Policy Analysis
NO. 2 · MAY 2010
Health Coverage for the High-Risk
CONTENT
Uninsured: Policy Options for Design of
Temporary Pool Provisions
2
Estimating the Target Population
4
the Temporary High-Risk Pool
Policy Options
6
BY MARK MERLIS
Eligibility
6
Other Eligibility Rules
7
Among the first tasks required by the recently enacted health reform law is creation of
Benefits
8
a temporary national high-risk pool program to provide subsidized health coverage to
Premiums
9
people who are uninsured because of pre-existing medical conditions. While as many as
Treatment of Existing State Programs
9
5.6-mil ion to 7-mil ion Americans may qualify for the program, the $5 bil ion al ocated
Looking Ahead
10
over four years wil al ow coverage of only a smal fraction of those in need, potential y
as few as 200,000 people a year. Policy makers wil need to tailor eligibility rules, benefits
and premiums to stretch the dol ars as far as possible. Another consideration is how the
new pool wil fit with existing state high-risk pools or other state interventions in the pri-
vate nongroup, or individual, health insurance market. Policy makers also wil need to
consider how to manage the transition of enrol ees from high-risk pools to the new health
insurance exchanges scheduled to be operational in 2014 to prevent adverse selection and
encourage insurer participation.
About the Institute. The National Institute for
Health Care Reform is a nonpartisan, nonprofit
Bridging the Coverage Gap for the High-Risk Uninsured
organization established by the International
Union, UAW; Chrysler Group LLC; Ford Motor
The Patient Protection and Affordable Care Act (PPACA) of 2010 includes insur-
Company; and General Motors. The Institute
contracts with the Center for Studying Health
ance market reforms and income-based subsidies designed to make health cover-
System Change (HSC) to conduct health policy
age more accessible and affordable. Most of these measures do not take effect until
research and analyses to improve the organiza-
January 2014. Until then, people with pre-existing medical conditions who lack
tion, financing and delivery of health care in
the United States. HSC President Paul Ginsburg
access to employer-sponsored or public coverage may continue to have trouble
serves as research director of the Institute. For
finding affordable coverage in the private nongroup, or individual, market (see box
more information go to www.nihcr.org.
on page 2 for more about underwriting practices in the nongroup market and state
regulatory responses).
To bridge the gap, the new law provides for an interim national high-risk pool,
modeled on those already operating in 35 states (see box on page 3 for more
about state high-risk pools). Possibly starting in some states as early as July 1,
2010, the program wil provide subsidized coverage to uninsured people with
600 Maryland Avenue, SW, Suite 550
Washington, DC 20024-2512
pre-existing medical conditions. This analysis summarizes provisions of the new
Tel: (202) 484-5261
temporary high-risk pool program, estimates the population that might be eligible
Fax: (202) 484-9258
and reviews some of the key policy issues that must be resolved as the program is
www.hschange.org
implemented.
President: Paul B. Ginsburg
Vice President and
Director of Policy Analysis: Elizabeth Docteur
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National Institute For Health Care Reform
Policy Analysis No. 2 · May 2010
insurance exchanges are available. The law allows an exten-
Underwriting and Regulation
sion of pool coverage beyond that date if necessary to assure
in the Nongroup Market
a smooth transition of enrollees into the exchanges. The
Nongroup health insurers commonly obtain information
HHS secretary can either operate the high-risk pool program
on an applicant's current health status, medical history and
directly or through contracts with states or nonprofit private
other indicators of future medical costs. If an applicant is
entities.
determined to be high risk, an insurer may:
HHS Secretary Kathleen Sebelius wrote an April 2, 2010,
· refuse to issue a policy;
letter to governors and state insurance commissioners, ask-
ing for expressions of interest in participating in the program.
· issue a policy with an exclusion or elimination rider,
Further policy guidance was provided in a solicitation of state
under which services for a specific condition are tem-
proposals to operate pools issued by HHS on May 10, 2010.1
porarily or permanently excluded; or
Program structure. HHS has indicated that states may
· Charge higher--substandard--premium rates than
operate a new high-risk pool--either alone or alongside an
would be offered to comparable individuals who are
existing pool--build upon other existing coverage programs
not classified as high risk.
for high-risk individuals or contract with a current carrier of
Insurers also commonly impose pre-existing condition
last resort or other carrier to provide subsidized coverage. If a
exclusions on al new policyholders, regardless of their
state does nothing, HHS wil administer the coverage program
perceived risk level. For a fixed period, such as six or 12
in that state. As of May 21, 2010, 29 states and the District of
months, no coverage is provided for any medical condition
Columbia had signaled an interest in operating their own pro-
the purchaser has at the time coverage takes effect or dur-
grams, while 19 states declined to participate. Rhode Island
ing a look-back period, typical y 12 to 24 months before
and Utah were stil deciding (see Supplementary Table 1 for a
the application. (Many people misunderstand the phrase,
list of state decisions).
"pre-existing condition exclusion," to mean refusal to issue
Eligibility. The program is open to citizens and legal resi-
a policy. The phrase properly refers to a temporary restric-
dents who have a pre-existing condition, as determined in
tion on coverage in a policy that has been issued.)
a manner consistent with guidance issued by the secretary.
Most states regulate at least some practices of nongroup
Applicants also must have been without creditable coverage
insurers, according to the Kaiser Family Foundation's
for at least six months--creditable coverage includes most
statehealthfacts.org Web site. In 16 states there is some
group and nongroup private health insurance, Medicare,
guarantee of access to nongroup coverage, whether from
Medicaid and some other public programs. HHS has indicated
multiple insurers or from a single so-cal ed carrier of last
that it wil allow states with existing pools to follow their own
resort, such as a Blue Cross plan. The ability of nongroup
criteria for defining pre-existing conditions, subject to HHS
insurers to vary premiums by medical condition or health
approval.
status is restricted in 18 states. Just one, New York, requires
Benefits. Benefits to be provided by the pools are not speci-
community rating--a single rate for al applicants--while
fied, but the pools must cover at least 65 percent of the cost of
six others allow adjusted community rating, with rates
whatever services are covered. The coverage also must have an
varying by age or other non-health factors. The other 11
out-of-pocket limit--the sum of deductibles, coinsurance or
allow rate bands, meaning rates may vary by health risk but
copayments--no greater than the limits established for high-
only within fixed upper and lower limits. Overal , 24 states
deductible health plans linked to health savings accounts:
and the District of Columbia have either issue or rating
$5,950 for an individual and $11,900 for a family in 2010.
rules; only nine have both types of rules. Most states also
HHS is considering establishing a "floor set" of benefits, tak-
have some restrictions on the use of pre-existing condition
ing into account benefits already offered by state pools. The
exclusions, although none prohibit them entirely.
new temporary pools are prohibited from imposing pre-exist-
ing condition exclusions.
