Lawmakers study high-risk pools for health coverage
30 01 08 - 11:17
January 30, 2008
By PATRICIA ANSTETT
FREE PRESS MEDICAL WRITER
As Michigan explores new ways to cover consumers who have lost their health coverage, the Legislature is looking to 34 states that have created high-risk health insurance pools as a possible blueprint.
High-risk pools provide health insurance to people with costly medical problems -- often those who can't afford to pay the higher costs insurance companies charge for serious health problems incurred after a health policy is first written.
The coverage can cost as much as 150% more than healthier people pay, according to several insurance industry groups and nonprofit organizations. For instance, in some states, high-risk pool coverage costs consumers $500 to $1,000 a month in addition to a $1,000 annual deductible.
The Michigan Senate's Health Policy Committee is to conduct a hearing today on the feasibility of high-risk pools as it looks for ways to broaden access to health insurance. Statewide, 1.1 million Michigan adults ages 18-64 are uninsured, according to the Michigan Department of Community Health. Another 400,000 Michiganders buy their own insurance -- about 6% of the state's insurance market.
The number is expected to grow to 25% as more employers drop costly health benefits.
The Senate hearing is a prelude to an upcoming discussion and vote on four bills promoted by Blue Cross to change how it writes and prices health insurance for people younger than 64 with no workplace coverage.
Not many in pools
Nationwide, only 190,361 people are insured through high-risk pools. Minnesota, with the oldest and biggest plan, started in 1976, covers 29,089 people, according to the Kaiser Family Foundation's analysis of high-risk pools. For more details on the pools, go to www.statehealthfacts.org.cq Blue Cross favors creating a high-risk pool as a way to lessen what it says is an unfair burden of providing insurance to all applicants. Blue Cross is a nonprofit organization created by state law as an insurer of last resort.
"The way it is now, it's unsustainable," said Mark Cook, vice president of government affairs for Blue Cross. Though the number of people served by the pools may be small (most states have fewer than 10,000 participants in their pools), they are part of a problem demanding changes to level the playing field for Blue Cross, Helen Stojic, Blue Cross spokeswoman, said Tuesday.
Funding a tall order
Funding high-risk pools remains a challenge.
The pools operate at a loss in virtually all 34 states. And cash-strapped Michigan has no money to give a subsidy to create and underwrite losses from the pools, as other states do, with grants from state treasuries or tobacco settlement money, industry experts say.
Under the pending legislation, Blue Cross would pay all costs to administer the pool for as long as it exists, and cover all losses not covered by consumer premium contributions for the first two years of the pools being established.
After that, Blue Cross would continue to pay for the losses, up to $10 million.
Blue Cross would pay $5 million toward any losses exceeding $10 million in the third year or later, and the rest would be assessed "across the industry," Cook said, meaning commercial insurers would pay the difference. The legislation does not say whether HMOs would pay for pool losses.
Some states underwrite losses by charging hospitals a bed tax. The Michigan Health & Hospital Association declined comment Tuesday on the feasibility of a hospital bed tax because it hasn't seen a proposal, said spokesman Kevin Downey.
Opponents of the legislation say Blue Cross receives $130 million annually in tax breaks as a nonprofit agency. High-risk pools would unfairly add millions in costs to insurers already paying taxes in Michigan and drive some out of the state, they say.
Contact PATRICIA ANSTETT at panstett@freepress.com.