High Risk Pools

Fact Sheet – Temporary High Risk Pool Program

UPDATE

The Pre-Existing Condition Insurance Plan is closed and no longer in operation. Individuals who were eligible for coverage can now purchase insurance with any company they choose through private plans or the health insurance exchange.

 

Called the Pre-Existing Condition Insurance Plan (PCIP), this program is for people who have been denied health insurance due to a preexisting condition so they can begin applying for coverage as of July 2010, in many states, under the first major program of the new health care reform law.

The $5 billion program will fund high-risk insurance pools in every state — the money will be funneled to states according to size and need (see how much money your state is getting below).

Twenty-nine states and the District of Columbia will use the funds to run their own high-risk pools, while 21 states have chosen to have the federal government run the program for them.

The program is intended to be a stopgap measure until 2014, when the bulk of the health care reform law goes into effect — including a provision that will ban all health insurance companies from discriminating against people with preexisting conditions.

Below, you’ll find some answers to questions about the program.

Eligibility

In order to receive insurance through the temporary high risk pool program, an individual must meet the criteria established in the law. Eligible individuals must:

  • Be a citizen or national of the United States or lawfully present in the United States;
  • Not have been covered under creditable coverage (as defined in Section 2701(c)(1) of the Public Health Service Act) for the previous 6 months before applying for coverage; and
  • Have a pre-existing condition, as determined in a manner consistent with guidance issued by the Secretary.

Premiums

Premiums could vary from $140 to $900 per month. By law, though, the plans cannot cost more than the standard health insurance plans for healthy people in each state that offer similar coverage.

Premiums in the high risk pool will be affordable for participants to ensure that those who have been locked out of the insurance market have access to high-quality insurance. Premiums must be set so that they:

  • Equal a standard rate for a standard population (that is, not exceed 100 percent of the standard non-group rate); and
  • Do not vary by age by more than 4 to 1.

State Role

HHS’s goal is to grant the flexibility needed to permit successful and expeditious implementation of the program by interested states. There are different avenues for states to carry out the statutory requirements for a high risk pool program.  A state could consider the following options:

  • Operate a new high risk pool alongside a current state high risk pool;
  • Establish a new high risk pool (in a state that does not currently have a high risk pool);
  • Build upon other existing coverage programs designed to cover high risk individuals;
  • Contract with a current HIPAA carrier of last resort or other carrier, to provide subsidized coverage for the eligible population; or
  • Do nothing, in which case HHS would carry out a coverage program in the state.

HHS has asked states to declare how they intend to participate in the program by April 30, 2010. Regardless of whether or how a state participates, all Americans who meet the eligibility criteria will have the opportunity to join a high risk pool.

Funding

The law appropriates $5 billion of federal funds to support the new temporary high risk pool program. It will be available beginning on July 1, the start of many state fiscal years, until the program ends on January 1, 2014. The program is funded entirely by the federal government.

HHS has proposed allocating funds for the program by using a formula almost identical to what was used for the Children’s Health Insurance Program (CHIP).  Specifically, funds would be allotted to states using a combination of factors including nonelderly population, nonelderly uninsured, and geographic cost as a guide.  This combination of factors has been refined over time in the CHIP context, and the CHIP formula has broad Federal and State support.

As under CHIP, HHS intends to reallocate allotments after a period of not more than 2 years, based on an assessment of state actual enrollment and expenditure experiences. This proposed reallocation aims to ensure that the capped amount of Federal funding is allocated to states based on both the initial formula and performance.  A list of proposed allocations by state for the four year period is included below.

The attached table presents the estimated state allotments based on the above methodology.

Potential Allocation of High-Risk Pool Funds
Dollars in Millions*
State Funds
Alabama 69
Alaska 13
Arizona 129
Arkansas 46
California 761
Colorado 90
Connecticut 50
Delaware 13
Dist of Columbia 9
Florida 351
Georgia 177
Hawaii 16
Idaho 24
Illinois 196
Indiana 93
Iowa 35
Kansas 36
Kentucky 63
Louisiana 71
Maine 17
Maryland 85
Massachusetts 77
Michigan 141
Minnesota 68
Mississippi 47
Missouri 81
Montana 16
Nebraska 23
Nevada 61
New Hampshire 20
New Jersey 141
New Mexico 37
New York 297
North Carolina 145
North Dakota 8
Ohio 152
Oklahoma 60
Oregon 66
Pennsylvania 160
Rhode Island 13
South Carolina 74
South Dakota 11
Tennessee 97
Texas 493
Utah 40
Vermont 8
Virginia 113
Washington 102
West Virginia 27
Wisconsin 73
Wyoming 8
United States 5 Billion

*Preliminary: Final allotments may increase or decrease by +/- 1%.
Data sources: ACS State Population 2008; BLS Wage Data 2008.