Health Reform Implementation Begins with High-Risk Pools

BY Lea Winerman  April 2, 2010 at 6:01 PM EST

In one of the first moves the Obama administration has taken under the new health care reform law, Health and Human Services Secretary Kathleen Sebelius on Friday sent a letter to state governors and insurance commissioners intended to gauge interest in a new insurance high-risk pool program.

The health care reform bill provides $5 billion in funding to create a network of insurance pools for people with pre-existing medical conditions who do not have insurance. The pools are intended to open within 90 days, and are a stopgap measure that will last until 2014, when insurance companies will no longer be able to deny coverage to anyone based on pre-existing conditions.

“When it’s up and running, the new high-risk pools program will provide immediate relief for millions of Americans,” Sebelius said in a conference call Friday.

More than 30 states already have some form of high-risk pool. However, the pools have suffered from underfunding, and many have waiting lists. Because they cater to high-risk customers, many also have higher-than-average premium costs.

In a conference call today, HHS Office of Health Reform Director Jeanne Lambrew said that the new pools would aim to “build on state programs that work.”

However, the health reform law has different requirements than many of the current high-risk pools — it will require plans to keep their premiums at “standard rates,” or no higher than the average person of that age would pay for insurance in the private market.

There are also different eligibility requirements. In order to be eligible for the new pools, people will have to have a pre-existing condition and have been without insurance for at least six months. Some states now allow people to transition directly from another insurer to a high-risk pool.

In her letter, Sebelius outlined states’ choices as to how to implement the pools: States that already have a pool can add a new one alongside it. States that don’t have a pool can start one from scratch, build on other existing programs designed to help high-risk populations, contract with insurers to provide subsidized coverage, or even do nothing — in which case HHS has the authority to run a pool itself in that state.

Many aspects of the new program are still unclear — officials don’t yet have an estimate of how many people it will cover, and they don’t yet know how the $5 billion will be distributed to states. However, the letter sets a quick timeline for action — it asks state officials to respond by April 30, and Lambrew said that HHS intends to meet the health reform law’s 90-day deadline for establishing the pools.