In the GOP health care bill that passed the U.S. House of Representatives this week, there is an echo from Colorado’s health-policy past.
As part of the bill’s controversial provision that could allow insurers not to cover customers’ pre-existing conditions, there is also a requirement: In order to trigger the provision, states must first set up high-risk insurance pools.
What are high-risk pools? They’re something Colorado and numerous other states have already tried — with mixed results that are still being debated today.
In theory, the idea is simple. Because a small percentage of people make up an enormous share of health care spending, high-risk pools group all those people in one place, on the same insurance plan. That makes the remaining mainstream insurance pool relatively healthier, meaning premiums for people in that group should go down. The people in the high-risk pool pay more for coverage, but they aren’t shut out entirely.
In practice in Colorado?
“It certainly was a challenge,” said Marcy Morrison, who, as the state’s insurance commissioner during Gov. Bill Ritter’s administration, oversaw Colorado’s high-risk pool, called CoverColorado. The pool ran from 1991 until 2014, when the Affordable Care Act’s prohibition on insurers excluding people with pre-existing conditions made the program obsolete.
The problems, Morrison said, came down to money.
People enrolled in the pool Morrison oversaw, which was called CoverColorado, paid premiums that were as much as 50 percent higher than market average. Taken together, though, those premiums were only enough to pay for about half of CoverColorado’s expenses. Contributions from the state’s unclaimed property fund and charges passed on to every other health insurance customer in the state made up the rest.
To keep costs down, CoverColorado imposed a $1 million lifetime benefit cap on enrollees and made people wait several months after joining before the plan would pay for expenses relating to a pre-existing condition. And Morrison said the plan still couldn’t accommodate everybody who wanted to join. The plan, she said, wasn’t sustainable.
“The numbers were obviously going the wrong way for us simply because the number of people who needed CoverColorado,” Morrison said.
These struggles led to mixed results for the plan’s beneficiaries.
Erin Eastvedt, an attorney in Longmont who was denied private insurance because of a childhood condition, said she appreciated the care she received on CoverColorado but not so much the premiums at upward of $600 per month. After the Affordable Care Act passed, she said, she was able to buy a plan on the state’s health insurance exchange for about a third of that.
Lynn Carretta, who lives in Montrose and couldn’t get insurance after a knee replacement, said she tried to get on CoverColorado, only to be taken aback by the price. The plan wanted to charge her $800 a month in premiums, with a $10,000 deductible, she said.
“I was like, ‘That’s not insurance, that’s ransom!'” she said.
But, for Dan Nassimbene and his wife, CoverColorado was a godsend. Nassimbene’s wife had cancer, and he said they were able to buy a plan for her through CoverColorado for about $300 a month. When they later bought a plan on the state’s Obamacare exchange, it cost three times that.
Nassimbene and his wife, who live in Colorado Springs, are now covered under a religious cost-sharing ministry called Medi-Share. But, if they weren’t, they could be paying the equivalent of a mortgage payment every month for insurance. At those prices, he said, protections for pre-existing conditions are meaningless.
“That’s everybody right now, if you’re in the private market,” he said.
Compared with some of today’s insurance rates, CoverColorado’s pricier premiums now look downright reasonable. In 2007, a 40-year-old, nonsmoking man could buy a plan on CoverColorado for $223 a month, with a $2,000 deductible, according to figures provided by Linda Gorman, a health policy analyst. Currently, the cheapest plan that same man could buy today on the state’s insurance exchange, assuming he lives in Denver, is $253 a month with a $3,000 deductible — although tax credits could lower that cost.
Linda Gorman, who works with the free-market Independence Institute, said families often find themselves paying much, much more for insurance that meets their needs. And part of the reason, she said, is that large numbers of relatively healthy people are having to pay to cover the needs of a small number of high-cost people.
“I can’t tell you how much damage Obamacare is doing to the household budgets of people in the individual market,” Gorman said.
Morrison said CoverColorado was a good value to people enrolled on it. But, she said, what those enrollees didn’t see were the ongoing behind-the-scenes financial struggles to keep the plan afloat.
And that is also where critics of current GOP plan find fault.
The bill, known as the American Health Care Act, makes more than $100 billion available to states over nine years to set up high-risk pools, although states could also use that money for other purposes. If all that cash went to the pools, the health care consulting firm Alavere has estimated it would be enough to cover 600,000 people nationally.
How many people could be excluded from insurance for pre-existing conditions and need to be covered by the pools? An estimated 2.2 million nationwide, according to Alavere.
In Colorado, the Kaiser Family Foundation has estimated that 753,000 adults could be denied coverage based on a pre-existing condition if the Affordable Care Act’s regulations are waived. At its peak, CoverColorado served only about 14,000 people.
And these are the people whose health care costs the most. The Kaiser Family Foundation has reported that the top 5 percent most-expensive people in the health care market account for half of the nation’s health spending — with the top 1 percent taking up nearly a quarter.
“If you go back to a pool-type of operation, you really do have to have deep pockets,” she said.
With possible changes to federal health care policy looming, Colorado lawmakers are again exploring the idea of creating a high-risk pool. A bill at the state Capitol would create a study on the feasibility of launching another pool or similar program, a question that has taken on new urgency with the passage of the Republicans’ plan.
But, at the bill’s first hearing this week, lawmakers quickly came face to face with the thorniness of the task.
“Please, be aware,” Virginia Morrison Love, a lobbyist for the industry group America’s Health Insurance Plans, said at the hearing, “these type of programs take a lot of money. They take a lot of federal funds, hopefully.”
