Thursday, October 21, 2010

High Risk Medical Insurance Federal Mandates

Comparison of State High Risk Medical Pools to the Federal Mandate for Pre-Existing Condition Insurance Plans or PCIP's
Recently I had the opportunity to listen in on the nonprofit Commonwealth Fund webinar about how state high risk insurance pools compare to the recent federal mandates for Pre-existing Condition Insurance Plans. The federal PCIP plans are a transition into the nationwide health care reforms mandating all people are covered regardless of their health and without waiting periods for medical insurance. The federal PCIP program started in July 2010 and runs to January 2014, when the national mandates for all insurance plans are slated for activation. This article addresses the plan differences and identifies which states have existing publicly managed health care plans for individuals the insurance industry didn’t want to serve, the uninsurable. Hallelujah, for all of you folks with real health problems, somebody cares, and you can thank the government.
Federal Mandates for PCIPs
The federal PCIP regulations require that all insurance plans be offered without waiting periods for pre-existing conditions, as I have previously reported. They also mandate that these individuals may not be charged a surcharge premium for their risk, in other words you can’t discriminate based on someone’s health. The maximum out of pocket cost for covered medical services per individual under the federal plan is $5,950 per year. The coverage must be nationwide, which probably means some insurance companies will not participate in the plans, which is fine. In order to be eligible for coverage under the federal plan, you must have been uninsured for six months. The federal plan does not offer a high deductible medical plan option of $5,000 for example. State high risk pools are not impacted by the health care reform mandate as they are not insurance companies or insurance plans, but nonprofit self insured funds.
States with Existing High Risk Medical Pools
The information in this analysis comes from a presentation by Amie Goldman, CEO of WHIRP or Wisconsin Health Insurance Risk Pool. The oldest high risk pool for medical insurance is the State of Wisconsin’s, started by the enterprising cheese makers in 1980, which provides medical coverage for 18,300 participants. Their composite premiums are equal to the private market rates for medical insurance in their state, even though they insure the “high risk” people. Also since they are a nonprofit entity, they do not have to pay the state insurance premium tax, which is an administrative saving. The monthly premium for a 50-54 year old is a mere $277, significantly less than other states. In terms of what their participants want for coverage, they prefer the first dollar benefits. Wisconsin has not noticed any adverse selection, where someone signs up, gets their procedure done, and then dumps the coverage. Wisconsin also does a lot of outreach to health care providers and benefit specialists (insurance agents) to promote their plan. Their director did state that low income folks are still more likely to be uninsured (no kidding, let’s see we'll pay the electricity bill or the insurance). Essentially the chronically uninsured are not able to afford to pay for the premiums (poverty sucks).
New Mexico-NMMIP
The information in this review was presented by Deborah Armstrong, JD, director of the New Mexico high risk medical program. Since New Mexico is a less populated state, they only have 8,200 people enrolled in their high risk health care plan. According to their director, their most popular plan has a $500 deductible. Of their population, it is expected that 1,000 will enroll in the federal high risk pool. Their premium rate (cost) for a 54 year old person is $495 per month, which is less expensive than the new federal risk pool. New Mexico provides financial subsidies for low income people enrolling in their high risk health care pool. Administratively they do promote their product and recently AARP did a mass mailing about it. The state also pays a broker fee to encourage insurance agents to market the program.
Washington State has had a high risk medical plan since 1987, which basically covers all of the people who the private insurance sector did not want to cover and those who can afford the premium. The plan almost evaporated in 2000 due to financial problems at the state and federal level, but with some revisions, it still exists today. And Washington State was selected as the administrator for the federal interim plan or PCIP, until the 2014 health care reforms are fully implemented. The Washington State pool is funded by assessments on insurance companies, based on their premiums charged to customers. Premiums charges to medical pool participants are allowed to be 10% higher than market rates and cover 33% of the pool’s claims. The rest of the plans cost is paid by insurer assessments and there is no state revenue funding. According to Washington’s WSHIP report, about 5% of applicants for market rate medical insurance are rejected and of those, 20% have the resources to enroll on the state plan. According to the 2009 annual report of plan performance, the top diagnosis claimed were all cancer related. For pharmaceutical charges, 58% were HIV/Aids related and these represented 9% of the top prescription drug categories of expenses. Washington’s plan is split into Non Medicare and Medicare Eligible products. For purposes of this analysis, the focus is on Non Medicare products. Since I have already used the 50-54 year old age group for pricing, I am also illustrating that here, because at this age it is more likely medical conditions will exist that may make those persons ineligible for market rate insurance. Monthly premiums for a non smoking person in this age bracket would pay $986/month for a $500 deductible health plan and $476 for a $2,500 deductible health plan. Overall enrollment in Washington’s risk pool was 3,578 people in 2009.
Federal High Risk Medical Plan Rates
$500 and $2,500 deductible plans

Child only premium-$324/$161 for nonsmokers(straight off the federal register)
Child only monthly premium-$327/$162 for smokers (By looks of the small premium difference thankfully there are not too many kids smoking.)
Youth to age 24, nonsmokers, $377, $177 and for smokers,$431 and $207
Age 25-29, nonsmokers, $423, $200, and for smokers, $489 and $232
Age 30-34, nonsmokers, $489, $233, and for smokers, $566 and $271
Age 35-59, nonsmokers, $567, $273, and for smokers, $657 and $316
Age 40-44, nonsmokers, $671, $328, and for smokers, $784 and $382
Age 45-49, nonsmokers, $822, $402, and for smokers, $952 and $464
Age 50-54, nonsmokers, $986, $476, and for smokers, $1,143 and $556
Age 55-59, nonsmokers, $1,157, $563 and for smokers, $1,342 and $653
Age 60-64, nonsmokers, $1,355, $655 and for smokers, $1,577 and $769
65 Plus, nonsmokers, $1,355, $655 and for smokers, $1,577 and $769
The majority of the states (36) have tried to address the “at risk” population of people with serious medical conditions who are unable to obtain medical insurance, which drastically impacts their ability to receive adequate medical treatment. For information on what your specific state is doing, go to the insurance commissioner web site and look for State High Risk Medical Pool or something similar. Or call the customer service number of your state's insurance commissioner’s office and ask about it.

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