Temporary Pool Provisions
Premiums. Premium rates may vary only by age, fam-
ily type (individual vs. family), geographic area and tobacco
Under section 1101 of the PPACA, the secretary of the U.S.
use. The highest age rate may be no more than four times
Department of Health and Human Services (HHS) is charged
the lowest. (The age rating rules for regular nongroup and
with establishing the temporary high-risk pool program
smal group coverage to take effect in 2014 specify a 3:1 ratio.)
within 90 days after the law's enactment. The program is to
According to the law, rates must "be established at a standard
continue operations until Jan. 1, 2014, when the new health
rate for a standard population." That is, they must be equal
2
National Institute for Health Care Reform
Policy Analysis No. 2 · May 2010
State High-Risk Pools
High-risk pools are state-operated or state-chartered programs
costs in an average pool, according to the GAO. Every pool
that offer subsidized coverage to people with health condi-
relies on some form of additional funding to subsidize pool
tions that prevent them from obtaining affordable coverage
losses. In 29 states, health insurers pay an assessment based
in the nongroup market. In many states, the high-risk pool
on their share of total health insurance premiums earned in
also serves as the mechanism for providing insurance to
the state. These assessments are imposed both on nongroup
people eligible for coverage without any pre-existing condition
and group premiums but not on self-insured employer plans,
exclusions under the 1996 Health Insurance Portability and
although some states do assess stop-loss carriers used by self-
Accountability Act (HIPAA) because they have recently lost
insured plans, according to the National Association of State
employer coverage. Likewise, many state pools provide cover-
Comprehensive Health Insurance Plans. Some states also use
age for people eligible for the Health Care Tax Credit (HCTC)
general revenues, tobacco settlement money or other special
Program established as part of the Trade Act of 2002. The
funds. Since 2002, there has been a federal grant program for
HCTC program pays part of the health insurance premiums
state high-risk pools, with $75 million allocated for 2010.
for workers displaced by trade and early retirees receiving ben-
Even after subsidies, risk-pool premiums can be quite
efits from the Pension Benefit Guaranty Corporation.
high. The median state pool rate for a 50-year-old male non-
Currently 35 states operate high-risk pools, with total
smoker in 2008 was $6,288 a year, according to GAO. Rates
enrollment estimated at 199,418 in 2008, and 72 percent
ranged from a low of $3,300 in Idaho to a high of $10,176
were eligible because they were "medical y uninsurable,"
in Oklahoma for the most popular plan in each state's pool.
according to a 2009 U.S. Government Accountability Office
Twelve states offered some form of subsidy to low-income par-
(GAO) analysis. An insurer may refer people to a state-
ticipants in 2008, with an average upper-income limit of 285
operated pool, or individuals may apply to the pool on their
percent of the federal poverty level--$29,640 for an individual
own. Applicants must demonstrate that they have been
in 2008--and an average maximum discount of 66 percent of
denied coverage for health-related reasons by one or more
the premium. Because subsidy funds are limited, a few states
insurers or--in some states--that they have a condition that
have resorted to waiting lists for pool applicants; one pool,
would lead to denial of coverage. States also allow enrol -
Florida's, has not been open to new enrol ees since 1991. In
ment by people who have been offered coverage only at very
addition, al but two imposed pre-existing condition exclusions
high rates. Premiums paid by risk-pool enrollees are typical y
in 2009--meaning that people admitted to the pool because of
capped at between 125 percent and 200 percent of the stan-
a medical problem often have to wait six or 12 months before
dard premium--that is, the premium that nongroup insurers
treatment of that problem is covered, according to the Kaiser
might charge an applicant of the same age and sex, in the
Family Foundation's statehealthfacts.org Web site.
same geographic area, without known medical problems.
Because the pools are designed to attract the highest-risk
Source: U.S. Government Accountability Office (GAO), Health Insurance: Enrollment,
applicants, even these higher premiums are insufficient to
Benefits, Funding, and Other Characteristics of State High-Risk Health Insurance Pools,
meet claims costs. In 2008, premiums covered 54 percent of
letter to congressional requesters, Washington, D.C. (July 2009)(GAO-09-730-R)
to 100 percent of the rate that nongroup insurers in the same
Supplementary Table 1).
area would offer for comparable benefits for a population that
Adjustments. Under the law, the HHS secretary has two
did not present high medical risk.
ways of keeping spending within the $5-billion limit. The first
Funding. Congress appropriated $5 billion to pay for the
is a general authority "to make such adjustments as are neces-
pools' claim and administrative costs in excess of premium
sary to eliminate" any projected deficit for a fiscal year. The
revenues during the period July 2010 through December
second is an authorization to "stop taking applications for par-
2013. This comes to about $1.4 billion per year, or about twice ticipation in the program."
the $800 million states spent subsidizing high-risk pools in
Maintenance of effort. If a state that already operates one
2008. HHS has indicated that it wil allocate funds across
or more risk pools enters into a contract to operate a pool
states using a formula comparable to that previously used
under the new program, it must agree to continue to spend
for the Children's Health Insurance Program (CHIP). Each
each year what it spent in the year before entering the contract
state's share wil be based on its total nonelderly population
on the existing state pool. Interestingly, if a state decides not
and its uninsured nonelderly population, with an adjustment
to contract, and HHS instead provides coverage in that state
for state differences in average health sector wage levels (see
directly, the state has no maintenance-of-effort requirement.
3
National Institute For Health Care Reform
Policy Analysis No. 2 · May 2010
Anti-dumping rules. The law has provisions meant to
Data Source
assure that insurers and employers do not attempt to shift
high-risk enrollees from their coverage to the pools. Under
People are classed as having a chronic condition if they reported,
these provisions, the HHS secretary must develop criteria to
at any time during 2007, one of the conditions defined as chronic
determine whether insurers or employers have discouraged an
in the HCUP system. HCUP uses five-digit ICD-9 codes to clas-
individual from keeping existing health coverage based on the
sify conditions as chronic or nonchronic. MEPS public-use data
individual's health status.
provide only higher-level three-digit codes. For the estimates
Some of the rules governing the temporary national high-
in this analysis, three-digit codes are classed as chronic if they
risk pool program are quite different from those commonly
include any five-digit code with a chronic classification. As a
applied in existing state pools (see Table 1).
result, these estimates show a slightly higher prevalence of chronic
illness than corresponding AHRQ estimates.
