High-Risk Insurance Pools: What are they?

Want to Know What High-Risk Insurance Pools Are?
One of the many parts of the new Patient Protection and Affordable Care Act (PPACA) is the creation of high-risk insurance pools, starting on July 1, 2010. Well, you probably have a few questions on high-risk insurance pools. What are they? Do they benefit you? Will these insurance pools cause an increase in your tax rate?


High-risk insurance pools are pools of money allocated to help provide health insurance for people with pre-existing medical conditions. The majority of individuals in the United States of America are covered with group health insurance plans provided by employers, and many more are capable of buying individual health insurance plans from companies such as Aetna and Humana. Even low-income families can obtain health insurance from state programs. However, someone with a pre-existing condition like, for an example, diabetes can be denied health insurance from private companies.

According to the PPACA, nobody can be denied health insurance based on pre-existing conditions starting January 1, 2014. Yet what can one do for the three and a half years until then? This is where high-risk pools come into the picture. The federal government has allocated five billion dollars to provide health insurance for those with pre-existing conditions that are unable to get coverage from private companies until January 1, 2014. The dispersal of these funds is not uniform among all fifty states; it is based on estimates of how many people will use it in each state.



Distribution of funds among the fifty states



One can only apply to receive benefits from the high-risk insurance pool if one has been denied coverage and has not had health insurance for at least six months. Nonetheless, it is not a free governmental program; insurance premiums must be paid in order to obtain coverage. In general, the premiums will be on par with those of plans offered by private corporations within the state that provide similar coverage. The good thing about this for most people in the United States is that it ensures that the high-risk insurance pool is self-sustaining: the program will not be an extra burden on taxpayers.

Yet will five billion dollars be enough? Estimates of the number of individuals that will take advantage of the high-risk insurance pool range from 200,000 to 700,000 Americans. It is apparent that some states are worried about adequate funding throughout the duration of the program. Only 28 states (and the District of Columbia) have set up their own high-risk insurance pools by federal guidelines; the other 22 have rescinded their responsibility of administering their high-risk pools to the federal government. In the case of financial failure of the program in these states, the unpaid bills will be transferred back to the federal government rather than the individual state governments. These states may just be watching their backs, but perhaps they are not confident in the feasibility of the high-risk pools.



See if your state's high risk pool is state-run or federally-run.




Until next time!