Most high-risk consumers shun costly safety net
Sun., Jan. 23, 2005
SEATTLE – Only one in seven consumers denied health insurance because of illness is enrolling in the state-established high-risk insurance pool designed to serve as a safety net.
Release of the new data coincides with another round of premium increases for the pool’s 2,800 participants. Some of this month’s boosts exceed 50 percent, and some premiums now resemble mortgage payments, with consumers paying as much as $1,356 a month for coverage.
The high-risk pool offers insurance to people who are not covered by an employer’s group plan or a government program, and are denied individual insurance because they have a costly condition such as HIV/AIDS or kidney disease.
“The sick people are being screened out of the individual health market,” said Sean Corry, a consumer representative on the board of the Washington State Health Insurance Pool, which administers the high-risk program. “The safety net has a huge hole in it.”
The organization plans a survey to find out what is happening to eligible people who don’t sign up with the high-risk pool. Program leaders suspect that some are covered through spouses or workplaces, but they believe that many simply do without insurance. Some people without coverage may wind up receiving care through Medicaid, the state-federal health care program that covers an estimated 50 million poor Americans.
“There is no question our rates are high,” said Karen Larson, executive director of the program. “I think it’s the same concern apparent in the whole market. Health insurance is getting very, very costly.”
The number of uninsured in Washington fell from 1993 to 2000 but has risen sharply since, the state Office of the Insurance Commissioner says. Last year, about 9.5 percent of state residents – more than 600,000 people – were uninsured.
Meanwhile, the percentage of people covered through their employers dropped from 71 percent in 1993 to 64 percent last year.
Larson said state laws governing the high-risk pool allow no option but to continue raising rates. The pool is required to offer benefits that are more generous than a typical individual health-insurance plan, she said. And it must charge higher rates to avoid competing with insurance companies.
The result is that the high-risk pool can cost double that of market plans.
The program is not intended for low-income people but for those who can afford health insurance but cannot get access, Larson said.
The state does offer a small discount for some lower-income people over 50.
The high-risk pool recently introduced new options to try and combat rising premiums – annual deductibles up to $5,000 a year in exchange for lower monthly premiums, for example.
Since 2000, the state has allowed health insurers to reject highest-risk applicants, trying to make the market more viable after insurers refused to write costly individual policies.
By law, those rejected should make up no more than 8 percent of the individual health-insurance market. Last year, 83,000 people applied for individual insurance statewide. Those denied individual coverage are referred to the high-risk pool, which the state says is designed to “provide access to health-insurance coverage to all residents of Washington who are denied health insurance.”
Figures collected by the pool show that in the first 11 months of last year, 5,828 people were rejected for individual health insurance. That’s about 7.7 percent of all those who applied. But just 832 enrolled in the high-risk pool. The pool’s high premiums cover only about 30 percent of the health costs, Larson said. The remainder – about $34 million last year – is divided among health-insurance providers. Companies that are self-insured do not contribute.
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