Estimating the Target Population
To identify people with high-cost conditions, a standard pre-
In considering policy options for implementation of the
mium rate was first established for each of the four age classes
temporary national high-risk pool program, it is useful to
used. The rates are based on private insurance payments (not
understand the size and characteristics of the uninsured pop-
total spending) for MEPS respondents who had employer cover-
ulation potential y eligible to participate. The 2007 Medical
age throughout 2007. Data on people with employer, rather than
Expenditure Panel Survey (MEPS) conducted by the Agency
nongroup, coverage were used because: 1) employer plans are
for Healthcare Research and Quality (AHRQ) allows esti-
more comprehensive, and spending wil reflect the ful scope of
mates of the uninsured population at a point in time as wel
likely utilization by people with and without health problems; and
as changes in the population over time.
2) nongroup data are affected by medical underwriting, which
About 51.6 million nonelderly people were uninsured in
excludes the very people whose utilization is of interest. The
December 2007--the most recent ful year of available MEPS
resulting "rates" (which include only claims costs, not administra-
data. Of these, 43.7 million--85 percent of the total--had
tion) for the age classes were then compressed to comply with the
been without insurance for six months or more, as required
4:1 limit in the PPACA risk-pool provisions.
by PPACA.
A condition is defined as high cost if average claims cost for
2 Children were slightly less likely to have long
periods without coverage; 74 percent of uninsured children in
people with that condition is at least 150 percent of the standard
December 2007 had been uninsured for six months or more.
rate for their age group. So dropsy is a high-cost condition if chil-
Of the people uninsured for six months or more, 44 per-
dren with dropsy have average costs of $1,017 x 1.5, adults aged
cent reported at least one chronic condition as defined by
19-34 with dropsy have average costs of $2,035 x 1.5, and so on.
AHRQ's Healthcare Cost and Utilization Project (HCUP).
This very simple method ignores interactions: some combinations
3
As expected, the prevalence of chronic problems rises sharply
of two or more lower-cost conditions undoubtedly result in high
with age (see Table 2). Not al chronic conditions as defined
average costs, but these were not identified.
by HCUP result in high medical spending or would be likely
A true standard rate in a given market is a rate after whatever
to lead to rejection or a substandard rate. For this analysis,
underwriting is common in that market. Properly, the process
a chronic condition is a high-cost condition if people in a
of developing standard rates and identifying high-cost individu-
given age group with that condition would be expected to
als should be iterative. One would compute a standard rate for
have claim costs at least 50 percent higher than average claim
the whole study population, throw out the people who exceeded
costs for the age group (see the Data Source for a description
it by a certain amount, recalculate the standard, throw out more
of how these conditions were identified). That is, people with
people, and so on, until one has reached some equilibrium. This
the condition could be expected to receive a rate quotation of
complex process was not adopted for the simple il ustrations pro-
at least 150 percent of a standard rate--if they were offered
vided here.
coverage at al . High-cost conditions are even more heavily
Original and Compressed Claims Costs for People with
concentrated among people aged 50-64 than chronic condi-
Full-Year Employer Coverage, 2007
tions in general.
Age
Raw Rate
Compressed Rate
Income distribution is similar for al nonelderly uninsured
people and for those who may be thought of as the target
Under 19
$1,005
$1,017
group for the temporary high-risk pool program--those
19-34
$1,662
$2,035
uninsured for six months with a high-cost condition (see
35-49
$2,495
$3,052
Table 3). Half of the target group has income above 200 per-
50-64
$5,003
$4,070
cent of poverty, and one in five is at 400 percent of poverty
Source: Author's analysis of 2007 Medical Expenditure Panel Survey
4
National Institute for Health Care Reform
Policy Analysis No. 2 · May 2010
Table 1
Comparison of Temporary High-Risk Pool Program Rules with State High-Risk Pool Practices
National Risk Pool
State Risk Pools
Eligibility
Period without Coverage
Six months
No provision
Medical Eligibility
Pre-existing condition, as defined by
Denial or quotation of substandard rate by one
HHS secretary
or more carriers, or in some states a condition
on a set list
Residence
Must be U.S. citizen or legal resident
Must be state resident, often for a minimum
period such as six or 12 months; U.S. citizen-
ship required in some states
Benefits
Scope of Services
Possible floor package to be established
Most states offer multiple benefit choices; pre-
scription drugs may be included or offered as
a separate rider
Actuarial Value
Plans must pay for 65% of costs of cov-
Not specified
ered services
Deductible
Not specified
Most states offer range of deductibles; average
deductible in most popular plan was $1,593 in
2008
Out-of-Pocket (OOP) Limit
$5,900 for an individual
Varies; in 2008, only 22% of states had an OOP
limit greater than $5,000 in the most popular
plan
Annual and Lifetime Benefit Limit
Not specified
Average annual limit in 2008 was $175,000;
lifetime limit was $1.6 million
Pre-existing Condition Exclusion
Prohibited
Imposed in al but two states (except for
HIPAA-eligibles and, often, other people with
recent coverage)
Premium
Percent of Standard Rate
100%
Usual y 125%-200%
Allowable Variation
Age (with 4:1 maximum ratio), geo-
Age (with varying maximum ratios), geogra-
graphic area, tobacco use
phy, sometimes gender, tobacco use, weight
Low-Income Subsidies
No provision
Available in 12 states
Sources: Kaiser Family Foundation, statehealthfacts.org; information compiled by the National Association of State Comprehensive Health Insurance Plans (NASCHIP), available at http://naschip.org/por-
tal/; the National Association of Insurance Commissioners Model Health Plan for Uninsurable Individuals Act, and U.S. Government Accountability Of ice (GAO), Health Insurance: Enrol ment, Benefits,
Funding, and Other Characteristics of State High-Risk Health Insurance Pools, letter to congressional requesters, Washington, D.C. (July 2009)(GAO-09-730-R)
or higher. While these people may face underwriting barri-
to obtain coverage as dependents through a family member's
ers, they might be able to afford even a substandard premium
employment; access to dependent coverage was not modeled
(within limits) or pay higher cost sharing than other members for these estimates.
of the target population. This is worth considering when
Possibly some others of the target population could qualify
thinking about how best to focus limited funding for the tem-
for Medicaid, although many adults would be excluded by
porary pool program.
the categorical restrictions that wil continue to apply in most
Final y, many people potential y eligible for the program
states until 2014. Low-income children might qualify for
have access to alternative sources of coverage. Of the nearly 7
CHIP. Of 646,839 children in the target population, 369,488--
million people with high-cost conditions who had been unin-
or 43 percent--had incomes below 200 percent of poverty.
sured for six months or more in December 2007, 14 percent
They would have been eligible for Medicaid or CHIP in 44
were offered coverage through their current employment,
states as of 2009.4
similar to the uninsured in general. Many more might be able
5
National Institute For Health Care Reform
Policy Analysis No. 2 · May 2010
Table 2
Uninsured with Any Chronic Condition and High-Cost Chronic Condition, December 2007
Age
Uninsured Six
Any Chronic
Any Chronic
Any High-Cost
Any High-Cost
Months or More
Condition
Condition
Chronic Condition
Chronic Condition
Under 19
7,291,537
2,544,761
35%
646,839
9%
19-34
17,801,359
6,008,326
34
1,777,171
10
35-49
11,074,037
5,363,380
48
1,849,390
17
50-64
7,507,693
5,230,575
70
2,613,648
35
Total
43,674,625
19,147,042
44
6,887,048
16
Source: Author's analysis of 2007 Medical Expenditure Panel Survey
Policy Options
program, the annual number of people who could be covered
would be around 200,000.
