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  • Rules issued for state run high risk health insurance pools

    On July 30, the Department of Health and Human Services released an interim final rule on the Pre-existing Condition Insurance Plan Program. This program is being established as a result of the health reform law, which requires the HHS secretary to create a temporary high risk health insurance pool program – either directly or through the states – to provide affordable coverage to uninsured individuals with pre-existing conditions. The program will be in effect until January 1, 2014, when the health insurance exchanges begin to operate. The rule went into effect on July 30. Comments will be considered until 5 p.m. on September 28.

    The Pre-Existing Condition Insurance Plan exists to address “the challenges of people with pre-existing conditions… In general,” HHS said, “high risk pools provide coverage of last resort for people who, because of their health, are denied coverage by private insurers or are unable to purchase coverage in the individual market except at substantially surcharged premiums due to their health status, and are ineligible for public coverage.”

    Currently, 35 states have high risk pools, which provide coverage to about 200,000 individuals, or about one percent of the individual market nationwide.

    Key issues addressed in the interim final rule include:

    Eligibility – Eligible individuals must:

    • Be a U.S. citizen, a U.S. national, or be lawfully present in the U.S.
    • Not have had insurance coverage for the previous six months.
    • Have a pre-existing condition that an insurer refused to provide coverage for, or have a rider that excludes coverage for that condition.

    Premiums – Must be set so they:

    • Equal the standard rate for anyone in the population with the same health conditions.
    • Do not vary by age by more than 4 to 1.

    State role – States are given flexibility in how to implement high risk pools.

    • They may operate a new high risk pool alongside their current state high risk pool.
    • If they don’t already operate a high risk pool, they may establish a new one.
    • They may build on other existing coverage programs designed to cover high risk individuals.
    • They may contract with a current HIPAA carrier of last resort, or another carrier, to provide subsidized coverage.
    • They may do nothing, in which case HHS will provide a coverage program.

    Funding

    • The law appropriates $5 billion in federal funding to support this program.
    • The formula for allocating funds to each state is “almost identical” to what was used for the Children’s Health Insurance Program (CHIP): a combination of factors, including nonelderly population, nonelderly uninsured and geographic cost.
    • Also like CHIP, funds will be reallocated after no more than two years, based on an assessment of actual enrollment.