High-risk health insurance pools could make comeback under GOP plans

If congressional Republicans succeed in passing a sweeping health care bill, high-risk health insurance pools could make a comeback.

High-risk pools are government-run health plans that offer coverage to people who have costly medical conditions like HIV, cancer or kidney disease and can’t get insurance elsewhere.

Washington established its high-risk pool, called the Washington State Health Insurance Pool, through the Legislature in 1987. Its history provides a look at what coverage might look like for very sick Americans under a Republican health plan.

Why were high-risk pools set up?

Before the Affordable Care Act went into effect in 2014, people generally had three options for getting insurance: Buy a plan through work, apply for individual coverage, or enroll in a government plan like Medicare or Medicaid.

Group plans offered through employers typically charged everyone the same price for coverage, regardless of medical history, and would insure people with pre-existing conditions (though plans often had annual and lifetime limits on care, which the ACA got rid of).

For people who couldn’t get insurance through work and didn’t qualify for a government program, the only option was the individual market. In Washington, people had to apply for a health plan and fill out a 26 page medical history questionnaire prescribed by state law, which asked about prior conditions for every system in the body: circulatory, respiratory, reproductive and more.

Based on that questionnaire, insurers would assign someone seeking care a score based on how costly their care was likely to be. If someone scored too high, they would be denied individual coverage. That denial made them eligible for the state high-risk pool.

How do the high-risk pools work?

Like any other insurance plan, people in the high-risk pool pay a premium for coverage, have deductibles to pay and then receive services. At least one plan in the pool had to cover a list of services prescribed in state law, including hospitalization, chemotherapy, maternity coverage and mental health treatment.

The pool sets premiums based on age, with higher prices for smokers. Premiums are supposed to be set at 110 percent of the market value for a similar plan, which makes them expensive. In 2017, a 30-year-old nonsmoker in Spokane County would pay between $1,126 and $1,422 per month for coverage, depending on discounts.

State law allowed further premium discounts for low-income people in the pool, but those discounts were contingent on funding the legislature hasn’t approved, said Sharon Becker, the pool’s executive director.

Enrollees have to pay 20 percent coinsurance for services and had out-of-pocket maximums ranging from $1,500 to $2,500 a year.

Because people in the pool are usually very sick, the cost of premiums does not cover the pool’s expenses. The remainder comes from a tax on health insurers operating in Washington.

Washington’s pool was set up as an independent nonprofit and currently has two staff members, contracting out for other services like claims processing.

What happened to the pool after the ACA?

The Affordable Care Act barred insurers from denying people coverage because of pre-existing conditions or charging them more for coverage. That meant most people who could only get insurance through the high-risk pool before were able to buy individual plans in the insurance marketplace. It also meant premiums got more expensive for younger, healthier people in the same pool.

Before the ACA went into effect, about 3,000 Washingtonians were enrolled in Washington’s high-risk pool, Becker said. State lawmakers passed a law saying no one new could enroll in the pool after the ACA’s individual insurance market was set up.

About 389 people remain in the pool now, Becker said. Many are HIV patients whose premiums and other care are covered through other federal and state programs for HIV-positive people. Under current state law, their coverage will end at the end of 2017, leaving them to buy an individual plan on the ACA exchanges.

What happens to the pool if the Republican health plan passes?

The short answer: It’s still too early to tell. Both versions of the Republican health bill leave many decisions up to individual states, so it would depend in part on how Washington responds.

Either the House or the Senate’s proposed health care overhaul bill could impact coverage for people with pre-existing conditions.

Under the House bill, states could apply for a waiver of many of the ACA’s regulations, including the ones on pre-existing conditions. In states that get a waiver, insurers would be able to charge people with pre-existing conditions more or deny them coverage, funneling them into high-risk pools.

Those waivers would be up to the state legislature, based on recommendations from the Office of the Insurance Commissioner.

“That’s not something that Washington state would consider,” said Stephanie Marquis, a spokeswoman for the commissioner’s office.

Under the Senate bill, pre-existing conditions would remain covered, and insurers couldn’t charge sick people more for coverage. But the bill allows states to waive a requirement for health insurance plans to cover certain types of care, like hospitalization or prescription drugs. That could in effect deny sick people the care they need, even if they have insurance.

For example, if a state waived the rule that plans have to cover prescription drugs, an insurer could choose to not cover expensive cancer drugs on its plans, or impose a cap on the amount it’s willing to spend on drugs per patient.

Marquis said Washington also wouldn’t repeal those requirements. But in the long term, Washington could be in trouble if most other states choose to repeal those coverage requirements. That would make Washingtonians on average most costly to insure and could lead insurers to pull out of the state.

Both bills include funding states can use for a number of purposes, including running high-risk pools.

Marquis said the commissioner’s office is looking at long-term plans for its high-risk pool, which could include things like stabilizing the individual insurance market by paying for the premiums of the sickest people, driving down risk for insurance companies which would in theory drive down premiums.