High-risk health insurance
pools are nonprofit associations created by states to assist residents
who are unable to purchase health insurance in the private market,
mainly because of pre-existing medical conditions.
In most states, insurance
companies are allowed to conduct medical underwriting, meaning they
can reject individuals in the open market based on their health
status. High-risk pools are a way to help individuals who are
uninsurable in the traditional insurance market to purchase coverage
for their medical bills.
Premiums are capped,
typically at 100 to 150 percent of premiums charged for average
market-rate insurance products. Because insurance costs for
individuals with serious medical conditions are often high, and
premiums are capped, most high-risk pools need to be subsidized. Pools
are usually administered by a board of directors and are not
considered state agencies.
States use a variety of
methods to fund the pools. Some assess all insurance companies and
HMOs in the state, and others also require self-insured corporations
to contribute. Federal grants are available to states to manage
high-risk pools.
Every state in the Midwest
has a high-risk pool except Ohio, where legislators have
introduced legislation in the past few years to create one. Minnesota
has the oldest high-risk pool in the nation, which insures about
30,000 residents.
Premiums in the Minnesota
Comprehensive Health Association are capped at 101 to 125 percent of
comparable policies in the open market.
Wisconsin
is one of a few states that provide premium subsidies to low-income
residents who participate in high-risk insurance pools, according to a
report by Families USA (www.familiesusa.org/assets/pdfs/High-Risk-Pools-May-2006.pdf).
Indiana’s
high-risk pool is financed by assessments on insurers, and about 7,200
people were participating as of June 2006, according to State Coverage
Initiatives (www.statecoverage.net/matrix/highriskpools.htm).
Premiums in the Kansas Health
Insurance Association are set to be self-sustaining, but insurance
companies can be assessed to cover pool losses.
In Nebraska, premiums for
children are 50 percent of the standard rate.
