At InsureBlog, Hank Stern has written an insightful article about the new high risk pool health insurance plan in NC. The plan just opened its doors to enrollees last month, so it’s still to early to tell how well it will work, or how it will impact the state’s other health insurance policies. Hank pointed out that with the plan possibly covering maternity, and covering pre-existing conditions, funding (or the lack thereof) is likely to be an issue. His other concern is that existing small group policies with high premiums (ie, the unhealthy groups) might be motivated to drop their policies and send their employees towards the high risk pool health insurance plan as a cost-cutting measure.
I was struck by how similar this plan sounds to the high risk pool we have here in Colorado. Cover Colorado has been open to participants since 1991, and it has been remarkably consistent. Of course there have been rate increases, but that has been the case with all of the private health insurance carriers too. Cover Colorado does cover maternity, with most of the plans covering prenatal visits with just a copay, and the delivery is covered at the coinsurance rate after the deductible is met. The maternity coverage is similar to many private group health insurance policies, and is an obvious advantage over individual health insurance plans, very few of which cover maternity at all.
In Colorado, eligibility for Cover Colorado can be triggered by a declined application from a private health insurance carrier, or by an offer of a policy with a premium that is higher than Cover Colorado’s premium, or by an offer of a policy with a pre-existing condition exclusion. Applicants must not be Medicare or Medicaid eligible, and must not be eligible for a group health insurance policy or COBRA. Basically the plan is set up to be as inclusive as possible, while still being an option of last resort.
In the 17 years that Cover Colorado has been available here, I would not say that we have seen a flocking from private group health insurance to high risk pool coverage. In 2007 (the most recent data I could find), there were 5,414 people insured by Cover Colorado. Compared with the 17% of our state’s population that is uninsured, the number of people covered by our high risk pool is a drop in the bucket.
When employers stop offering group health insurance policies (which we may well see next year, as HB1355 takes effect and healthy groups are no longer eligible for a premium discount), the employees have a few options. If they are healthy, they can apply for individual health insurance and choose from among numerous private carriers offering hundreds of policy options. If they have pre-existing conditions, they can still apply for individual health insurance, but they may end up with a policy that excludes pre-existing conditions, or one that charges them a higher rate in trade for covering the pre-existing condition. If they are unhappy with the offer they receive, or if they are declined, they can apply for Cover Colorado. But the premium is steep. A non-smoking 35 year old female will pay more than $400/month for a policy with a $1000 deductible (rates vary by county, and discounts are available to people with household incomes below $50,000). There are plenty of Colorado residents who can’t afford premiums on private, medically underwritten policies, much less high risk pool rates.
If NC is efficient in the management of their high risk pool, I see no reason why it won’t be successful long-term. But the high premiums (from Hank’s article, it sounds like they’re even higher than Cover Colorado) will likely be a stumbling block for a lot of people. Those who are currently experiencing costly medical bills will find a way to pay the premiums. But people who have been declined for health insurance because of a condition that is not currently costing them money might be less inclined to do so. And going uninsured means that if (when) they do run into an expensive medical problem in the future, they will be out of luck, as the high risk pool will enforce a waiting period on pre-existing conditions. So even with high risk pools, we find ourselves in a situation where people are uninsured and lacking realistic access to health care. As long as we continue to have an opt-in/opt-out health insurance system, this problem isn’t likely to be solved by high risk pools.
