States decide on risk pools as first major health law decision

Politico reports that establishing high-risk insurance pools, the first major decision after the enactment of health care reform, "has come and gone with the decisions so far made mostly along party lines." Many Democratic governors "decided to help the Department of Health and Human Services by creating the pools themselves with federal funding. Most Republican governors decided to allow the federal government to establish its own high-risk insurance pool in their states, essentially punting." The pools are temporary, lasting only until 2014, and are meant to help those with pre-existing conditions find and afford health insurance. They "could be a telling sign of how well the states and federal government work together on putting the rest of the overhaul into action."

"Not all states have responded to HHS yet. But of those that did, 15 said they would leave the job to HHS. Twenty eight states, plus the District of Columbia, agreed to do the work under contract." Three states that declined are led by Democratic governors and many who turned down the offer said that the money the federal government was offering to help — $5 billion for all states together — wasn't enough (Haberkorn, 5/3).

The Hill: "[A]ll but five of the 21 states that opted to run their own pools are led by Democrats. The exceptions: Connecticut, Rhode Island, South Dakota, Vermont and California, where Arnold Schwarzenegger on Thursday became the first Republican governor to endorse the health reform law. ... California would get the most, $761 million, while North Dakota, Vermont and Wyoming would each get $8 million. The high-risk pools are scheduled to begin operating July 1." Some observers are questioning the liquidity of such pools, however. "Rick Foster, the chief actuary for the Centers for Medicare and Medicaid Services, pointed out in an April 22 analysis of the health reform law that 'by 2011 and 2012 the initial $5 billion in federal funding for this program would be exhausted, resulting in substantial premium increases to sustain the program; we anticipate that such increases would limit further participation'" (Pecquet, 5/1). 

The Dallas Morning News: Texas will not help the federal government run the pool, according to a letter from Gov. Rick Perry to HHS Secretary Kathleen Sebelius. "Texas is among 35 states that already have high-risk pools. About 26,500 people are enrolled in the existing state program, which charges about twice the rate of standard health insurance, said Stacey Pogue, senior policy analyst at the nonprofit Center for Public Policy Priorities, which advocates for low-income Texans. The new federal program should lower those costs by half, Pogue said" (Hoppe, 5/1). 

Detroit Free Press: Michigan will help create the pool and will likely do so by "subcontracting the job to one of the state's health insurers, state officials said Friday. ... State officials plan to meet with health insurance companies to determine the best way to create a pool here, insurance commission spokesman Jason Moon said. No decision has been made about how the pool will be run, Moon said" (Anstett, 5/1).