Center for American Progress

High-Risk Pools Won’t Work for Nationwide Health Care Reform
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High-Risk Pools Won’t Work for Nationwide Health Care Reform

In theory, high-risk pools could provide a viable option for high-cost individuals. In practice, using these pools as a model for nationwide reform would be extremely expensive.

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Under conservative plans for health care reform, insurance coverage purchased in the individual market would be subsitituted for group coverage, such as the insurance that many Americans have through their employers. These proposals also call for expanding existing high-risk pools to provide coverage for people with chronic illnesses and costly health histories.

High-risk pools have been around for over 30 years and currently exist in 35 states, but they only cover about 207,000 Americans. The biggest barrier to enrollment is cost. High-risk pools are inevitably expensive because all of the enrollees have medical conditions that could potentially result in costly medical bills, which means the pools cannot spread costs across low-risk and high-risk individuals. Despite attempts to cap premium rates, the coverage is still unaffordable for many. 

Some proponents refer to high-risk pools as “safety nets,” but in reality, the pools do not provide a guarantee of coverage. Most have an exclusion period—some period of time during which an insurer can exclude coverage for certain medical conditions that exist before the insurer issues coverage. These exclusion periods can last anywhere from 90 days to 1 year. Some pools cannot afford to admit more individuals; they either have waiting lists or are completely closed to new enrollees. In the meantime, individuals with costly conditions must go without coverage.

In theory, these pools could provide a viable option for high-cost individuals. In practice, using these pools as a model for nationwide reform would be extremely expensive. Policymakers should consider other approaches to providing affordable, adequate coverage to costly individuals, such as expansion of group coverage options and guaranteed availability of health insurance, known as guaranteed issue in insurance parlance.

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