Congress Approves $100 Million for High-Risk Pools

Published August 30, 2002

The Trade Adjustment Assistance Act (TAAA), passed by the Senate on August 2 by a vote of 64-34, contains a little-known provision that could provide a big boost to market-based health care financing. The measure was signed by President George W. Bush on August 6.

Significant health care reform legislation is buried deep in TAAA, its presence mostly ignored by the mainstream media. Senators Max Baucus (D-Montana) and Gordon Smith (R-Oregon) are credited with getting the enabling legislation attached to the trade bill.

High-Risk Pool Funding

The trade bill provides $100 million in federal funding to help subsidize the cost of state high-risk pools (HIPs), which provide health insurance for high-risk individuals otherwise unable to find insurance. The federal measure requires that states cap the premiums charged to pool participants at 150 percent of standard health insurance premium rates, thereby ensuring the insurance will remain affordable for those who require high-cost medical care.

Sally Albright, executive director of the Health Insurance Safety Net Coalition, told Health Care News, “30 states currently operate successful high-risk pools. With TAAA, up to $1 million in ‘seed money’ for each of the remaining 20 states, including the District of Columbia, will be made available to cover initial start-up expenses.”

In addition to start-up funding, the trade measure allocates $40 million in 2003 and 2004 to help all state pools, new and existing, with ongoing operational overhead and claims. States who take advantage of the start-up funding need not apply for the 2003 and 2004 continuing funds, which will require that they meet certain qualifications.

States seeking additional funding for their pools may not charge pool participants more than 150 percent of premiums charged in a standard underwritten health insurance policy, must give consumers a choice between two or more plans, and must have a mechanism for continued funding that does not rely on federal subsidies. States that already have HIPs generally charge a capped premium and assess health insurance companies a “surcharge” to help cover claims.

Consumers Win

Kelly Loussedes, director of public relations at the National Association of Health Underwriters (NAHU), reacted positively to news of the HIP measure. “High-risk pools have provided affordable health care choices for thousands of individuals who would otherwise be uninsured. We are hopeful the additional federal funding will encourage other states to implement them.”

Kerry Smith, director of government relations for Fortis Health, agreed. “As an alternative to the costly and detrimental effects of mandated guaranteed issue, risk pools provide a viable safety-net for individuals with chronic or high-risk medical conditions. As I have told many members of Congress and the White House, these people need coverage, and risk pools are there for them … just give them the money.”

“HIPs accomplish the social goal of assuring access to quality medical care for those who need it,” noted Joseph Bast, president of The Heartland Institute, “without the disruptions and negative side effects caused by heavy-handed regulations of the insurance industry.”

“Ensuring all Americans have access to affordable health insurance is one of the most important issues facing Congress,” commented Dr. Merrill Matthews, director of the Council for Affordable Health Insurance (CAHI). “As the nation continues to debate the best way to ensure access to affordable coverage, high-risk pools must be a part of the solution.”

Matthews told Health Care News that House-Senate conferees came together to draft a bill that is good for the economy and increases access to affordable health insurance for many Americans. The conferees removed a guaranteed issue provision, he noted.

Keeping What You Have

The appearance of health care reform measures in a trade bill isn’t entirely surprising.

“The trade bill also helps eligible individuals maintain their health insurance if they lose their jobs due to trade arrangements,” explains Janet Trautwein, vice president of government affairs at NAHU.

“There are more than 39 million Americans who are currently uninsured, and this legislation will ensure that those numbers do not rise,” Trautwein noted. “Displaced” individuals who qualify under the legislation would receive a refundable tax credit in advance to purchase health insurance from a number of different sources, including COBRA, purchasing pools, high-risk pools (HIPs), and other state assistance programs.

Rick Carlson, director of Illinois’ high-risk pool, the Comprehensive Health Insurance Pool (CHIP), said “[TAAA] appears it could be as significant and beneficial for consumers as the federal HIPAA that was first enacted in 1996. In the past year there have been a number of steel mills and other Illinois employers who have declared bankruptcy and gone out of business who have left literally thousands of employees, retirees ,and their dependents without health insurance.”

Carlson told Health Care News, “Our CHIP program has been able to enroll and help hundreds of these individuals, but many more were unable to qualify or enroll, either because of their having failed to exhaust all of the COBRA coverage that was available to them or because they were unable to afford this coverage (having lost their job and source of income).”

“This legislation,” said Carlson, referring to the trade measure, “should be of great benefit to these displaced workers, who can now receive financial assistance to continue their previous coverage and/or access other available coverage options such as their state’s high-risk pool.”

For more information …

see Heartland Policy Study #91, “Extending Affordable Health Insurance to the Uninsurable,” by Conrad F. Meier. The report is available on the Internet in HTML or in Adobe Acrobat’s PDF format.