Guaranteed High Risk Health Insurance Choices
About 375,000 Americans with significant
medical conditions are expected to rely on
government-subsidized high risk insurance plans through
2011. The cost will be paid primarily by taxpayers but
applicants will pay a reduced premium of $140 to $900 per
Those people with ongoing medical issues
typically have a cost of
treatment that exceeds the premium collected. In this situation it makes more sense to provide
medical care through some type of public program rather than
rely solely on commercial insurance. We recognize that these
people could not possibly pay the full cost of their medical
treatment without public subsidies and as a public policy,
we pledge to support the treatment of those with significant
medical issues. High risk health
insurance pools are used to pay part of
the cost while the participants pay a price similar to the
amount paid by healthier individuals.
The federal high risk health
insurance is available to individuals who
have been without health insurance for more than 6 months.
The premium will be about the same as other major medical
out-of-pocket expenses are limited to $5,000 per year
for deductibles and co-payments.
Even with total enrollee payments of up
to $12,000 per year
(the premium plus out-of-pocket costs), the Department of Health and
Human Services expects to spend up to $4 billion this year
to subsidize the cost of the high risk health insurance
Commercial health insurance plans take an
entirely different approach to ensuring financial stability.
guaranteed issue health insurance is offered in most states,
the insurance limits the amount of benefits available to
cover pre-existing medical conditions to ensure that claims
do not exceed the collective amount of premiums paid. These policies
provide a limited amount of coverage to all applicants
regardless of prior medical history.
High risk individuals may use only the
government-subsidized plan only, a commercial insurance
only (where available), or a combination of a government-subsidized insurance
and a commercial insurance plan to allow the best protection
and coverage that each individual's personal budget will
At the time this article was written 7
states had not yet announced whether they would operate a
high risk health insurance pool as directed by the federal
health insurance reform law. 20 states had decided that they
will allow the federal government to provide this coverage.
The remaining states will operate their own high
risk health insurance plan.
Federal funds for high risk health
insurance are available
on the same basis as the subsidies to the Children's Health Insurance Program
(CHIP). This means, for example, that California would receive $761
million, the largest amount of funding. The states with the
smallest amount of funding, Vermont and Wyoming, would each
receive $8 million. It is not clear what happens to the
insurance enrollees when the federal funds are exhausted.
History of high-risk insurance plans
The federal government provided states
with an opportunity to establish or expand high risk
health plans under the Federal Trade Act of 2002 with a
grant program of $20 million. Bonus grants were given to
state pools that paid premium subsidies for those with low
incomes, provided additional benefits, eliminated waiting
lists, or implemented disease management programs. The State
High-Risk Pool Extension Act of 2006 extended the provisions
of the Federal Trade Act and authorized an additional $90
million of seed funding though 2009 to encourage
states to establish qualified high-risk pools. Premiums must
be limited to 150% of the standard in the individual market
for states to qualify for a grant.
The 2010 Patient Protection and
Affordable Care Act created temporary high-risk insurance
for those with pre-existing medical conditions but includes
eligibility criteria that exposes potential applicants to
severe financial risk before insurance is available.
We believe that high-risk insurance plans
where public funding is provided in consideration of the
ability to restrict eligibility and limit the medical
benefits available under the insurance will continue to be a
pillar of our nation's health care delivery system.