High Risk Pool to Save Insurers Millions
The federal program will extend coverage and save Oregon insurers millions
It could also save Oregon health insurance companies about $65 million over the next three years from the assessments they pay for the current state high-risk pool, which began in 1990.
Last year, insurers paid $90 million to the Oregon Medical Insurance Pool to cover fewer than 15,000 people who were either rejected or would have been rejected for coverage.
With the federal high-risk pool to provide $66 million in new funding, enrollment in OMIP will shrink. The assessment will in turn likely drop to around $80 million this year and remain the same over the next two years, reducing the costs to Oregon health insurers by nearly $40 million in 2012, according to an analysis by state officials.
Without the federal high-risk pool, the assessment would peak at more than $130 million in 2013.
There is still some uncertainty, however, on the exact number of people in Oregon the program will be able to cover, which could limit these estimates.
“We are still waiting to hear from the feds about whether they will let us operate the program this way,” said Tom Jovick, administrator of the Office of Private Health Partnerships, who was expecting a call any day now.
The state would like to enroll up to 3,900 people by December 2012, Jovick said, but at that point would run out of federal money and have to transfer the pool to OMIP. If not, the program would likely cap enrollment at about 2,000 people, Jovick said.
“They may want us to enroll people and maintain those people in coverage through 2013,” Jovick said.
The new federal program was unveiled this week by the Obama administration as a major stopgap measure before the full set of federal reforms takes effect in 2014. But clearly it has limits. It provides $5 billion to states nationwide – $66 million to Oregon – over the next three years.
Oregonians can begin signing up this month through the Office of Private Health Partnerships for the plan which begins Aug. 1 once the feds approve a contract with Oregon. The federal government has signed contracts so far with just three states to start enrollment on July 1: Montana, Alaska and Iowa.
Each year, Oregon insurers reject more than 20,000 people for individual health coverage, often nearly 1-in-4 applicants. Sadly most will still go without coverage because of costs or the six-month waiting period by the federal program.
As the federal high-risk pool fills with enrollment, Oregon’s own high-risk pool will continue just as it has for the past 20 years until 2014 when both programs will be dissolved. In the meantime, here are a number of ways the two programs differ:
- Eligibility – You must have a qualified pre-existing condition to qualify for both programs, though you have to be uninsured for at least six months to enroll in the federal high-risk pool. There is no waiting period for Oregon’s high-risk pool. This prevents current OMIP enrollees from entering the federal pool.
- Premiums – In the federal program, premiums paid by individuals reflect the average market rate for a comparable plan, while member premiums for the Oregon high-risk pool can be up to 25 percent higher than the market average.
- Enrollment – The federal high-risk pool is expected to reach an estimated 6,700 people with a peak enrollment up to 4,000 in 2013. Enrollment in the Oregon Medical Insurance Pool is expected to decline to less than 13,000 in 2013. The program has covered more than 60,000 people since inception.
- Benefits – Under the federal pool, benefits are richer. OMIP has a six-month waiting period for treating certain pre-existing conditions while the federal plan does not. The federal plan also has a $5,000 out-of-pocket maximum for prescription drugs while OMIP plans do not.
For more information
For related articles on high risk insurance click here.
For more information about the Oregon Medical Insurance Pool or the new federal high-risk insurance pool click here.
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Comments
This doesn't save insurers any money, it will save anyone covered on a fully insured health plan and some people who are covered on self funded health plans the OMIP assessment.
The insurers don't pay this, they simply collect the money from the insured and then pass it along. No different than the taxes listed out on your phone bill or a hotel tax.
When I read your headline and then the article you make it sound the insurance companies are somehow winning because of the new high risk pool.
The real question should be how in the world is it going to be sustainable to have a high risk pool with NO pre-existing condition limitation? This is would be like being able to call State Farm AFTER your house burns down and getting replacement coverage on the house.
Another good article would be on who exactly pays the current OMIP assessment and who benefits from it. Anyone covered by a fully insured plan pays it but generally would not use OMIP they would use portability. The large self funded groups do not pay the assessment and their employees don't have access to portability so they end up on OMIP yet they don't pay the assessment.
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