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AIS's Health Business Daily
Featured Story, July 8, 2010 High-Risk Pools Under Reform Face Delays Despite States’ Efforts to Comply Reprinted from AIS's HEALTH REFORM WEEK, a new newsletter designed to help savvy business leaders in health care understand what the enormous changes mean to them ... and what they can do about it. By Judy Packer-Tursman, Contributing Editor (tursman@comcast.net) Under the federal health reform statute, states were supposed to begin operating a temporary federal high-risk pool program by late June — 90 days after the law’s enactment. But the reality is that it is taking months longer for states to get going, even with what a Michigan official calls “an aggressive timetable.”
The new federal program will cover people with pre-existing medical conditions who have been uninsured for at least six months. It will end in January 2014, when state-based health insurance exchanges begin and other major market reforms take effect.
“Bids [from carriers] are due July 7….We anticipate the contract will start in early August, enrollment will begin in September, and coverage in October,” Michigan Office of Financial and Insurance Regulation spokesman Jason Moon told HRW June 24. “We’re working very quickly…because we had to contract this out…[and we] put an aggressive timetable on it.”
Oregon, which unlike Michigan is one of 34 states operating an existing high-risk pool, expects to begin coverage in the federal high-risk pool in August. In Oregon, roughly 14,000 high-risk people are covered in the state’s own pool.
“We do plan on running the federal high-risk pool alongside the Oregon Medical Insurance Pool,” OMIP spokesman Don Myron told HRW June 24. “We are currently in negotiations with HHS to try to wrap up this contract….We anticipate that happening, and assuming all goes well, we do plan on having applications available during the month of July for coverage effective Aug. 1 for the federal pool.”
The timeline on the federal mandate has been “incredibly aggressive,” Myron said, describing work to launch the federal high-risk pool as “a real whirlwind” in the past month. But he said HHS has been “fairly easy and open” for the state to work with on the program.
In all, $5 billion has been appropriated for the federal high-risk pool program. Michigan’s share is expected to reach $141 million to run the pool until 2014, while Oregon’s allocation is $66 million. Moon said he has no estimates on how many people will be covered by the pool in Michigan. Oregon projects peak enrollment of 4,000 and expects 6,700 residents to be served over the program’s duration.
States Don’t Plan to Use Own Funds
Moon echoes other states in stressing that Michigan does not intend to pour state funds into the new program. “We won’t be using any state dollars for this plan, so we’ll structure it so that we stretch the federal dollars to reach the most people we can,” he said.
Recently, the Congressional Budget Office was asked to estimate the federal costs of implementing a similar high-risk pool program that didn’t cap the funding available. CBO stated June 21 that if an uncapped program covered about 65% of enrollees’ costs for health care, then federal spending through 2013 would probably be between $10 billion and $15 billion. And CBO said total enrollment likely would climb to 600,000 or 700,000 in 2013 from 400,000 in 2011, even though millions of people would be eligible for the program.
HHS has determined minimum benefits that must be included in the program, with plans having to cover at least 65% of health care costs. For example, there is a $100,000 annual cap on prescription drug coverage, and total out-of-pocket costs cannot top $5,950 a year.
But initial out-of-pocket costs for enrollees in the federal pool may vary considerably from state to state. Michigan, for example, is setting a $1,000 annual deductible. “Although it’s not an insignificant number, in many cases it’s smaller than what is in the individual market,” Moon said. “The Blues’ most commonly sold plan has a $2,500 deductible.”
By contrast, under Oregon’s benefit design for the federal pool, state residents can choose between two PPO plans: one with a $500 deductible and the other with $750. Myron said that Oregon intends to put out a single application for the federal and state high-risk pools. If a person is determined to be eligible for the federal pool, he or she will be given that coverage.
Myron explained that Regence BlueCross BlueShield administers Oregon’s state high-risk pool, and the federal pool would be operated in the same way.
HHS Sec. Kathleen Sebelius told states April 2 that they have several options for operating the temporary high-risk pool. States can run a new high-risk pool alongside an existing state high-risk pool, set up a new high-risk pool if the state doesn’t currently have one, build upon other existing coverage programs for high-risk individuals, contract with insurers to provide subsidized coverage, or let HHS run the program. |
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