Health

Will high-risk insurance pools like Iowa's work?

Proper funding required for House GOP health care bill to help those with pre-existing conditions, experts say

Joseph Day
Joseph Day

DES MOINES — People with serious and chronic health conditions that require high-cost medical care could be placed in high-risk insurance pools under health care reforms under construction in Congress.

Iowa has operated a high-risk insurance program for nearly three decades. But expert opinions as to whether a return to high-risk pools for those people with pre-existing conditions is the right course of action are mixed.

They say high-risk pools for people with high health care costs could work, but only with sufficient funding to help make the insurance affordable.

“It worked in the past. Why would it not work in the future? It covers people that are high risk, which is the basic issue here. ... It functions very well. You can’t force people to take it, but it’s there and it’s available. It’s not priced out of line considering the circumstances.”

- Joseph Day

Cedar Rapids lawyer and president of the board that oversees Iowa’s high-risk program

People with pre-existing conditions currently cannot be denied or charged more for health insurance. Those protections are a result of federal health care reforms implemented under former President Barack Obama.

Republicans now in control of the White House and Congress seek to overhaul the Affordable Care Act by sending more policy authority to the states. One provision in a bill passed recently by the U.S. House would allow states to apply for a waiver that would allow them to, in some cases, permit insurers to set higher costs for people with high costs of care.

Any state that applies for such a waiver would be required to establish some version of a cost-sharing program. Many Republicans have suggested high-risk pools.

The House bill does not change the Obama-era reform that prohibits insurers from denying people coverage based on high health care costs. But it does enable states to apply for a waiver that would allow them to permit insurance companies to charge higher rates for people with high health care costs who go without coverage for more than nine consecutive weeks.

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That could be 6.3 million Americans, according to the Kaiser Family Foundation, a national not-for-profit organization that studies health care issues and policies.

The House bill is not necessarily the health care reform package that will land on President Donald Trump’s desk. Senators have said they will construct their own bill, and if it passes, the two sides will work out the differences.

Multiple senators, however, also have said high-risk pools could be a solution to providing an avenue to health insurance for people with pre-existing conditions.

“There are a number of options available out there, and we have talked about various ways to do subsidies for those that have pre-existing conditions (including high-risk pools),” said U.S. Sen. Joni Ernst, R-Iowa. “There’s many of those ideas that have actually worked in a number of states quite well.”

The general goal of high-risk pools is to create lower costs for the healthier majority of insured individuals by placing those with abnormally high medical costs in a separate pool.

Thirty-five states, including Iowa, had high-risk pools before Obama’s health care reforms were implemented, according to the Kaiser Family Foundation.

Iowa’s high-risk program, HIP Iowa, remains in operation even after Obama’s health care reforms required insurers to cover people with pre-existing conditions and created federal financial assistance for low-income people.

The state program covers Iowans with dozens of ailments, including metastatic cancer, leukemia, Type 1 diabetes, kidney failure requiring dialysis, AIDs and Parkinson’s disease.

“Throwing a bunch of high-risk people back into Iowa’s high-risk pool without funding is really not the answer because, quite frankly, the state doesn’t have the money to co-insure, and neither (do) the feds. It would bankrupt the existing high-risk pool that’s already out there and provide less service at a higher price."

- State Sen. Matt McCoy

D-Des Moines

Just 342 Iowans enrolled in the high-risk program in 2016. That is down dramatically from the more than 3,000 enrollees during the peak years before Obama’s federal reforms were fully implemented.

Should the new administration and Congress create a waiver for high-cost patients and state leaders in Iowa request the waiver, those Iowans with high-cost ailments could wind up in a high-risk pool similar to the current program.

Joseph Day, a Cedar Rapids lawyer and president of the board that oversees Iowa’s high-risk program, said he thinks the program has been positive thus far and a similar program could be similarly successful if passed by Congress and the president.

“It worked in the past. Why would it not work in the future?” Day said. “It covers people that are high risk, which is the basic issue here. ... It functions very well.

“You can’t force people to take it, but it’s there and it’s available. It’s not priced out of line considering the circumstances.”

Matt McCoy, another board member and a Democratic state senator from Des Moines, said he would be concerned that a broader high-risk program would be insufficiently funded.

“Throwing a bunch of high-risk people back into Iowa’s high-risk pool without funding is really not the answer because, quite frankly, the state doesn’t have the money to coinsure, and neither (do) the feds. It would bankrupt the existing high-risk pool that’s already out there and provide less service at a higher price,” McCoy said. “For us to say we’re going to throw a bunch of people into that high-risk pool, I don’t think that’s an answer.”

The House bill set aside $8 billion over five years for states that opt for the waiver. Some experts said that will not be sufficient.

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In 2011, the 35 states with high-risk pools covered more than 226,000 people — including 3,268 in Iowa — at a cost of more than $2.6 billion, and premium payments covered less than half of that, according to a Kaiser report.

“It doesn’t offset what it takes away,” Karen Pollitz, a senior fellow at Kaiser, said of the House bill in a report on CNN’s website. “You just aren’t going to cover many people with $8 billion over five years. These are expensive, expensive cases.”

Iowa’s high-risk program, as with most states’, is funded by a mixture of premiums paid by the people who enroll in them and a risk-sharing fee on Iowa health insurance agencies, which receive tax relief for the expense.

Monthly premiums are calculated based on 150 percent of the average market rate of the top five individual insurance carriers. In 2017, Iowa’s high-risk program premiums range from roughly $200 per month for young men in high-deductible plans to more than $1,000 per month for men and women in their 50s and 60s.

Premium payments generated $3.6 million in 2016, and the fee on insurance companies generated $8.9 million. That covered the program’s $11.9 million in operating costs.

“It was an attachment for individuals that had specific diseases and specific conditions, but it generally did work because it was generally funded,” Iowa Insurance Division Commissioner Doug Ommen said of the state program.

Adequate government funding is the key to a strong high-risk pool, multiple experts agreed. Richard Popper, with the Kansas City, Mo.-based health care technology company DST Health Solutions, wrote in an opinion piece for the Washington Post that he helped manage two state high-risk pools and one federal pool and that the successful programs were well-funded.

“If well-administered, the (U.S. House proposal) could allow premiums to stabilize and help those with health conditions acquire affordable coverage,” Popper wrote. “But if not, uninsured individuals with health conditions could end up longing for the good old days of the (Affordable Care Act).”

l Comments: (515) 422-9061; erin.murphy@lee.net

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