The high risk of high-risk pools

When the health reform law’s high-risk insurance pools launched last summer, there was a lot worry that the new coverage option would be swamped by demand from uninsured individual. Then, there was worry about too little demand: The insurance pools saw anemic enrollment, with some states enrolling just a few dozen subscribers. And now, there’s a new worry: The high-risk pools attracted such expensive patients, with costly medical needs, that nearly a quarter are running short on cash.

Nine states have asked HHS for additional funds to continue running their Pre-Existing Condition Insurance Plans, the program meant to cover some who insurers have denied coverage between now and 2014, when insurers’ ability to discriminate on preexisting conditions ends. Two states, New Hampshire and California, have requested additional funds twice now, as their high-risk pool’s bills exceed expected costs.

Montana is among the states seeking more funds, and it points at the type of people who enrolled in the plan as the reason for it’s request. The Montana plan has 269 members, a $16 million budget and, via the Billings Gazette, not enough money:

The $16 million, issued in mid-2010 as part of the federal health reform law, was supposed to cover costs of the subsidized health insurance program through 2013 for as many as 400 people covered by the pool.

Yet initial cost estimates turned out to be too low, because the medical costs per covered customer are higher than expected, said Cecil Bykerk, executive director of Montana’s pool.

“Our numbers (for enrollment) were fairly accurate, but per-member, per-month claim costs have been much higher than the original assumptions that we used,” he said.

This isn’t exactly surprising: When the federal government created a new health insurance program catering to those who have had trouble obtaining insurance in the past, it makes sense that those who have very high medical costs would be first in line. It hasn’t helped that the premiums have proved relatively pricey: In Montana, the monthly premium for the high risk pool is as high as $681. Anyone who enrolls in a plan with that kind of premium likely expects to have relatively expensive medical costs in the near future.