Coming Soon: State Insurance Pools

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Starting July 1, individuals denied health insurance due to pre-existing medical conditions will be able to enroll in new national insurance pools, but those pools may differ depending on particular states’ elected participation in the federal program.

The insurance pools, which were created under the Patient Protection and Affordable Care Act, are temporary. The pools allow those unable to get health insurance to buy into plans alongside other similarly affected individuals. They are intended to bridge the gap in coverage for those with serious medical conditions who have been uninsured for at least six months until mandated health insurance exchanges become available in 2014.  The eventual insurance exchanges will offer individuals who can’t get coverage through an employer a choice of competitively-priced healthcare plans and prohibit coverage from being denied or affected by health status.

Congress set $5 billion aside for the insurance pools program.  Applications will be available in some states, including Colorado, Maryland and North Carolina, as early as Thursday. Other states, such as New York, California, Massachusetts, Michigan and Pennsylvania, are still working on proposals and plan to implement their programs later in the year.

Thirty states -20 of which have already filed formal proposals with the U.S. Department of Health and Human Services - have said they will institute and run their own federally-funded high-risk insurance pools. However, 18 of the remaining states are opting for HHS to run their pools instead. Kentucky and Rhode Island have delayed making a decision about how they will implement their programs.

The states who have elected to rely on HHS include Alabama, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Louisiana, Minnesota, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, Tennessee, Texas, Virginia and Wyoming.

Most states electing to let the federal government do the legwork did so over concerns that the allotted funding would not last over the next three and a half years. Last week, the Congressional Budget Office, which conducted a study of the program, said that the $5 billion would not be sufficient to cover the cost of all applicants through 2013.

Additionally, 35 states already operate high-risk insurance pools, funded by state money and high insurance premiums. According to The New York Times, these pools all operate at a loss, which is problematic, considering that they charge higher premiums than those permissible in the new federal program. Due to these lower premiums, the CBO estimates that the federally-funded insurance pools will receive more applicants than the state ones do (currently around 200,000), in which case “the available funds will probably be exhausted prior to 2013.”

As of now, state officials have been instructed by the HHS to stay within their allotted budget of federal funding when handling insurance claims. There has been no final decision as to how claims will be handled when the money runs out.

In order to help the uninsured learn about their options, HHS will be launching an online portal that will include information on available health insurance in each state.  As of July 1, the website will provide summary level information on available coverage options by state and zip code in the private market and information about public programs with links to more detailed information.  In October, more detailed pricing and benefit information will be available.

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