High Risk Pools and the Patient Protection

2011-Nov-01 - Christopher H. Hause

As we inch closer to 2014, some high risk pools are discussing whether their plans should begin implementing provisions under the Patient Protection and Affordable Care Act (PPACA). This idea has merit as it will smooth policyholder transition into the contemplated Exchanges. However, there are also complications that need to be addressed.

Some of the key PPACA provisions that may impact High Risk Pool (HRP) plans are outlined below along with some brief thoughts on potential issues.

1. Plans may not impose an exclusion of benefits or limit coverage based upon a pre-existing condition for an individual under age 19.

HRPs may have difficulty separating this cost if plan premiums are based on family coverage. Additional claims currently excluded will have to be assessed. State pool plans will need to be compared to Federal plans.

2. Preventive Care, immunizations and screenings must be provided without cost sharing.

Some HRP plans charge a copay for office visits. Identifying preventive services and separating charges may be problematic.

3. Premium variation by age of a maximum of 3:1.

HRP plans may have to adjust rates at either or both ends of the age spectrum. Choices made here may result in subsidies by age group or a redistribution of in force.

4. Coverage of dependents up to age 26.

The expansion of dependent care coverage may be costly for some HRPs. Plans may expect additional claims without any additional premium revenue.

5. No annual and lifetime limits.

Annual limits are predominantly phased-out over the next three years but outliers are prevalent in HRPs. Removal of annual and lifetime limits will expose plans to substantial risk.

The above is just a sampling of some of the issues that may arise as HRPs think about the transition to 2014. If you would like to discuss any of the issues further, feel free to contact Hause Actuarial Solutions.