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Feds Will Operate High-Risk Pools in at Least 17 States

By Jane Norman, CQ HealthBeat Associate Editor

May 3, 2010 -- High-risk pools will be operated by the federal government in at least 17 states that have officially declined to participate in a new program authorized in the health care law.

The Department of Health and Human Services (HHS) said it had officially heard from all but two states as of Monday, and 17 opted out of the program for people who can't obtain insurance because of their pre-existing conditions. Another 29 states and the District of Columbia will accept federal subsidies to set up their own programs to assist sick people. April 30 was the deadline for states to make their decisions known to HHS.

Rhode Island and Utah have requested applications and will make decisions later, while there's no official word yet from Florida or Arizona, HHS officials said. However, the Miami Herald reported that Florida Gov. Charlie Crist sent a letter to HHS Secretary Kathleen Sebelius late April 30 saying his state will not set up its own program.

"As governor of Florida, I cannot commit any state resources to participate in the federal temporary high-risk health insurance program," said Crist, who recently announced he would leave the Republican Party and run as an independent for the Senate.

In Utah, the Salt Lake Tribune said that Republican Gov. Gary R. Herbert has asked for additional information about the program and is worried about whether the federal government will absorb the costs. Richard S. Foster, the chief actuary of the Centers for Medicare and Medicaid Services, has predicted that funding for the program will run out in 2012, requiring substantial premium hikes in 2013.

The state-by-state program with $5 billion in funding is designed as a temporary measure until 2014, when insurance companies will be prohibited from discriminating against people with pre-existing conditions.

Most, but not all, of the governors who declined to set up a state program were Republican. GOP Gov. Rick Perry of Texas said in a letter to Sebelius on April 30 that the $5 billion won't stretch far enough. "Most experts believe this amount to be insufficient. In the coming years, state officials could be forced to reduce health coverage, raise premiums or ask state taxpayers to pay for these high-risk pools once federal funds run dry," Perry wrote, according to the Houston Chronicle.

Jenny Backus, acting assistant secretary of HHS for public affairs, wrote in a blog post late April 30 that the department was gratified by the response from the states aiming to extend coverage for sick people who have been without insurance for six months or longer.

"Whether states create these pools or the federal government creates them for states, the pools will be paid for by 100 percent federal dollars and most importantly — uninsured people around the country will soon have access to another affordable coverage option," she wrote.

States could choose to operate a new high-risk pool alongside an existing state pool, set up a state pool if one did not exist already, build on other existing coverage programs, contract with a carrier to provide coverage for the affected people or do nothing, in which case HHS would carry out the program in that state. There are 35 states that now run high-risk pools, though not all the pools are taking new applicants. Premiums can still be very high and are supposed to be more affordable in the federal high-risk pools.

States that will run their own programs are: Alaska, Arkansas, California, Colorado, Connecticut, Illinois, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Dakota, Vermont, Washington, West Virginia and Wisconsin. The District of Columbia will also run its own pool.

States that have opted out are: Alabama, Delaware, Georgia, Hawaii, Idaho, Indiana, Louisiana, Minnesota, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, Tennessee, Texas, Virginia and Wyoming. HHS run programs in those states.

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