Why the high risk pools are struggling — and what it means for health reform

For more than a year now, the health reform law’s insurance program for those with pre-existing conditions has struggled with enrollment. Many expected the program, launched last summer, to be swamped by Americans denied coverage on the individual market.

The crowds never showed and the program’s enrollment has lagged far behind projections. The chief actuary for Medicare initially estimated that 375,000 people would sign up by the end of 2010. As of Oct. 1, only 41,427 have enrolled.

A new report from the Government Accountability Office explores why that happened, suggesting that the speed and intensity with which the program was rolled out may explain the dismal enrollment numbers.

The GAO report compares the rollout of the high-risk insurance pools with that of the Children’s Health Insurance Program, a coverage option for low-income that started in 1997.

States could choose whether to participate in the CHIP program and uptake was initially slow; only 8 states opted to run a CHIP plan in the program’s first year. But on the high-risk pools, all 50 states and the District of Columbia started at pretty much the same time:

The high-risk pools were also running on a tight timeline: After the health-reform law passed, states had only 90 days to get their high-risk pools up and running. There was no similar requirement for the CHIP program; states could opt in to the coverage plan at any time.

The GAO study is most interesting, however, not necessarily for what it tells us about high-risk pools but rather what it might say about the new health exchanges. Every state will launch an exchange, or marketplace, for health insurance by 2014, and there’s a lot of debate in health policy right now over what they’ll look like, or if states will even be ready in time.

In one sense, the exchanges face a problem pretty similar to the high-risk pools: All 50 have to get up and running at once. States are, quite literally, all over the map in terms of what they’ve done to get ready for that. Here’s a map from consulting firm Manatt (larger version here) that shows how much states have done to prepare for a health exchange:

Getting all those states to a place where they can run a health-insurance exchange two years from now is going to be a massive lift. It’s the same challenge that the federal government faced with the high-risk pools in getting a wide array of programs off the ground at once.

But there’s one thing that the exchanges have that the high-risk pools didn’t: A relatively long lead time. States have gotten nearly four years to prepare to launch health exchanges. The majority have debated legislation to set up a marketplace, and 14 states have passed laws on the issue. In that way, it feels a bit similar to CHIP: States have some time to think about their health exchange and lay new groundwork in a way they really didn’t with the high-risk pools.