High-risk insurance pools could cost more than $5 billion, report says

The $5 billion set aside by the health reform law to fund high-risk coverage pools throughout the U.S., until 2014 may not be enough if calculations by made by the National Institute for Health Care Reform are correct. In fact, NIHCR's findings indicate that the money--which is supposed to pay for the coverage of 2 million people--might only be enough to pay for 200,000 individuals. 

Mark Merlis, an independent health policy consultant and author of the report, believes that policy makers will be forced either to limit who can obtain coverage from the pools in an attempt to work within the budget's constraints, or to "open the doors to programs that are more generous than most current state pools and allow the programs to reach capacity." 

"Under the law, the HHS secretary has two ways of keeping spending within the $5-billion limit," Merlis writes. "The first is a general authority--to make such adjustments as are necessary to eliminate any projected deficit for a fiscal year. The second is an authorization to stop taking applications for participation in the program." 

Merlis also mentions other cost-controlling methods--like shifting coverage percentages over time and establishing a minimum enrollment period--but offered words of caution when talking with Kaiser Health News for those who are overly optimistic about obtaining coverage.

"[P]eople may have the impression that this magic program is going to help everyone in need right away," he says. "That's not the case."

Merlis ultimately believes that rising health costs and reduced premiums would lead to average per-person costs of $7,000 annually by 2014, up from the $5,000 annual per-person price tag estimated by actuaries. Such findings only reaffirm the notions of analysts like Thomas Tobin, who predict that the real cost for such pools will run much higher than anticipated.

Still, the Department of Health and Human Services insists that the program will work. Spokeswoman Jessica Santillo argues that the cost-per-person will be less, and that the target population will be smaller. "Even by its own conservative estimates, [the report] suggests that the proposal would double the number of people with major health problems who are currently helped by state high-risk pools," she said. 

To learn more:
- read this Kaiser Health News piece
- here's the report
- here's a release summing up the report
- check out this New York Times article

Suggested Articles

The profit margins and management of Community Health Group raise questions about oversight of managed care insurers.

Financial experts are warning practices about the pitfalls of promoting medical credit cards to their patients.

A proposed rule issued by HHS on Tuesday would expand short-term coverage, a move Seema Verma said will have "virtually no impact" on ACA premiums.