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The GOP likes high-risk pools; CA's experience was negative

Beginning in January, California will limit its Medi-Cal recovery claims to costs associated with nursing home care, which is required by federal law.
Pictures of Money via Flickr Creative Commons
Beginning in January, California will limit its Medi-Cal recovery claims to costs associated with nursing home care, which is required by federal law.

The GOP health care bill that cleared the House would give states the option of setting up high-risk pools to help pay for the care of their sickest residents. California has had experience with high-risk pools, and it was largely negative.

 If the House bill becomes law, states would have the option of setting up these pools if they choose to let insurance companies charge people with preexisting conditions more for their coverage.

California set up its own high-risk pool - the Major Risk Medical Insurance Program - in 1991. Experts say the program didn't work well. 

The state used enrollees' premiums and tobacco tax revenues to pay for the program, but that wasn't sufficient, says Jennifer Kent, director of the California Department of Health Care Services. She says premiums were expensive, and the program had to institute a $75,000 annual spending cap and a $750,000 lifetime spending cap. 

California also had to restrict enrollment; in 2001, more than 7,000 people were on a waiting list to get into the high-risk pool, says Kent.

"By the time we were able to open up slots sometimes those individuals had died waiting for coverage," she says.

California's problems were not unique, says Nadereh Pourat, Director of Research at the UCLA Center for Health Policy Research. Similar high-risk pools in other states "continuously had to get additional dollars to cover the costs, or they had to add limitations, restrict the benefits, or restrict enrollment so that they could actually cover people," she says.

States no longer needed high-risk pools once the Affordable Care Act forbade insurance companies from denying coverage to people with preexisting conditions.

With Republicans in Congress seeking to resurrect them, many experts say the House bill doesn't commit nearly enough money to make them work. 

It’s unclear if the House bill’s plan for high-risk pools will survive in the Senate.

"We have to keep in perspective that the ink is still wet on the bill," says David Duker, Chief Strategic Officer with the insurance services firm Word & Brown Companies. "So, we’re not quite there yet."

Since the beginning of this year, leaders of Covered California, the state department of insurance and Gov. Brown have all been public about their opposition to any plan that upsets California’s Obamacare programs. The state has cut the number of people without insurance by more than half. 

Political observers doubt they’ll be eager to adopt a policy that would allow sick people to be charged more for health insurance. But if some form of the House bill becomes law, a general increase in the cost of insurance could force a reassessment. 

"Policy makers in California could face a lot of pressure to consider those types of changes," says Erin Trish, assistant research professor at the USC Schaeffer Center for Health Policy and Economics.