High-Risk Insurance Rate Cut Aims to Spur Enrollment

By: - June 2, 2011 12:00 am

LOWER RATES: Starting July 1, the federal government will cut its insurance rates for people who have been denied coverage by private carriers because of pre-existing medical conditions, the Department of Health and Human Services announced this week. Rates will drop by as much as 40 percent in 18 of the 23 states where the federal government offers such a plan. In all other states, a state-run high-risk insurance plan is offered.

In addition to moving rates closer to what most Americans pay for individual coverage, the federal government is making the application process easier. Instead of requiring a rejection notice from an insurance company, the administration says a letter from a medical professional outlining the condition will suffice. The administration also said it will pay insurance brokers to help people sign up.

The changes are aimed at spurring enrollment in the Affordable Care Act program, designed to be a bridge to 2014 when insurers will no longer be allowed to deny coverage to people with conditions like cancer, diabetes and asthma. Since the so-called high-risk insurance plans were offered a year ago, enrollment has been far lower than expected. Out of an estimated 4 million uninsured Americans eligible for the plan, only 18,000 have signed up.

GOP EXCHANGES: Health insurance exchanges where individuals and small businesses can compare and purchase insurance plans are a state responsibility under the Affordable Care Act. But many Republican governors have been dragging their feet on the project in hopes that the U.S. Supreme Court will overturn the law. Meanwhile, at least six GOP governors have taken the opposite approach. Mitch Daniels of Indiana , Scott Walker of Wisconsin and Haley Barbour of Mississippi are allowing the projects to move forward by executive order. Brian Sandoval of Nevada , Nathan Deal of Georgia and Bob McDonnell of Virginia have endorsed legislative proposals for state exchanges, with Virginia’s bill now signed into law.

At the same time, three other Republican governors — Rick Scott of Florida , Bobby Jindal of Louisiana and Susana Martinez of New Mexico — have adamantly refused to support an exchange. Martinez, in fact, vetoed her legislature’s exchange bill last month.

So far, only seven states have enacted exchange laws, including Massachusetts and Utah, which had exchanges before the federal health law was signed. In addition to Virginia, California , Maryland , Washington and West Virginia -all states led by Democratic governors — have enacted exchange laws. More than half of state legislatures have considered exchange bills this session.

NO BLOCK GRANT: Most Americans oppose the plan put forward by Republicans in the U.S. House of Representatives to transform Medicaid into a block grant, according to a new poll. The survey was conducted by the Kaiser Family Foundation. According to Kaiser, 60 percent of Americans want Congress to keep Medicaid in its current form with the federal government guaranteeing coverage and setting minimum benefits for states to follow.

The House voted in April to convert Medicaid from an open-ended entitlement program, in which the federal government pays nearly 60 percent of costs, into a federal block grant to states. Under the proposal, each state would get a fixed amount of federal money based on the previous year’s spending. In exchange for what would be less aid over time, states would get new freedom from federal rules to decide who to cover and what services to provide. The survey also found that 51 percent of respondents reported some personal connection to Medicaid, including having received health coverage themselves (20 percent), or having a friend or family member who had received assistance (31 percent).

SINGLE PAYER: Governor Peter Shumlin, a Democrat, last week signed Vermont’s much-discussed single-payer health insurance plan into law . The next step is to build the first taxpayer-supported health insurance system in the country. Considered too controversial for national adoption when the federal health care law was debated, a single-payer system would nearly eliminate the state’s private insurance market. Instead, doctors and hospitals would send their bills to one insurer — the state. Falling short of a purely public model, the plan will allow individuals to purchase supplemental insurance or keep private individual insurance policies, which about 20 percent of the state’s 620,000 residents have. Shumlin has touted the plan as a job-producer, because he says it will allow small businesses to flourish without the burden of providing health insurance to their employees.

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Christine Vestal

Christine Vestal covers mental health and drug addiction for Stateline. Previously, she covered health care for McGraw-Hill and the Financial Times.