In implementing the temporary high-risk pool program, the
Of course, not everyone in need is likely to apply, particu-
HHS secretary wil need to make many decisions about eli-
larly if the pools require payment of ful standard premium
gibility, benefits, the method for setting premiums and other
rates without low-income subsidies. Stil , the available funding
issues. These decisions wil directly govern the design of the
is sufficient to help only a very smal share of the population
national program for non-contracting states and wil also
in need.
set the parameters for federal y funded state-operated pools.
It is likely that policy makers at both the federal and state
This analysis focuses chiefly on the choices that must be
level wil have to choose between two basic courses. They can
made at the federal level and not on the additional decision
simply open the doors to programs that are more generous
making that wil occur in individual states.
than most current state pools and allow the programs to reach
The major constraint on policy makers at al levels is the
capacity. There might then be pressure for supplemental fund-
very limited funding for the program relative to the popula-
ing--although current rules would require that any additional
tion in need. Until enrollment criteria are established, it is
spending be offset by new revenues or offsetting spending
impossible to project just how many people might qualify
cuts. Or they can look for ways to limit entry to the program
for the temporary pool program. As noted earlier, using one
to those most in need and/or to stretch the dol ars to serve
plausible definition of the eligible population, almost 7 mil-
more people. How much leeway they have to modify the out-
lion people are potential participants, or about 5.6 million if
lines of the program is uncertain.
those with access to other coverage were excluded. The $5
As noted earlier, the HHS secretary has the authority to
billion in federal funding is sufficient to provide subsidized
make "adjustments" in the program to keep it within budget.
coverage to only a fraction of potential y eligible people.
It is not clear whether this authority is meant to allow only
The Office of the Actuary, Centers for Medicare and
minor tinkering with program provisions (such as the rule
Medicaid Services (CMS), projected that 375,000 people
that the pool cover 65% of benefit costs) or would allow more
would be enrol ed in the temporary pool program in 2010
substantial changes in program design, such as charging more
but concluded that federal funds would be exhausted
than 100 percent of a standard rate or imposing pre-existing
"[b]y 2011 or 2012."5 The number of people who could be
condition exclusions. The statutory language does not appear
covered for the ful term of the program might be consider-
to leave some provisions adjustable and others inviolable,
ably smaller, particularly because the law precludes some
so the discussion here wil consider some options that over-
cost-saving measures adopted by state pools and requires
ride explicit PPACA provisions. It wil also assume that the
that premiums be no more than 100 percent of a standard
secretary can proactively make adjustments at the very outset
rate. In 2008, state high-risk pools' costs per participant
of the program, on the basis of projected funding shortfal s,
exceeded premiums by $4,200. If a $4,200 subsidy was need-
without waiting for deficits actual y to appear.
ed to bring premiums down to the typical 125 percent-150
percent of standard rates, the subsidy needed to bring pre-
Eligibility
miums to 100 percent of standard rates would have been in
the range of $6,000 to $7,000. If federal subsidies of this size
There are two key issues in determining the eligible popula-
were provided for the three-and-one-half-year life of the
tion. The first is how to define a pre-existing condition. The
second is whether the secretary can establish additional eligi-
6
National Institute for Health Care Reform
Policy Analysis No. 2 · May 2010
bility requirements and, if so, what these should be.
Table 3
Defining a pre-existing condition. The National
Family Income, All Uninsured and Six-Month Uninsured
Association of Insurance Commissioners (NAIC) Model
with High-Cost Chronic Condition, December 2007
Health Plan for Uninsurable Individuals Act, the prototype
Family Income
All Uninsured
Uninsured Six
used by many states in developing their risk pool authori-
as a Percent of
Months or More,
Federal Poverty
with High-Cost
zation laws, outlines two different ways of defining people
Level
Chronic Condition
medical y eligible for the pool. First, a person may have been
refused "substantial y similar" coverage by at least one insurer
Under 100%
21%
25%
or offered coverage only at a rate higher than that offered by
100%-124%
7
6
the pool. (Note that this is, by definition, a substandard rate,
125%-199%
21
19
because no state pool offers a standard rate.) Second, a person
200%-399%
can have a condition on a list of "presumptive conditions"
33
29
established by the pool; these are conditions that would usu-
400%+
18
21
al y lead to a coverage denial. State lists have as few as 16 or as
Source: Author's analysis of 2007 Medical Expenditure Panel Survey
many as 80 presumptive conditions.
As some analysts have noted, requiring applicants to first
seek coverage in the nongroup market is time-consuming and
people who might be medical y uninsurable in the nongroup
burdensome, as nongroup applicants must typical y make a
market do have access to other coverage. It might be reason-
(refundable) premium payment when applying.6 Moreover,
able to consider closing enrollment to people with access
the law's language seems to tilt in the direction of using a pre-
to employer coverage or people who could have taken up
sumptive condition list. However, insurers' underwriting prac- continuation coverage but did not. The HHS secretary also
tices vary widely: any list is likely to include conditions that
could require states that operate pools to screen for potential
some insurers are willing to cover and omit some that could
Medicaid and CHIP eligibility. Whether either measure would
lead to a denial. So it would make sense to allow both routes
save very much is doubtful. People are unlikely to pass up
to coverage: having a condition on a set list or denial by an
employer coverage for the more costly coverage likely to be
insurer for a condition not on the list.
offered by PPACA pools, and few people who could afford
It is harder to say how the program should treat people
pool premiums would qualify for Medicaid or CHIP.
who have been offered a substandard rate. Should someone
State residence. Under the PPACA, eligibility extends to
who is offered coverage at 110 percent of standard be allowed
any U.S. citizen or legal resident meeting the pre-existing
into the pool, drawing federal subsidy dol ars to obtain a slight condition and coverage gap requirements. State pools com-
premium discount? An alternative is to set a higher threshold,
monly limit participation to people who have been resident
such as the 150 percent of standard used in the modeling in
in the state for a fixed period before applying. Should states
this analysis. But then someone who is offered a 150 percent
be allowed to continue these rules under the new program?
rate would be bought down to 100 percent, while people
If not, what wil prevent people in a state whose program has
offered a 145 percent rate would be left out. These perplexities reached capacity from applying for coverage in some other
are just one of the drawbacks of the law's limiting the pre-
state (or for the national program in a state that isn't operating
mium to standard rates.
a federal pool)?
