Small Biz Health Care Daily: State High Risk Pools

Part of the current debate over health care is driven by providing affordable health care coverage for individuals with pre-existing conditions. The current emphasis is on more regulation and mandates – specifically, guaranteed issue whereby anyone applying for insurance must be accepted no matter their health status, and community rating, which means that all insured individuals are charged the same price, or with slight variations for age and location.

A better, more affordable and less distortive response are state high risk pools.

The Council for Affordable Health Insurance (CAHI) just published a two-pager describing and making the case for high risk pools. It is well worth reading.

A couple of key points to highlight here:

• State risk pools are not intended to have a permanent place once the other reforms go into effect. This is a huge mistake. An even bigger mistake is believing that moving to an insurance system with guaranteed issue and community rating will somehow make health insurance less costly. Research has consistently shown that these reforms always increase premiums. By contrast, the data clearly show that state high risk pools help make private health insurance coverage more affordable for everyone.

• State high risk pools are a lower-cost alternative to Medicare and Medicaid expansions, and offer substantial advantages to other “public plan” options.

- Most state risk pools pay medical providers higher fees than Medicare and Medicaid;
- Risk pools generally have more generous benefits than Medicare and individual market plans; and
- Risk pools are attuned to regional needs and have extensive provider networks.

Read the report here.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council