% of enrollees’ costs for healthcare, federal spending through 2013 would probably fall between $10 billion and $15 billion ... The larger the share of costs that the program would cover, the more attractive it would be to potential enrollees and the more expensive it would be to implement—because there would be more enrollees and higher costs per enrollee," he told Enzi.

The high-risk pools were designed to cover individuals with pre-existing conditions until 2014, when insurance companies will no longer be able to deny coverage based on existing medical conditions. After that, enrollees could leave the high-risk pools and obtain coverage through insurance exchanges.

But to make the program work, the government will have to either spend more or cap spending or the number of enrollees, according to Elmendorf. The CBO expected HHS to limit enrollment to an average of 200,000 during the 2011-2013 period, but total enrollment could grow to as high as 700,000 in 2013.

"The number of people who may be eligible for the program is in the millions—much greater than the estimates of participation," Elmendorf wrote. However, some who are eligible will be discouraged by the premiums and cost-sharing requirements, and others won't be aware of their eligibility.

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