One problem with relying on carrier decisions is that carri-
Medically eligible children. Despite ambiguities in statu-
ers have an increased incentive to turn down marginal cases.
tory language, HHS and the insurance industry have agreed to
Of course this is already true in states with pools, but there
interpret PPACA as immediately prohibiting denial of cover-
is an offsetting incentive: the more people in a state's pool,
age or substandard rates for children on the basis of health
the higher the assessments on private insurers in the state.
risk. In theory, this would obviate the need to admit children
This countervailing incentive would not exist for the federal y
to the high-risk pool. However, it appears that insurers could
funded pools.
stil refuse entire families, or perhaps could impose a higher
premium on the entire family (without singling out any par-
Other Eligibility Rules
ticular family member as the reason for the substandard rate).
Unless these problems can be overcome, pools may need to be
Access to other coverage. While the law excludes people
open to the very smal number of potential y eligible children.
who had coverage within six months of applying, it does not
Underinsured. As noted previously, the NAIC model act
exclude people who could obtain coverage elsewhere and have would admit to a pool an applicant who could find some
failed to do so. As noted earlier, a considerable number of
coverage in the nongroup market but not coverage "substan-
7
National Institute For Health Care Reform
Policy Analysis No. 2 · May 2010
form of catastrophic coverage, rather than as a way of facilitat-
While it seems paradoxical for a high-risk pool to
ing access to routine care. If the program could use income-
based cost sharing, hefty contributions from those who could
afford them could reduce overal premiums. Savings in pre-
apply a pre-existing condition exclusion, this is a
mium subsidies could then finance reduced cost sharing for
lower-income enrollees. How far this model could be taken
standard component of state programs, because
within the PPACA rules is uncertain. Arguably, the pool might
be in compliance if it covered 65 percent of the aggregate
of concerns about people jumping in and out of
expenses of its enrollees, but the proportion covered for indi-
vidual members varied by income. Income-based cost sharing
might be left as an option for individual states, many of which
the pool to meet a one-time medical need.
are already performing income determination for their state-
funded pools. Adding an income-related feature to the feder-
al y operated pool might be more difficult. (PPACA provides
for income-related cost sharing in exchange plans beginning
tial y similar" to the pool's coverage. An example might be
in 2014, but the mechanisms for administering this have not
someone offered only a policy with a $10,000 deductible.
yet been developed.)
(People offered only a high-deductible plan as a result of
Pre-existing condition exclusion. While it seems paradoxi-
medical underwriting must be differentiated from people
cal for a high-risk pool to apply a pre-existing condition exclu-
who choose a high deductible to obtain a lower premium.)
sion, this is a standard component of state programs, because
It is not clear how common this practice is, but a case
of concerns about people jumping in and out of the pool to
could certainly be made for admitting such individuals to
meet a one-time medical need. An example might be someone
the pool. There is an obvious equity problem raised by the
who needs knee surgery, joins the pool, and drops out after
requirement for a six-month coverage gap: people who
a month or two. Offering coverage without an exclusion is
already have low-value plans would be unable to shift. But
costly. A Maryland analysis of short-term enrollees with and
the six-month rule raises the same equity issue with regard
without a six-month exclusion found that those without the
to people who have already been struggling to pay substan-
exclusion cost about 40 percent more.8 With a $5-billion limit
dard premiums. Without this bar, the program could be
on funding, the prohibition of pre-existing condition exclu-
swamped with current nongroup purchasers.
sions in the federal pools is likely to significantly reduce the
number of people who can be covered. Even if the adjustment
Benefits
authority in the law were read as allowing a modification of
Cost-sharing levels. The minimum benefit standards in
the rule, it would be in some respects counterproductive to
the law--65 percent coverage of costs and a $5,900 out-of-
admit someone to the pool because he or she has cancer, for
pocket limit for an individual--might allow packages that
example, and then deny coverage of treatment for six months.
expose enrollees to considerable expense. For a population
There are alternatives to a strict exclusion that could stil
with a risk ratio of 1.5 times standard and higher, a plan
help control costs. The high-risk pool in Tennessee has experi-
with a deductible of something like $3,250 and coinsur-
mented with a system under which enrollees can choose
ance of 20 percent up to the out-of-pocket limit would have
between a plan that covers 80 percent of costs after six months
been in compliance with the 65 percent rule in 2007.7 There
and one that covers 50 percent of costs immediately. Some
would be many other ways of reaching the same target--a
costs, such as chemotherapy and radiation and maintenance
higher deductible plus fixed copayments, limitations on
prescription drugs, are covered regardless of the exclusion.9 In
prescription drugs or other specific services, or other vari-
Maryland, subscribers pay a 50 percent premium surcharge
ants.
to avoid a six-month exclusion. The surcharge is reduced to
Cost sharing at this level would obviously preclude
10 percent for members below 200 percent of poverty and 30
access to needed services for lower-income enrollees. On
percent for those between 200 percent and 300 percent of pov-
the other hand, for some enrollees even higher cost sharing
erty.10 Another approach that could reduce short-term enrollee
would not be unsustainable. As noted earlier, 21 percent
churning would be to establish a minimum enrollment period,
of the uninsured with high-cost chronic conditions had
similar to those imposed by mobile phone contracts, to assure
incomes above 400 percent of poverty. It could be argued
that people with a one-time medical need would continue
that, for these enrollees, pool enrollment should serve as a
contributing to the system after that need was met. There
8
National Institute For Health Care Reform
Policy Analysis No. 2 · May 2010
could be a penalty for early termination, with an exception
method of setting standard rates. The standard could be set
for people who become eligible for other coverage.
using common nongroup rates without a correction for the
lack of a pre-existing condition exclusion or other benefit dif-
Premiums
ferences. Administrative loading could be reduced to reflect
the temporary pools' actual administrative costs. But, of
Under the law, temporary high-risk pool premiums must be
course, finding ways of reducing the premium paid by enrol -
set at 100 percent of "a standard rate for a standard popula-
ees would simply raise per enrollee subsidy costs, speeding
tion." Commonly, state pools develop a standard rate by
exhaustion of the available funds. In a sense, the decision
looking at the rates charged by major nongroup carriers in
about premium methodology is a choice between making the
the state for a benefit package comparable to the one offered
program affordable for more people for a shorter period or
by the pool. If comparable packages are not common in the
making it affordable for fewer people for a longer period.
