California's high-risk pool is sick
California high-risk pool for medically uninsurable helps fewer residents
By Jordan Rau
Los Angeles Times
October 28, 2008
California… is one of 35 states that arranges health coverage for people rejected by commercial companies because they have blemished medical histories.
This group — known as “medically uninsurable” — accounts for about an eighth of the 5 million Californians who lack health insurance. Most are self-employed, work for companies that don’t provide insurance or don’t have a job.
But California’s publicly subsidized high-risk pool, long one of the least generous in the country, has atrophied over the tenure of Gov. Arnold Schwarzenegger — even as the governor put the plight of the uninsured at the top of his political agenda.
Rising premiums and limited subsidies have made the Major Risk Medical Insurance Program either unaffordable, unavailable or ineffective for many of those who most need health insurance.
The program now covers about 13,000 Californians — about 2% of the medically uninsurable.
Enrollment has dropped by almost a third since Schwarzenegger became governor.
Subscribers pay two-thirds of the pool’s cost and the state about one-third. The insurers that voluntarily participate — primarily Blue Cross of California and Kaiser Permanente — break even.
Unlike most other states, which finance their programs either directly with tax dollars or with assessments on insurers, California’s subsidies have come only from the state’s tobacco tax.
Lawmakers have kept annual financing at or below $40 million a year, requiring the pool’s administrators to cap its enrollment.
One of the major obstacles is the cost of premiums, which the law sets at 125% of commercial insurance rates. More than a third of pool participants who dropped out this year told the pool’s administrators that they couldn’t afford it anymore.
Despite its cost, California’s high-risk pool is of limited use for people needing extensive medical care, such as those with cancer or chronic diseases. That is because the pool’s benefits are capped at $75,000 a year, lower than the limits of any other state’s pool.
To fix California’s pool, the Legislature this year proposed placing a $1 monthly per customer fee on insurers that sell policies directly to customers.
But in his veto message, Schwarzenegger said the fee would be passed on to customers and thus “only exacerbates their burden.”
http://www.latimes.com/news/local/la-me-uninsured28-2008oct28,0,7559850,full.story
Comment:
By Don McCanne, MD
The concept of health insurance is quite simple. When everyone pays into an insurance risk pool, the many who are healthy are subsidizing the higher costs of those with greater health care needs. Thus everyone receives whatever medical care they need without facing financial barriers to care.
Then why do we have high-risk pools? The simple answer is that health care has become so expensive that premiums for universal pools would be so high that few could afford them. So we move higher cost individuals into high-risk pools in order to keep premiums more affordable for pools of healthy individuals.
Think about the premium for a family in an employer-sponsored pool composed of the healthy workforce and their young healthy families; it now averages $12,600. If we were to add into these pools many hundreds of thousands of individuals with high health care costs, you can only imagine how high the premiums would go.
Although California has set the high-risk pool premium at 125 percent of commercial rates, they have had to cap the benefits at $75,000 to avoid yet higher premiums. Sorry, but for this high cost group, that falls far short of the insurance function of preventing financial hardship in the face of medical need. For adequate benefits, the premiums for high-risk pools would be unaffordable for all but the very wealthiest of us, as if they weren’t too high already.
If we expect to cover high-risk individuals, we do need a transfer from the healthy to the sick. California attempted to take a very small step in this direction by assessing fees on insurance plans in the individual market that would be used to help fund the high-risk pool. But Gov. Schwarzenegger didn’t want to “exacerbate the burden” on the healthy by expecting them to help fund care for the sick. Then who funds the high-risk pool?
We really need to end this game of juggling unaffordable premiums amongst fragmented, inequitable risk pools. It’s time to establish one single risk pool for all of us, and fund it equitably through progressive taxes. The private plans get in our way. We need to dump them.