Funding for High-Risk Insurance Pools to Start July 1
Starting July 1, the federal government will begin financing “high-risk” insurance pools, which are aimed at providing coverage for uninsured individuals with pre-existing or chronic conditions.
Under PPACA, the government has set aside $5 billion for states to set up the high-risk pools for individuals who have been uninsured for six-months or longer. The pools are intended to be a stopgap to extend coverage until state insurance exchanges begin operating in 2014. (Under PPACA, insurance exchanges will be required to cover individuals with pre-existing conditions.)
The pools will have no restrictions based on pre-existing conditions, and will offer low deductibles and co-payments, and a ban on annual or lifetime limits.
While the pools will be funded by government subsidies, individuals will still have to pay premiums – specifically, PPACA requires that premiums for the “high-risk” coverage must be the same as the standard rate for a healthy adult in that state.
Under the law, each state can decide whether it wants to run the new high-risk pool itself, or whether it wants to have the federal government run the program instead. Michigan, for example, intends to run the new pool itself with the $140 million it will receive from the government. According to the Michigan Office of Financial and Insurance Regulation, patients can enroll in the new plan in September, with coverage slated to start in October. (Click here for additional information on Michigan's plan.)
However, there is some debate over whether the $5 billion set-aside will be sufficient to fund the high-risk pools until 2014. Since PPACA gives the Secretary of Health and Human Services discretion to adjust the state awards in anticipation of a projected deficits, states may be left with the unflattering option of either shouldering the burden, or un-insuring its residents.
For more information on state insurance pools, visit the National Association of Insurance Commissioners website, which has a directory of state insurance departments. Individuals interested in signing up for the high-risk pools should contact their corresponding state agency.
