New High-Risk Pool Requirement Poses First Reform Challenge for New York

Release Date: 04.28.2010
Contact: rdeluna@uhfnyc.org
Contact Phone: 212 494 0733

Twenty years ago, state policymakers rejected special high-risk pools for consumers with health problems, and instead required health plans to accept all New Yorkers for coverage, regardless of their medical status.  But at a well-attended roundtable discussion at the Fund on April 23, senior government leaders, health plan officials, and consumer advocates grappled with how best to set up such a high-risk mechanism, the first major implementation challenge of the new federal health care reform legislation.

Designed to provide a bridge to coverage for uninsured Americans with chronic conditions, until major market reforms and subsidy provisions take effect in 2014, the Interim High Risk Pool (IHRP) presents special challenges for New York and a handful of other “guaranteed-issue” states in the Northeast.  Those states already provide unfettered access to individual coverage, and base rates on the combined experience of the healthy and the sick.  Under the ambitious timetable contained in the Patient Protection and Affordable Care Act, the new high-risk pools are slated to be open for business by the end of June 2010.

"The challenge facing New York—and the Fund—at this exciting time is to stay on top of implementation requirements of the new federal law, and at the same time focus on the longer-term system reform goals that are necessary to make health care reform work,” says Fund President James R. Tallon, Jr.  “We are pleased to have convened what will likely be the first of many productive roundtable discussions, and to continue in our role as a resource in tackling both specific and broader issues related to reform.

Peter Newell, co-director of the Fund’s Health Insurance Project, opened the two-hour session with a summary of eligibility and operating requirements for the $5 billion IHRP program, an overview of the high-risk pools now operating in thirty-five states, key design questions for New York, and an estimate of the population that might be served here.  He concluded with a description of some of the assets New York can tap to solve the problem, including its long experience with reinsurance mechanisms, the platform of broad-based HMO coverage already in place, and the regulatory flexibility the state’s insurance superintendent enjoys under current law to make new products available to individuals.

New York State Insurance Department Deputy Superintendent for Health Troy Oechsner, who is leading a team charged with developing options for the Paterson Administration, followed with an up-to-the-minute account of contacts with federal Department of Health and Human Services (HHS) officials on the issue, and an overview of state options under the federal law.  The threshold issue: Should New York design and administer its own high-risk pool, or cede that responsibility to HHS?  While authorizing HHS to run the program would be infinitely simpler, the decision might result in higher rates for older New Yorkers, and less comprehensive benefits for all enrollees, both options permitted under the federal guidelines.  Mr. Oechsner raised key considerations that have come to the fore, and outlined five options for New York that have surfaced through the Paterson Administration’s outreach to stakeholders.

A number of those considerations were pursued in the wide-ranging discussion that followed.  One fundamental question that emerged, for example, was whether health plans would cover eligible individuals through conventional insurance arrangements—accepting the risk of managing care and paying claims in exchange for premium payments and federal subsidies—or instead serve as administrative agents, with New York State assuming the risk, the way in which many existing high-risk pools operate now.

"The high-risk pool program is aptly named,” notes Mr. Newell.  “There is risk for the President and Congress, who promised immediate benefits for uninsured Americans through reform; risks for New York, at the start of a vitally important new federal relationship; risks for health plans, if funding proves inadequate; and risks for consumers, who, depending on the decisions that are made, may not be eligible to participate in the program or able to afford it."

Download the full presentations and find links to additional resources below.

Downloads:

• Newell: Playing the Hand We're Dealt: New York State and the Federal Interim High Risk Pool (100KB)
• Oechsner: Temporary High Risk Insurance Pool Program: Section 1101 of the Patient Protection and Affordable Care Act (116KB)