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Insuring the Uninsurable: An Overview of State High-Risk Pools

Results from an analysis of state high-risk insurance pools for people denied private health coverage indicate that high premiums, deductibles, and copayments severely limit the impact of high-risk pools in making insurance available and affordable for those who are otherwise uninsurable. Premiums average $3,083, and range as high as $4,920 a year per individual.

For many people who have no employer-sponsored health insurance but do have extensive health care needs and medical expenses, obtaining coverage in the individual insurance market is not a viable option. In most states, insurers can turn down ""high risks"" because of an existing or previous illness. Partly to help insure those denied private health coverage, 29 states operate high-risk insurance pools. But enrollment is very limited and these pools cover only about 113,000 people; Minnesota has the largest program with 25,892 enrollees in 1999.

The study, Insuring the Uninsurable: An Overview of State High-Risk Health Insurance Pools, conducted by Lori Achman and Deborah Chollet of Mathematica Policy Research, Inc., finds that state risk pools often charge premiums that are high relative to incomes and typically include sizeable deductibles and copayments. Even though they are designed for people with serious or chronic illnesses, risk pools also often require waiting periods for preexisting conditions.

Achman and Chollet also found that though all states cap premiums at some multiple of average standard rates, the plans are costly. Only six of the 29 states with risk pools offer premium assistance for low-income enrollees. In addition to high deductibles and copayments, many programs also restrict lifetime benefits. Other restrictions include limits on mental health and maternity leave benefits in most states, although outpatient prescription drugs are usually covered. Two state pools also have long waiting lists and one is closed to new applicants.

The report notes that only limited revenues are available through state premium taxes, since the Employee Retirement Income Security Act of 1974 (ERISA) exempts self-insured plans from paying them. To help keep costs down for risk pool enrollees, the authors suggest that Congress consider lifting this exemption for the limited purpose of high-risk pool financing.

Facts and Figures
  • Premium prices range from an average of $1,832 per year in Washington, or about 4 percent of median household income, to $4,920 per year in Missouri, or 12 percent of income.
  • Deductibles are typically $500 to $1,000, but can be as high as $10,000 (Alaska, Arkansas, and Florida).
  • Most states cap patient out-of-pocket expenses at $2,000 to $2,500 per year, but a few cap them at $10,000 while others have no limits at all.
  • Waiting periods for obtaining care for a preexisting condition after coverage begins are typically six months, but extend to 12 months in eight states.

Publication Details



Insuring the Uninsurable: An Overview of State High-Risk Pools, Lori Achman and Deborah Chollet, The Commonwealth Fund, August 2001