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High-risk insurance pools face start-up hurdles

Published March 31, 2010 4:44 pm

Health reform » Covering the hard-to-insure a first test of new rules.
This is an archived article that was published on sltrib.com in 2010, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

A volunteer at a Midvale senior center where she recently taught a 90-year-old to navigate Facebook, Sherri Park is well-versed on the ins and outs of the new federal health overhaul.

But like many Americans, the 63-year-old is curious to know how it applies to her. Will it mean lower premiums and fewer out-of-pocket costs? What services will be covered, and will she have a choice of plans?

Park may have answers sooner than most. She qualifies for one of the first benefits to materialize under the law, a federally-funded program for people who have been turned down by private insurers because they have a pre-existing medical condition.

The Obama administration has 90 days to move from policy to practice, launching high-risk pools that will guarantee insurance for those deemed uninsurable.

The program represents the first test of the ambitious law -- and Utah's willingness and ability to comply with it.

"It's a transition, the first of many, and a Band-Aid at best," said AARP of Utah director Rob Ence who cautions against high expectations. "It's too soon to tell if state will take advantage of it, or even if the state is willing. It's a bit of an unknown."

Utah has joined 12 other states in a federal lawsuit challenging the constitutionality of health care reform. And under a new state law, agencies must report to the governor and Legislature before implementing any of it.

"We can't do anything, we can't apply for grants, without reporting first to the Legislature," said state health insurance division director Tanji Northrup Anderson.

Utah already has a high-risk pool covering about 3,700 people with chronic illnesses and disabilities. Another 50,300 are currently eligible and haven't enrolled.

But the Utah Comprehensive Health Insurance Pool (HIPUtah) doesn't meet some of the new federal standards. And how much it will cost to update the state-run program, or even if it will be updated, is unknown.

Complicating matters further, the U.S. Health Department of Health and Human services hasn't yet decided whether it will administer its own high-risk pool, or contract it out with states or a non-profit.

But there's an assumption states will play a role: There's $5 billion available in grants to help states.

HHS spokesman Nicholas Papas promises, "we will be working closely with states as we establish these pools," but , it's premature to talk details.

House Speaker Dave Clark, R-Santa Clara, thinks Utah's high-risk pool may qualify for some of the money.

"But there may be tweaks that need to be done," which would require legislation and a special legislative session in May or June, said Clark.

One scenario being floated in Utah is to create two separate pools, one for existing customers and another, federally-backed version for newcomers.

Lawyers have assured state officials this is legal, even though it will create disparities in premiums and benefits. "HIPUtah will be more expensive," acknowledged Anderson.

The new, federal pool comes with various consumer protections that wouldn't apply to HIPUtah. It must cover at least 65 percent of patient care costs. Out-of-pocket charges are capped at $5,950 a year for an individual, or $11,900 for a family. It can't exclude coverage of participants' pre-existing conditions. And older people can't be charged more than younger people.

That's attractive to Park who has been paying into HIPUtah for years, shelling out $959 a month in premiums for a high deductible plan. Though healthy, she was told by her insurance agent, "If you're over 50, insurers will find some reason to deny you."

That can no longer happen starting in 2014, when exchanges, health insurance marketplaces, are up and running and other protections for people with pre-existing conditions are in effect. It's at that point that high-risk pools become obsolete, including HIPUtah, which will dissolve, said Anderson.

Until then, Park may not get a break on premiums, unless she jumps ship and enrolls in the new federal pool.

There would nothing legally barring her, but she would have to go uninsured for six months -- a prerequisite for enrolling in the federal pool, said Tomi Ossana, HIPUtah director.

That won't suit Park who doesn't "want to take the gamble" of falling ill. Her strategy: stay the course for two years until she qualifies for Medicare.

"I'm one of the lucky ones," Park says.

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High-risk pools, who qualifies

Applicants must have been denied coverage due to a pre-existing condition and have been without health care coverage for at least six months.

The fine print

The pool will only last until 2014 when exchanges, health insurance marketplaces, are up and running and other protections for people with pre-existing conditions are in effect.