High-Risk Patients Fuel More Health-Law Worry
November 18, 2013
The Wall Street Journal
So-called high-risk pools for people rejected by commercial health-insurance companies were supposed to be largely phased out when President Barack Obama's health law kicked in. Instead, they are gaining a brief second life in some states due to the problems with the federal health-insurance exchange created by the law.
The development may represent short-term good news for the law, because it would keep some people with costly medical conditions out of the new policies, at least temporarily. But it adds to the uncertainty for insurers, analysts say, increasing concerns that could cause rates to rise for everyone next year.
High-risk pools operate in 35 states and insure about 200,000 people, typically those with medical conditions that make it hard for them to find coverage. About half of these states had planned to close their high-risk pools around the end of this year, because when the law takes full effect insurers must accept all customers regardless of their health history and may vary prices only slightly by age.
Now, in a sign of the uncertainty created by the health-law rollout, some states are taking a second look and considering extending their pools' lives. Such extensions could cost taxpayers money since some states contribute to the cost. In other states, insurers fund a large portion.
Wisconsin, which has one of the biggest high-risk pools at about 22,000 members, said Thursday it would hold a special legislative session with the aim of extending the program by three months. Wisconsin and other states considering extensions cited problems with the federal HealthCare.gov website, saying they didn't want people to lose coverage Dec. 31 and have no way of replacing it.
"In Wisconsin, we are taking action to protect our citizens from the federal government's failure," said Gov. Scott Walker, a Republican who opposes the federal health law.
Texas, with about 23,000 members in its high-risk pool, is weighing whether to do the same. Indiana officials have said they would keep their program open at least a month past the original Jan. 1 closure, and will add extra months if the federal website's performance doesn't improve.
The federal government also has indicated it hasn't ruled out extending a separate program it oversees for about 100,000 high-risk people across the country. It was slated to close at the end of this year.
While the moves would keep some people with illnesses out of the new insurance exchanges for a short time, they are an example of how insurers' assumptions about the health law keep getting upended. On Thursday, Mr. Obama said he was asking insurers to reinstate individual policies that were due to be canceled because they didn't comply with the law. Such moves could make it harder for the law to find solid footing.
Carriers generally must set rates for 2015 next spring. With only a few months' worth of claims to consider, more uncertainty could push them to tread cautiously by proposing higher premiums for all individual insurance bought on and off the exchanges next year, analysts said.
"Any delay [in ending the pools] is going to add more risk to the overall process of guessing what the rates are going to be," said David Axene, a fellow of the Society of Actuaries, a professional organization for insurance and other actuaries.
Supporters of the law point to provisions in it designed to cushion any single insurer against the costs of a larger proportion of unhealthy enrollees, including a three-year, $25 billion fund designed to compensate carriers for higher medical costs.
The Obama administration is counting on those provisions to keep insurers from raising rates hastily. "We will adjust these programs as necessary to ensure greater premium stability for consumers shopping for health insurance coverage on the marketplace," said a spokeswoman for the Centers for Medicare and Medicaid Services, the agency overseeing the implementation of the Affordable Care Act.
On average, state high-risk pool participants incur around $11,000 in medical claims a year, according to the National Association of State Comprehensive Health Insurance Plans, which advises the programs.
Premiums for the pools have tended to be much higher than a healthy person would pay, but even so, the pools generally require extra financial support. In Texas, a levy on insurers pays the difference, which for this year is projected to be $165 million.
Some 17 states already had decided to keep pools open beyond the end of 2013. Maryland is moving the 20,000 people in its pool gradually over the next few years to an exchange run by the state that sells Affordable Care Act-compliant policies. Maryland Insurance Commissioner Therese Goldsmith has said the move kept 2014 premiums in the exchange lower because insurers knew some of the sickest people in the state wouldn't be signing up for exchange coverage right away.
Many exchange plans have narrower doctor and hospital networks than state high-risk pools. "We do believe that the majority will find better rates outside of the high-risk pool," said Tanya Case, executive director of the Oklahoma program, which has 2,600 members and is staying open after the end of this year. But she added, "If you're in the middle of chemotherapy, the last thing you want to do is switch oncologists."