More and more Americans are finding the rising costs of health insurance coverage out of their budget. Group plans, like the ones offered through work, are one way to distribute the financial burden of health care. But what if you aren't part of a group plan and you have a chronic illness? You've probably been denied a policy or offered one with unreachable deductibles. Depending on the state you live in, there could be a group pool specifically for you. High-risk health insurance pools are state-mandated programs designed to provide health insurance coverage to those who are unable to purchase private health insurance due to a pre-existing condition. In this article, we'll take a look at high-risk health insurance pools to get an idea of how they work.
High-risk health insurance pools, which began in Minnesota in 1976, are now offered in more than 30 states, with more than 180,000 people enrolled nationwide [source: Kaiser]. These pools are typically used as a last resort, or to fill in the gap should you find yourself between group policies. But thousands couldn't live without the coverage these pools provide. By gathering "uninsurable" people into a single group, the state can offer them health care -- at a higher cost.
Who are the uninsurables?
High-risk insurance pools are designed for people who can afford to buy insurance, but were denied coverage because of a pre-existing condition. Insurance companies can deny coverage because of a fatal disease, a manageable chronic disease, or even the frequency of routine check-ups. Many people in high-risk insurance pools have received organ transplants or suffer from leukemia, Type 1 diabetes, or cirrhosis. Simply having such an illness isn't enough to qualify for a high-risk pool, though, each state has rigorous eligibility guidelines. Normally, you have to provide proof of state residency, proof of rejection by an insurance carrier, or proof of a denied claim for treatment of pre-existing conditions.
Those not eligible for these high-risk pools include inmates, and people who are also eligible for Medicare or Medicaid, or anyone on COBRA. High-risk pools aren't necessarily a guarantee of coverage though; even the high-risk pools have certain conditions that they can't insure. These too, vary by state. States usually limit the number of people in the group, in which case waiting lists are provided.
In the next section, we'll discuss who's covered and how much it's going to cost them.
Coverage and Cost
Plans offered by high-risk pools are comparable to most major medical plans, and have a wide range of premiums and deductibles. Benefits also vary but usually include prescription coverage, maternity care and disease management. States use different systems to deliver these services, such as traditional indemnity plans and HMO styled networks, but the PPO style plan is the most popular.
However, getting coverage isn't exactly easy. It's hard to find continuous coverage from an employer health plan to a high-risk pool plan. If your pool is full, you have to be placed on a waiting list to get in. In addition to the waiting list that could potentially halt your coverage, the high-risk pool plan often doesn't immediately cover the condition which drove you to high-risk coverage in the first place. Many pre-existing conditions require a waiting period before you can get coverage for treatments relating to that condition. Normally this waiting period is about six months, but this time frame can vary depending on the state you're in and the condition you're suffering from.
What Does it Cost?
In short, these plans are expensive. While there's some federal grant money set aside for these high-risk pools, and occasionally funds are collected from taxes on hospital revenues, the majority of the expenses in the plan are paid by the members. Because this group of people are more likely than the general population to use their insurance benefits, these plans are more expensive than a similar policy from a private insurer. State laws typically cap the rates, but these caps still allow for rates between 130 percent and 200 percent of the market value. The cost you would pay to be a part of such a group would depend on your medical history, age and the guidelines set forth by your state.
For more information on high-risk health insurance pools, health insurance and similar topics, see the links on the next page.
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More Great Links
- American Diabetes Association: State High Risk Pools
- COBRA- High Risk Insurance Pools. http://www.cobrahealth.com/statehighriskpools.html
- The Commonwealth Fund: Federal Aid to High Risk Pools. http://www.cmwf.org/usr_doc/Pollitz_highriskpools_875.pdf
- The Commonwealth Fund: Insuring the Uninsurable. http://www.commonwealthfund.org/usr_doc/achman_uninsurable_472.pdf?section=4039
- Health Administration Responsibility Project: High Risk Insurance Pools. http://www.harp.org/shrhip.htm
- Health Affairs: Using Tax Credits and State High Risk Pools to Expand Health Insurance Coverage. http://content.healthaffairs.org/cgi/content/full/hlthaff.w2.345v1/DC1
- Health Insurance Resource Center: High Risk Pool Info. http://www.healthinsurance.org/riskpoolinfo.lasso
- Insure.Com: High Risk Insurance Pools. http://www.insure.com/articles/healthinsurance/high-risk-insurance-pool.html
- National Association of Health Underwriters: High-Risk Health Insurance Pools. http://www.nahu.org/consumer/HRPGuide.cfm
- StateHealthFacts.Org: State High Risk Insurance Pool Participation. http://www.statehealthfacts.org/comparetable.jsp?cat=7&ind=360