state, the pool may need to take premiums from widely sold
policies and actuarial y adjust for benefit differences.11
It should be emphasized that states are setting the stan-
dards by looking at (and adjusting) actual premiums charged
In states already operating pools, the new federal
by nongroup carriers. These carriers wil often have a medi-
cal-loss ratio of 70 percent or less--meaning that 70 percent
pool will almost certainly be less costly for enrollees
of the premium goes to pay claims and the rest to cover
administration and profit. (PPACA requires nongroup carri-
and will probably offer superior benefits--in par-
ers to raise their loss ratios to 80% by 2011 or issue rebates to
consumers.) In state pools, the comparable ratio--claims as
a share of combined premium and subsidy revenue--ranged
ticular, immediate coverage without a pre-existing
from 85 percent to 99 percent in 2008, with a weighted aver-
age of 95 percent.12 This is partly because they do not incur
condition exclusion.
some costs, such as marketing, and do not make a profit, but
also because administrative costs are being measured against
a very high claim volume. The state solicitation issued by
HHS indicates that states should plan to limit administrative
Treatment of Existing State Programs
costs to 10 percent of claims. But this does not mean that a
Al but five states have some measures in place to assist high-
standard rate would have to assume the same level of admin-
risk individuals: regulation of issue and rating practices, high-
istrative spending. The standard is a benchmark of what the
risk pools, or both. General y, states using both approaches
private market would charge, not a projection of the pool's
have looser regulations that provide incomplete protection.
own costs.
For states already operating pools, how wil the new tempo-
If the same methods were used for the temporary pools,
rary pool program, whether managed by the state or the fed-
rates could be quite high. Note that, in actuarial terms, the
eral government, fit around the existing program? For states
presence or absence of a pre-existing condition exclusion is a
that have instead opted for strict regulation of the nongroup
component of a benefit package and should be considered in
market, what would be the effect of adding a new high-risk
establishing a standard rate. The correct standard rate for a
pool?
pool that imposes no pre-existing condition exclusion should
States with existing pools. In states already operating
be considerably more than the standard rate for an otherwise
pools, the new federal pool wil almost certainly be less costly
comparable nongroup plan that imposes an exclusion. This,
for enrollees and wil probably offer superior benefits--in
combined with the use of an administrative loading based on
particular, immediate coverage without a pre-existing condi-
private nongroup market practices, might produce an aver-
tion exclusion. The six-month noncoverage rule means that
age single rate of $600 or $700 a month for pool coverage in
current state pool enrollees wil be trapped in their inferior
2010--or a higher amount for older enrollees.
arrangements, unless they are willing to accept a lapse in cov-
Setting premiums at this level would make the program
erage. There doesn't appear to be any way of correcting this
affordable only for higher-income participants. Some lower-
inequity; even the broadest reading of the HHS secretary's
income people might participate but likely only those with
authority would not allow funds to be used to improve ben-
the greatest medical needs. The PPACA language is vague
efits for the currently insured.
enough that the HHS secretary or states might be able to
Meanwhile, new applicants who can meet the six-month
bring rates down somewhat by deviating from the usual
9
National Institute For Health Care Reform
Policy Analysis No. 2 · May 2010
is nothing to prevent formulas for subsequent years from
including some form of adjustment to reward states that main-
One possible way of assuring that federal funds
tain or increase enrollment in their own pools (or penalizing
the reverse, though this seems self-defeating).
expand coverage, instead of replacing state
States with strict regulation. There are currently six states
that require guaranteed issue by al carriers and allow no varia-
funds, is through the allocation formula...there is
tion in rates by health status.15 While al of these states plan to
set up some form of pool under the federal program, it is not
clear what role a high-risk pool program could play. Carriers
nothing to prevent formulas for subsequent years
are already offering coverage at a standard rate to al appli-
cants; the pool could be less costly only if it offered less gener-
from including some form of adjustment to reward
ous coverage or possibly reduced administrative costs. While
it appears that the HHS secretary is stil required to establish a
states that maintain or increase enrollment in their
pool in these states, adding the pool might have destabilizing
effects. Either the federal subsidies bring the pool's rates below
a true community rate, distorting competition, or the pool
own pools.
becomes simply another option with no apparent benefit.
This does not mean that there is no problem of uninsurance
in these states. Nongroup premium rates tend to be higher
rule wil have a strong incentive to choose the federal pool
than in other states, in part because there too few lower-risk
instead of the state pool, and states wil have an incentive to
enrollees to share the costs for the higher-risk participants. In
steer them toward the federal y funded pool. Texas, which
the extreme case, New York, nongroup premiums averaged
has declined to operate a temporary federal pool, is already
$6,630 in 2009--more than twice the national average.16 Is
issuing a letter to state risk-pool applicants, informing them
there some way that the newly available federal funding could
that the new federal y operated pool may be available in July
help alleviate this problem?
2010 and wil have no pre-existing condition exclusions and
One option would be to establish a pool only for a limited
charge premiums at half the Texas rate (because the Texas
list of high-cost conditions. This pool could set an artificial y
pool uses 200% of the standard rate). The letter concludes,
low standard rate, drawing some people with the specified con-
"You should determine which risk pool program--state or
ditions out of the private nongroup market in the state. This
federal--best serves your needs, based on your individual
could increase aggregate rates of insurance, because nongroup
circumstances."13
carriers would be able to offer lower rates to applicants who
The maintenance-of-effort requirement is supposed to
were ineligible for the federal pool. Stil , it would be more effi-
deter this kind of steering, but it applies only in states that
cient to get the federal dol ars into the system without setting
contract to operate the federal pool. States that fail to do so,
up a parallel insurance program--for example, simply by giv-
leaving the federal pool to be run by HHS, have no fund-
ing grants to the states to subsidize low-income enrollees or to
ing requirement. They could drop their existing pool or,
provide reinsurance that could lower nongroup rates. But there
more realistical y, could freeze enrollment or at least limit
is no apparent way of doing this within the legal framework of
enrollment to people not meeting federal pool eligibility
the program.
rules. The potential for attrition in the existing pools is not
Administration of the program in non-contracting states.
trivial. While average duration of enrollment in state pools
In the states that have chosen not to participate in the risk pool
was 36 months in 2008, six states had average duration of
program, HHS appears to have three basic options: 1) operate
24 months or less.14 If most new enrollment in these states
through Medicare; 2) contract with the national Blue Cross
shifted to the federal pool, it could largely replace the state
arrangement that serves Federal Employees Health Benefits
pools within two years. Even in states that are subject to
Program (FEHBP) enrollees or with another national carrier;
maintenance of effort, the required funding commitment
or 3) contract with private nonprofit entities in each state. The
does not increase with inflation, so a state could comply
last seems least practical: if there were states where HHS could
while allowing some attrition in its current pool.
