Health Insurance: Enrollment, Benefits, Funding, and Other Characteristics of State High-Risk Health Insurance Pools Page: 2 of 41
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for coverage of preexisting conditions to discourage medically uninsurable individuals from
foregoing health insurance until they require care.3
Because of the higher health care costs typically incurred by medically uninsurable
individuals, all pools operate at a loss. Premiums for HRP health plans are higher than for
plans offered to healthy individuals in the private health insurance market; however, these
premiums are capped to limit enrollees' costs and are thus insufficient to cover the costs of
enrollee health care claims.4 As a result, all HRPs supplement their revenues through various
funding mechanisms, such as assessments on health insurance carriers and state general
revenues.
Federal grants are also awarded to establish and fund HRPs. As part of the Trade Adjustment
and Assistance Reform Act of 2002, Congress established a program to provide grants to
HRPs to offset losses and establish HRPs-commonly referred to as operational and seed
grants, respectively.5 Subsequent legislation authorized funding for the program through
2010, including grants to be used for supplemental consumer benefits-commonly referred to
as bonus grants.' Since 2003, the grant program has awarded nearly $286 million to state
HRPs for various purposes. The Centers for Medicare & Medicaid Services (CMS), within the
Department of Health and Human Services (HHS), administers this federal grant program.
Recent health care reform proposals call for an expanded role for HRPs to enhance health
insurance options for the medically uninsurable. Because of the federal funding provided to
HRPs, you expressed interest in obtaining data on several aspects of each state HRP. In this
report, we describe (1) HRP enrollment and enrollee demographics; (2) HRP plans' cost-
sharing provisions, coverage restrictions, and premiums, and comparable information for
certain private market health plans; and (3) HRPs' governance, expenditures, and funding.
To address our three objectives, we administered a Web-based data collection instrument
(DCI) to senior officials of the 34 HRPs in operation in 2008.' The data obtained were
generally for fiscal year 2008, although for certain questions we obtained additional historical
data. Because each HRP offers multiple plan options to enrollees, in order to simplify
comparisons of plan-specific cost-sharing provisions, benefits, coverage restrictions, and
premiums, we limited many of our comparisons to each pool's most popular plan-i.e., the
plan chosen by the most enrollees. Collectively, the most popular plans covered 41 percent of
3Most states offer waivers for the waiting period for coverage of preexisting medical conditions.
Examples of criteria to qualify for a waiver often include involuntary termination of coverage by a
previous carrier or previous creditable coverage within the past 12 months, among others. HIPAA-
eligible enrollees are not subject to preexisting condition restrictions.
4Where funding is limited, an HRP may need to restrict enrollment by various means, such as by
temporarily closing the pool to new enrollees or maintaining a waiting list.
5Pub. L. 107-210, Div. A, 201(b), 116 Stat. 935, 959.
'See, the Deficit Reduction Act of 2005, Pub. L. 109-171, 6202, 120 Stat. 4, 134 (2006) and the State
High Risk Pool Funding Extension Act of 2006, Pub. L. 109-172, 2, 120 Stat. 185. The State High Risk
Pool Funding Extension Act authorized a total of $75 million in operational and bonus grants for each
of fiscal years 2006 through 2010 and $15 million in seed grants for fiscal year 2006. Bonus grants are
to be used for supplemental consumer benefits such as premium subsidies, disease management
programs, and HRP expansion efforts.
7We did not include the North Carolina HRP in our DCI because it was not operational until 2009.GAO-09-730R State High-Risk Health Insurance Pools
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United States. Government Accountability Office. Health Insurance: Enrollment, Benefits, Funding, and Other Characteristics of State High-Risk Health Insurance Pools, text, July 22, 2009; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc302766/m1/2/: accessed April 23, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.