Health Insurance: Understanding High Risk Pools

Understanding Your State's High Risk Pool

united states map
Health Risk Pools - Does your state have a high-risk health insurance pool?. Wikimedia Commons

Most Americans get their health insurance through their employer and many others are enrolled in government programs such as Medicaid, Medicare, CHIP, and health plans affiliated with the armed forces. Also, many people who are self-employed purchase their own health plan directly from a health insurance company.

Additionally, more than 40 million Americans do not have any health insurance because they work part time, their employer does not offer health insurance, or they cannot afford health insurance premiums but make too much money to qualify for Medicaid.

There are also significant numbers of people who can afford insurance but are turned down by insurance companies because they have a serious pre-existing condition such as cancer, diabetes, or an HIV infection. In most states, there are no laws that require a health insurance company to provide coverage to an individual.

High Risk Pools

However, 35 states have created special programs for residents who are denied coverage by private insurers because of health-related issues. For the most part, these programs, known as high-risk pools, guarantee that individuals can purchase and enroll in a health plan regardless of their health status.

Dr. Mike’s Bottom Line

If you are young and healthy and have no health risk factors (such as smoking), you will probably have an easy time finding affordable health insurance and health plans that are eager to have you as a client. However, if you have been treated for a chronic health condition or have health-related, high risk factors (such as being overweight or chewing tobacco), you may not be able to get health insurance coverage at any price.

Most health plans are in business to make money and they do not want to enroll “sick” people who are going to utilize the most services.

What Happens to High-Risk Pools Under Health Reform?

One of the major provisions of the health reform bill (Patient Protection and Affordable Care Act) that was signed into law in March 2010 is to eliminate pre-existing condition rules and provide access to affordable health plans that cannot deny coverage based on health status.

 

Each state has a health insurance exchange that offers at least two health plan options with different levels of premiums and out-of-pocket expenses. The exchanges may be a replacement for, or an addition to, your state’s current high-risk pool.

How Much Will High-Risk Pool Insurance Cost Me?

High-risk health plans are very expensive for your state to operate. Because of that, the high-risk pool in your state will most likely charge you more than the cost of buying traditional individual health insurance. Typically, high-risk pools offer four to eight health plans through a contract between your state and one or more private health insurance companies.

Depending on the state, your monthly premium for a high-risk health plan will be 125% to 200% of the premium of a similar private plan – similar to the health plan that denied you coverage. For example, if a traditional plan for an individual costs $500 each month, in California you may have to pay $625 for the high-risk plan (125% rate), in West Virginia $750 for the high-risk plan (150% rate), and in Maryland $1000 for the high-risk plan ($1000).

In most states with high-risk pools, the insurance company also can vary the cost of your premium based on your personal characteristics, such as age, gender, smoking status, where you live in the state, and your health status. They cannot deny you coverage if you have a health problem, but they can charge you a higher premium!

In addition to your monthly premium, you will also be responsible for out-of-pocket expenses, such as annual deductibles, copayments, and co-insurance. You can expect to have an annual deductible of at least $500, but in many states the deductible may be between $1000 and $3000.

Are High-Risk Pools a Good Idea?

A high-risk pool can be very helpful if you have a pre-existing condition, have been denied the ability to enroll in a health plan, and can afford to pay the monthly premiums. Since some states also provide financial help with premiums, a high-risk pool can act as a safety net if you cannot afford to buy a private health plan.

However, there are some significant problems with high-risk pools. Although several million people in the 35 states with high-risk pools may be eligible to participate, actual enrollment – at about 190,000 – has been very low. This is mainly due to the high cost of the premiums and yearly out-of-pocket costs – many people simply cannot afford to purchase coverage through a high-risk pool.

Since high-risk pools are so expensive to operate, many states have either limited or stopped enrolling people in the pools.

Resources

Since each of the 35 states with high-risk pools have different regulations, it is important for you to understand your state’s eligibility requirements, available plans that offer insurance in the high-risk pool, annual costs, and the possibility that the plans are currently closed.

State High-Risk Pools: An Overview – an excellent document from the Kaiser Family Foundation that includes a list of states with high-pools and some basic information about those state’s programs.

National Association of State Comprehensive Health Insurance Plans provides a list of states with high-risk pools including a direct link to each program.

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