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Interim High Risk Pool could run out of money before 2014

The Patient Protection and Affordable Care Act’s Interim High Risk Pool — aimed at making medical coverage available at standard market rates for those with preexisting medical conditions until insurers and health plans are required to accept all applicants regardless of preexisting conditions in 2014 — will likely run out of money before then.

That’s the conclusion of a recently issued paper by the National Institute for Health Care Reform.  The paper warns that while 5.6 million to 7 million Americans may qualify for the pool, the $5 billion the Act allocated may be enough to cover only 200,000 people a year. “Policy makers will need to tailor eligibility rules, benefits and premiums to stretch the dollars as far as possible,” the paper recommends.

There are multiple factors that could affect demand for the $5 billion set aside to subsidize Interim High Risk Pool coverage as well as cover administrative costs of operating the pool.  Individual market premium rates are trending upward so even the standard rates required to be charged those in the pool (insurers charge nonstandard, surcharged premium rates to individuals with certain controlled preexisting conditions) could as this blog previously noted end up roughly equal to current nonstandard rates.  In a struggling economy, those higher premiums would reduce the incentive for people to sign up for coverage.

The other unknown is how the states ultimately implement the Interim High Risk Pool and how the 35 states that have high risk pools in place coordinate (or don’t) their pool rules with those of the new, temporary federal program.  Some states have already indicated they will be opting out of the federal program, which means the feds will designate a nonprofit organization in those states to administer the Interim High Risk Pool there.

In those states as well as states that have indicated they intend to integrate their high risk pools with the federal program, there could be disparities between the new pool and existing state high risk pools that could create incentives for individuals to go uninsured (individuals must be uninsured for at least six months to qualify for coverage via the Interim High Risk Pool) in order to obtain more generous, lower cost coverage than their state high risk pools offer.  That would accelerate the drawdown of the $5 billion set aside for the program.

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