Durbin Stops Blocking High-Risk Pools

Published November 1, 2005

After seven months of blocking a Senate bill that would help low-income people with serious medical conditions find affordable health insurance, Senate Minority Whip Dick Durbin (D-IL) agreed not to oppose the measure, in response to a compromise developed in the Senate.

Durbin dropped his hold on the High Risk Pool Funding Extension Act (S. 288) on September 28 when guarantees were given that Illinois would receive its “fair share” of funding.

“This is a victory for Illinois and the people who depend on the federal government for their health coverage,” Durbin said in a statement on September 28. “I could not stand idly by when the legislative language in the previous Senate bill would have resulted in hundreds of Illinoisans losing their health insurance.”

Accused of Blocking Funds

Only days earlier, the senator had been defending himself against charges he was blocking funding to state high-risk pools. Federal “seed” money for state high-risk pools for uninsured individuals “should follow the people in need, and not be determined by politics,” Durbin said in a September letter to 20 high-risk pool administrators.

Durbin was responding to a charge leveled by the state officials in a September 6 letter to Senate Majority Leader Bill Frist (R-TN) alleging Durbin had “blocked” consideration of Senate legislation to fund the pools. The senator had formally put a “hold” on the legislation, which is within his congressional powers.

Most States Have Pools

High-risk pools provide health insurance coverage to people with serious medical conditions, such as HIV or cancer, who are unable to purchase coverage in the individual market. While states are not required to provide coverage for their medically uninsurable residents, 33 states have high-risk pools to do so.

Of the remaining states, 12 require that individual policies have some provision for at least some coverage without regard to medical condition, coverage through a reinsurance pool, or coverage through a carrier designated as one of last resort. Five states do not require individual access to insurance for persons with catastrophic medical conditions.

Despite receiving funds through the payment of individual premiums, state legislative appropriations, tobacco settlement funds, and hospital surcharges, among other sources, high-risk pools lose money. While federal funds were made available under the Trade Adjustment Assistance Act of 2002 to create the pools, that funding expired in 2004, which led to congressional efforts this year to renew federal support.

The September 6 letter from state risk-pool administrators urged Frist to schedule time to debate and consider the funding extension bill.

Funding Formula Will Change

In February, Sen. Judd Gregg (R-NH) and 11 cosponsors introduced the bipartisan State High Risk Pool Extension Act (S. 288) to restore funding. The measure was later amended by Health, Education, Labor, and Pension Committee (HELP) Chair Mike Enzi (R-WY) and approved by HELP in July.

The bill was to provide $15 million to help states set up high-risk pools, with another $50 million available through 2009 for states with existing pools.

In the form approved by HELP in July, the bill would have changed the funding allocation from the legislation enacted three years ago: The new measure would divide one-half of the funds equally among all participating states. The remaining dollars would be apportioned based on the number of uninsured residents in each state and the number of enrollees in a state’s high-risk pool.

In July, the House passed a different version, which would divide one-third of the funds among all of the states, another third based on the number of uninsured, and the final third based on the number of participants in a state’s high-risk pool.

Durbin Strongly Opposed Changes

In his letter to the high-risk pool administrators, Durbin wrote, “The [Senate] bill cuts funding to states with large numbers of uninsured people, such as Illinois, Colorado, Indiana, Maryland, and Oklahoma, and increases funding to states with a smaller number of uninsured Americans.”

He declared his support for high-risk pools and said it was not “accurate” to say he “blocked” the bill. “I have made numerous attempts to negotiate with the leadership of the HELP Committee to find an acceptable compromise,” only “to be rebuffed each time,” Durbin wrote.

No House or Senate appropriations bills over the past two years contained funds for high-risk pools, Durbin wrote, and he said he was unable to add dollars to pending appropriations for the departments of Labor and Health and Human Services “given these difficult fiscal times.”

“There is no reason a state like Illinois,” Durbin wrote, “that has 1.8 million people lacking access to health insurance should suffer a funding cut of 60 percent while a state like South Dakota with 90,000 uninsured people sees its funding more than double.”

The new Senate bill was described by Angela Hunter, federal affairs director for the Council for Affordable Health Insurance, as “a compromise between the House and Senate formulas,” according to the Associated Press.

At press time, it was unclear when the bill would go before the Senate for a vote.

Pools Provide Critical Coverage

For people lacking access to employer-based coverage, or who have been declared uninsurable, high-risk pools are a vital safety net for avoiding life-threatening or financial disaster.

Coverage for high-risk pool participants is generally similar to that found in a state’s individual insurance market, including a comprehensive major medical plan and assorted deductibles, most often offered as a PPO or indemnity plan. Some states have HMO and/or HSA options.

Among other services, high-risk pools offer prescription drug benefits, maternity coverage, disease management programs for treating enrollees with severe chronic diseases, and assistance for overcoming mental health problems and substance abuse.

Premiums charged for those covered are slightly more than what is paid in the state’s individual market. Premiums are usually capped by state law at 125 to 150 percent of the base individual market rate.

Insurance Providers Support Pools

“Traditional individual market and small group health insurance consumers benefit from the existence of a pool, since the greatest risks are removed from these insurance markets,” said Janet Trautwein, executive vice president and CEO of the National Association of Health Underwriters, which represents the insurance agent and broker community.

“Federal funding for high-risk pools should be made permanent to ensure stability in state-level individual and small group health insurance markets,” Trautwein said.

Tom Bruderle ([email protected]) is vice president – congressional affairs for the National Association of Health Underwriters.