not find a contractor, it would have to use the Medicare or
One possible way of assuring that federal funds expand
national carrier option as a backup. It would probably be more
coverage, instead of replacing state funds, is through the
efficient to settle on one or the other for al non-participating
allocation formula. Although HHS has already indicated
states.
that the first year's formula wil be population based, there
10
National Institute For Health Care Reform
Policy Analysis No. 2 · May 2010
Under the Medicare option, Social Security offices would
seem to be the logical place for accepting and processing
applications (as under the Medicare Part D low-income
It seems likely that--unless more funding is pro-
subsidy program). Claims processing and other insurance
functions could be performed by current Medicare interme-
vided--the temporary pool program will rapidly
diaries and carriers. As some observers have noted, provid-
ers might object to accepting low Medicare payment rates
reach capacity and have to establish a waiting
for pool enrollees. Pool rates could arbitrarily be set at some
higher level (as would have been the case for the public
list. This could leave hundreds of thousands of
plan included in the House health reform bill). But it is not
clear that there would be any authority to compel Medicare-
participating providers to accept risk-pool payment rates as
potential participants with serious medical prob-
payment in ful . To prevent unlimited balance billing, con-
tracts would have to be negotiated with these providers, an
lems unable to obtain coverage until the full set of
expensive and time-consuming process. Using Medicare as
the coverage vehicle for pools also could raise political con-
reforms takes effect in 2014.
cerns; some might perceive this approach as a step toward a
single-payer program.
The national carrier option might or might not be work-
able. There is no actual national Blue Cross Blue Shield plan.
of reforms takes effect in 2014. It is not difficult to guess who
The program for federal employees is a long-standing ad hoc
wil be waiting in line when the new exchanges open their
arrangement in which the regional Blue Cross Blue Shield
doors on Jan. 2, 2014. The exchange plans may suffer con-
plans have agreed to participate; it has no other clients. The
siderable adverse selection--attracting a sicker-than-average
local plans might sign on if the arrangement for the pools
population--at the outset. This wil be compounded by the
is as much like their current FEHBP contract as possible.
closing of the high-risk pools--both the federal y funded
Under FEHBP, the plans have no involvement with process-
pools and presumably most existing state pools. Most of their
ing applications and enrollments or collecting premiums;
enrollees wil go directly into the exchange.
these functions are performed by employing agencies.17 Some
Over time, premium subsidies and the individual mandate
entity would be needed to perform these tasks. If the Blues
to have insurance may gradual y bring a more representative
are unwilling to contract, none of the other national plans
population into the exchange plans. At the outset, however,
in FEHBP, al ostensibly operated by employee associations,
they wil have difficulty competing with nongroup insurers
seem like likely candidates. There are some non-FEHBP car-
operating entirely outside the exchange. Although these plans
riers that offer national coverage to large employers; whether
wil be subject to guaranteed-issue rules, they wil have an
any one of these could actual y serve as the carrier in every
existing, healthier enrollment base, and might be able to offer
single state would need to be seen. Possibly HHS could select
favorable rates, especial y to people ineligible for the PPACA's
the Blues or another insurer as the carrier for most states and
income-based subsidies.18
then negotiate contracts individual y for states in which the
The law includes three mechanisms that take effect as the
national carrier is unable--or the local Blue Cross affiliate is
exchanges begin operation in 2014 that are intended to deal
unwilling--to provide coverage.
with this problem:
· Under a temporary reinsurance program, al issuers of
Looking Ahead
coverage, including insurers and the administrators of
self-insured employer plans, wil pay an assessment into
This analysis has suggested a number of options for stretch-
a reinsurance pool. The available funds wil be paid out
ing the limited funds appropriated for the temporary national
to nongroup insurers that enrol people with a high-risk
high-risk pool program, at the price of limiting access to the
medical condition; the HHS secretary is to develop a list
program or providing less comprehensive coverage. Even with
of 50 to 100 such conditions. Assessments available for
these measures, it seems likely that--unless more funding is
payout to insurers are to total $10 billion in 2014, $6 bil-
provided--the temporary pool program wil rapidly reach
lion in 2015 and $4 billion in 2016, the program's final
capacity and have to establish a waiting list. This could leave
year.19
hundreds of thousands of potential participants with serious
medical problems unable to obtain coverage until the ful set
11
National Institute For Health Care Reform
Policy Analysis No. 2 · May 2010
· Also for the first three years, individual and smal group
pools: they may lead insurers to continue the costly practice of
insurers wil be subject to a risk-corridor system. Those
examining applicants' medical history, and they do nothing to
whose allowable claims costs are less than 97 percent of a
compensate insurers for high-cost problems that emerge after
target amount based on premium revenues wil pay part
enrollment, as reinsurance does. But there may be advantages
of their profits into a pool; the pool wil cover part of the
as wel . Insurers may be more willing to enter the exchange
losses of plans whose costs are more than 103 percent of
market if they can temporarily divert applicants with high pre-
the target amount.
dictable risk. A pool for people with specific conditions might
· There wil be a permanent risk-adjustment system for al
also promote programs to improve management of those con-
individual and group health plans (other than self-insured ditions.
employer plans and some grandfathered plans) in each
Another option would be to continue risk pools solely for
state. Plans with a lower-risk population wil make pay-
those who were enrolled in them on Jan. 1, 2014, and who
ments to plans with a higher-risk population. How risk is
chose to remain in them. This would at least prevent the sud-
to be assessed and funds to be distributed is unspecified;
den dumping of half a million high-cost people into the new
the HHS secretary is to develop a method in consultation
exchange plans. Reinsurance payments for those with speci-
with states.
fied conditions could partial y replace existing premium subsi-
dies, but additional assessments or other revenue would prob-
A ful discussion of these provisions is outside the scope of
ably be needed. The PPACA reinsurance provisions include
this analysis, but each has some limitations that may reduce
language on coordination between the reinsurance program
its potential for overcoming the selection problem. The risk-
and state high-risk pools that might be interpreted as permit-
corridor system would provide some protection but would
ting this use of reinsurance funds, but the intent is unclear.20
stil leave insurers potential y exposed to considerable losses.
The insurance markets--in and out of the exchanges--
For example, an insurer whose claims came in at 110 percent
that arise in states in 2014 wil not al be the same, because
of the target amount would be paid 4.1 percent of the target
of differences in income distribution, current availability of
amount, covering less than half its loss. An adequate risk-
employer-sponsored coverage and many other factors--not
adjustment system for the non-Medicare population is likely
least, each state's own past efforts to fix the nongroup market.
to require huge amounts of new data collection and could take Until a ful y workable national risk-adjustment system can be
years to develop and calibrate.
implemented, there may be a case for allowing each state to
Over the short term, the reinsurance program seems most
develop its own approaches to the problems of risk selection
likely to offer the kind of protection that might be needed to
and risk distribution.
induce carriers to join the exchanges. The reinsurance pro-
gram resembles a state high-risk pool in a number of respects.
