Iowa’s high-risk insurance pool prompts questions of health reform

The Des Moines Register

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The United States has long been a global embarrassment when it comes to health care. We are the only industrialized country that leaves millions of its citizens uninsured. Americans demanded Washington tackle the problem. It did. The main goal of the health reform law was to finally get coverage for the uninsured.

The law is crafted to do so through an expansion of Medicaid and new “insurance exchanges” offering private coverage. But those changes won't be in place until 2014.

So Congress established a program for temporary “high-risk pools” to immediately cover hard-to-insure Americans. The federal government allocated $5 billion to the endeavor and gave states the option of running them. Iowa chose to run its own pool, It opened its program in the summer of 2010 and can receive up to $35 million in federal money.

The pools are important because they offer affordable coverage to sick people whom private insurers have refused to cover. But the program is also important because it is one of the first tests of the health reform law. Its success or failure is an early indicator of the government's ability to facilitate new insurance programs.

It's clear the government has some work to do.

About 18 months after Iowa's high-risk pool opened, there are less than 250 people enrolled. The program was expected to insure about 1,000. So The Des Moines Register started asking questions. The more we learned, the more concerned we became.

Iowa crafted its program to prevent enrollment - and hasn't fixed the problem

Former Gov. Chet Culver decided Iowa would operate its own high-risk pool upon the advice of the Iowa Insurance Division. That agency and the board overseeing the state's existing high-risk pool worked out the details.

Among them: prohibiting “third party payers” from picking up the cost of premiums for enrollees in the new program. Iowa is one of a few states that did this.

That decision has prevented uninsured HIV-positive Iowans from joining. These are among the very people Congress was trying to immediately help. In Iowa, many of these individuals receive assistance with medications from another state-run program, but its administrator would rather use its money to enroll them in the high-risk pool. Then these Iowans would have coverage for their drugs and their medical care.

Iowa crafted its pool, called HIPIOWA-FED, in a way that has prevented that from happening. When the Register talked to its executive director, Cecil Bykerk, he said he would work to address the problem. When the board met this month, they chose not to do so. That keeps at least 100 HIV-positive Iowans out of the high-risk pool. That's a disgrace.

Iowa's pool has high administrative costs compared to other states

The most recent federal report on state high-risk pools was released in September. Iowa had enrolled 200 people and spent $2.7 million on paying health care claims. It spent $776,429 on “administration.”

That is a stunningly huge amount of money dedicated to administration - nearly 30 percent of the amount paid for actual health care. And it is a higher percentage than almost every other state operating its own program.

Kansas, for example, has spent 8.4 percent for administration. That state, with a population similar to Iowa's, had enrolled more people but spent $250,000 less than Iowa for administration. Illinois' administrative costs were 3.5 percent of the amount paid for health claims. Missouri had three times as many people enrolled, but had spent less money than Iowa on administration.

Yet the U.S. Department of Health and Human Services, which is supposed to oversee the high-risk pools, insists Iowa's administrative costs are not out of line.

Bykerk said these costs will eventually average out to fall below the maximum of 10 percent the federal government allows. He attributes the higher percentage to having fewer enrollees. He said the program spent $275,000 on advertising and outreach to increase the number of enrollees.

Critics and skeptics of health reform are going to pounce on anything that hints of failure or corruption or waste in new programs. While Americans should have some patience while new programs get under way, they won't have much. Concerns about the effectiveness and efficiency of the high-risk pools raise questions about forthcoming programs in the health reform law.

It's difficult to track how money is being spent on the high-risk pools

To say it was difficult to get answers about the Iowa high-risk pool is a big understatement. We sent numerous emails to federal, state and program officials in an attempt to figure out how Iowa was spending its money.

The Iowa Insurance Division didn't know. The U.S. Department of Health and Human Services provided limited information. Bykerk was forthcoming with details about how money was spent. But he had to get federal permission to release them to this newspaper.

In all the new programs under the health reform law, the public must be able to easily know how public money is being spent. Are they paying for actual health care or executive salaries?

States are poorly equipped to implement these health programs

Ideas about states being “laboratories of democracy” and “giving them control” over how they implement federal programs may sound good in a campaign speech. In the real world, what you can end up with is a hodge-podge of programs floundering around on their own, trying to figure out what to do.

When something as important as getting Americans insured is at stake, the federal government has to take the lead. Yet states now have the option of setting up their own insurance exchanges. Unlike the temporary high-risk pools, the exchanges are intended to insure millions of people and could be around for decades.

Iowa is already struggling to figure out what to do.

Last session, Iowa lawmakers tried to come to agreement on a blueprint for the exchange. They gave up after a lawmaker who sells insurance tried to guarantee everyone in his profession a set commission on plans sold in the exchange. Special interests and political agendas are too much to overcome. In addition, this state has a governor who has opposed reform and is now in charge of implementing it.

Let the federal government take on the task of creating our insurance exchange.

The Register's editorial board wants the health reform law to succeed. It provides Americans needed protections from insurance company abuses. It puts in place a mechanism to get Medicare spending under control. But Congress relied too heavily on the private sector to get Americans insured. The Obama administration is giving too much control to states.

Will Iowa make the best use of the health reform law to get people insured? Will it waste money on “administration” instead of actual care? Will the public be able to know how our tax money is being spent?

If Iowa's high-risk pool is any indicator, it doesn't look good.

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