By John Reichard, CQ HealthBeat Editor
July 31, 2013 -- A number of the 35 states that set up high-risk pools to help uninsurable residents get health coverage are in the process of winding them down as the coverage expansion provisions of the health care law are set to take effect next year.
But some of these pools will stay open, at least for a while. And for Maryland, keeping its risk pool going temporarily has helped to lower initial premiums in its new insurance exchange. How much of an effect that has had on rates isn't clear. But Maryland officials have been aggressive about finding ways to keep premium charges down in the new Maryland marketplace by thoroughly reviewing proposed exchange rates and by deciding early on to keep the 20,000-person risk pool open for now.
Meanwhile, all the federally funded programs states set up under the health care law to cover uninsurable residents—which are separate from the state risk pools—are ending this year. They are part of the federal Preexisting Condition Insurance Plan. Under the law, starting next year, insurers cannot deny people insurance coverage because of their medical histories. And their premiums cannot be raised to adjust for their pre-existing conditions either.
In some cases, people who are in the federal PCIP program will be able to get coverage more cheaply, if, for example, they qualify for Medicaid or for subsidies to buy coverage on the new exchanges. That's also true for people in the 35 state high risk pools. But those predate the health care law (PL 111-148, PL 111-152), and it's up to the states to decide whether they want to keep them running.
According to a tally by the National Association of State Comprehensive Insurance plans, which represents the high-risk pools, 14 states plan to shut them down in early to mid 2014. They are: Arkansas, Colorado, Florida, Indiana, Kansas, Kentucky, Louisiana, Missouri, Nebraska, North Carolina, Oregon, Texas, West Virginia, and Wisconsin.
Another 16 states plan to maintain coverage beyond early to mid 2014. Maryland falls into that category. The board of its risk pool, which is called the Maryland Health Insurance Plan, will decide next year whether the pool will remain open past June 30, 2014. Under Maryland state law, people who enroll in the state pool before the end of this year can keep their coverage until Jan. 1, 2020. Other states in this group include Alaska, California, Connecticut, Idaho, Illinois, Iowa, Minnesota, Mississippi, New Mexico, North Dakota, Oklahoma, South Carolina, Tennessee, Washington, and Wyoming. Five states—Alabama, Montana, New Hampshire, South Dakota, and Utah—haven't decided when to cancel their pool.
States have different reasons for keeping these pools going, at least for a while. They may not have gotten around to addressing the fate of their pools in their legislative sessions. They may want to want until their insurance exchange is fully operational. Or they may not want to be perceived as cooperating with "Obamacare" by shuttering a program in response to the law, which could be seen as a concession that the overhaul is here to say.
Maryland's Factors
The final marketplace rates Maryland recently announced in many instances are sharply lower than the premiums insurers first proposed. Plans were instructed to take into account the fact that at the state risk pool would remain open, and as part of rate review regulators went over with plans their assumptions about the "morbidity" of expected enrollees.
"I think this was a factor—because both insurers and the Insurance Administration knew the plan during rate review," Joshua Sharfstein said in an email message responding to a question about whether the continuation of the risk pool helped produce lower rates. "But I don't think it's possible to say by how much."
Sharfstein is Maryland's secretary for health and hygiene. A spokeswoman for the Maryland Department of Insurance also said the risk pool's continuation was a factor in keeping rates lower but said it would be difficult to quantify by how much.
Whatever the impact, it's not likely to last because people are expected to leave risk pools like Maryland's because in many instances they'll be able to get coverage that's more affordable. In states like Maryland that are expanding their Medicaid program, people currently in the risk pool they might be eligible for that program. Or, in other instances, they might be able to get subsidies to buy coverage on the exchanges.
Karen Pollitz, an analyst with the Kaiser Family Foundation, downplayed the impact that keeping state risk pools open will have on exchange rates in other states. Not only will people be migrating out of risk pool plans under the health law, the pools nationwide only cover about 200,000 people, she said. And in many instances, states have very small pools. Maryland has one of the nation's largest with its 20,000 enrollees.