Notes
It is funded through assessments on insurers--except that the
federal program also can assess self-insured employer plans,
which states usual y cannot reach except indirectly, through
1. HHS, "Sebelius Continues Work to Implement Health
assessments on stop-loss carriers. It makes payments, compa-
Reform, Announces First Steps to Establish Temporary
rable to a state pool's premium subsidies, on behalf of people
High Risk Pool Program," News Release (April 2, 2010);
with conditions on a defined list. But, it also differs from high-
The state solicitation is available at www.hhs.gov/ociio/
risk pools in some ways, presenting possible problems. First, it
Documents/state_solicitation.pdf.
may need to rely on reporting by insurers and could be subject 2. MEPS shows 39.3 million nonelderly people with no
to gaming if insurers assign patients to preferred diagnoses. It
insurance at any time in 2007. This number should cor-
would apparently operate retrospectively, leaving insurers at
respond to estimates provided by the Current Population
risk until they receive unpredictable future payments. Final y,
Survey (CPS), which identifies people without insurance
there is no way of knowing whether the budgeted amounts--
for an entire calendar year. However, CPS shows 44.9 mil-
especial y for the third year--wil be sufficient to cover the
lion nonelderly people with no health insurance in 2007.
costs for the high-risk population.
For a discussion of some of the reasons that MEPS and
It may be worth considering whether it would be preferable
CPS estimates differ, see www.aspe.hhs.gov/health/Reports/
to continue the high-risk pool program for some time after
uninsur3.htm.
the establishment of the exchanges, or perhaps to allow states
to determine whether the new revenues yielded via the all-
3. See www.hcup-us.ahrq.gov/toolssoftware/chronic/chronic.jsp.
issuer assessments should be used for reinsurance, a risk-pool
4. Ryan, Jennifer, The Children's Health Insurance Program
arrangement or both. There are obvious drawbacks to risk
(CHIP): The Fundamentals, National Health Policy Forum,
12
National Institute For Health Care Reform
Policy Analysis No. 2 · May 2010
Washington, D.C. (April 2009).
18. Insurers that operate both in and out of the exchange
5. Foster, Richard, "Estimated Financial Effects of the
would not benefit from this risk selection, because PPACA
"Patient Protection and Affordable Care Act," as passed by
would require them to treat al their enrollees, exchange
the Senate on Dec. 24, 2009," CMS, Baltimore, Md. (Jan. 8,
and non-exchange, as a single risk pool.
2010).
19. There are additional assessments that wil not be used for
6. Pollitz, Karen, Issues for Structuring Interim High-Risk
reinsurance but wil instead go into the Treasury general
Pools, Kaiser Family Foundation, Washington, D.C.
fund.
(January 2010).
20. Patient Protection and Affordable Care Act (Public Law
7. The modeling for this estimate uses an out-of-pocket limit
No. 111-148), Section 1341(d).
of $5,500; this is the limit that would have applied if the
PPACA rules had been in effect in 2007.
8. Popper, Richard, and Frank Yeager, Maryland Health
Insurance Plan: Analysis of Preexisting Condition Exclusion
"Buy Down" Rider (September 2009), available at www.
naschip.org/Arlington/popperyaeger.pdf.
9. Hilley, David, Coverage Options for Pre-Existing Conditions
in State High Risk Pools AccessTN benefit design,
(September 2009), available at www.naschip.org/Arlington/
Hil ey.pdf.
10. Popper and Yeager (September 2009).
11. Leif, Elizabeth, Standard Risk Rates (Oct. 16, 2008), avail-
able at www.naschip.org/Savannah/Presentations/Liz%20
Leif/Standard%20Risk%20Rates.pdf.
12. U.S. Government Accountability Office (GAO), Health
Insurance: Enrol ment, Benefits, Funding, and Other
Characteristics of State High-Risk Health Insurance Pools,
letter to congressional requesters, Washington, D.C. (July
2009)(GAO-09-730-R).
13. Texas Health Insurance Pool, New Temporary Federal
High Risk Pool Program Notice (May 3, 2010), available at
www.txhealthpool.org/New_Temp_Federal_Pool_Notice_
REV_05-03-2010.pdf.
14. GAO (July 2009).
15. They are Maine, Massachusetts, New Jersey, New York,
Vermont and Washington, according to the Kaiser Family
Foundation's statehealthfacts.org. Three other states, Idaho,
Oregon and Utah, have fairly tight rules but not enough
that there would be no role for a pool.
16. America's Health Insurance Plans (AHIP), Individual
Health Insurance 2009, Washington, D.C. (2009).
17. Or, in the case of annuitants, by the Office of Personnel
Management.
A
D
V
A
N
C
I
N
G
H
E
A
L
T
13
H
P
O
L
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C
Y
R
E
S
E
A
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C
H
National Institute For Health Care Reform
Policy Analysis No. 2 · May 2010
Supplementary Table 1
Preliminary State Funding Allocations and Pool Operation Decisions for Temporary National High-Risk Pool Program
State
Funds (millions)
Pool Operation
State
Funds (millions)
Pool Operation
Alabama
$69
Federal
Montana
$16
State
Alaska
13
State
Nebraska
23
Federal
Arizona
129
Federal
Nevada
61
Federal
Arkansas
46
State
New Hampshire
20
State
California
761
State
New Jersey
141
State
Colorado
90
State
New Mexico
37
State
Connecticut
50
State
New York
297
State
Delaware
13
Federal
North Carolina
145
State
District of
Columbia
9
State
North Dakota
8
Federal
Florida
351
Federal
Ohio
152
State
Georgia
177
Federal
Oklahoma
60
State
Hawaii
16
Federal
Oregon
66
State
Idaho
24
Federal
Pennsylvania
160
State
Illinois
196
State
Rhode Island
13
Undecided as of
May 21, 2010
Indiana
93
Federal
South Carolina
74
Federal
Iowa
35
State
South Dakota
11
State
Kansas
36
State
Tennessee
97
Federal
Kentucky
63
State
Texas
493
Federal
Louisiana
71
Federal
Utah
40
Undecided as of
May 21, 2010
Maine
17
State
Vermont
8
State
Maryland
85
State
Virginia
113
Federal
Massachusetts
77
State
Washington
102
State
Michigan
141
State
West Virginia
27
State
Minnesota
68
Federal
Wisconsin
73
State
Mississippi
47
Federal
Wyoming
8
Federal
Missouri
81
State
Sources: Funding al ocations from HHS Web site at http://www.hhs.gov/oci o/initiative/hi_risk_pool_facts.html; state operation decisions from CQ HealthBeat, May 3, 2010, updated with local newspaper
reports