Bills Wind Down The Texas Health Insurance Risk Pool When It Is No Longer Needed

Since 1998, the Texas Health Insurance Pool (the state’s high risk pool) has been providing health insurance coverage to Texas residents who cannot get coverage in the private market because they have pre-existing medical conditions. Since its inception, the pool has offered a lifeline to many Texans, but because its coverage is expensive—as required by state law, pool premiums are generally twice as high as comparable coverage—many more Texans with preexisting conditions have remained uninsured.

The national health reform law, the Affordable Care Act, makes fundamental changes to the insurance market that remove the need for states to have high risk pools.  Starting on January 1, 2014, health insurance companies can no longer deny a person coverage because of pre-existing conditions or charge them higher premiums.  Texans covered by the pool today will be able transition into the new Health Insurance Marketplace, where they can choose among a wider array of plan options and have access to some benefits, like maternity, that are not offered by the pool. For example, Sally Jo Hahn, profiled in this YNN story last year, pays $640 a month in Texas’ high-risk pool, and she’s looking forward to more affordable coverage in 2014.

Coverage in the Marketplace will be more affordable than the state’s risk pool.  Low- and moderate-income pool enrollees who get pool subsidies today will pay less in the Marketplace, where more generous subsidies are available.  And even higher income pool enrollees who will have to pay full-price premiums in the Marketplace will fare better, because if the risk pool were to stay open, its premiums would have to climb to twice that in the Marketplace.

SB 1367 by Senator Duncan and HB 2791 by Representative Smithee both wind down the state pool in a responsible manner, by directing the pool board to develop a plan to dissolve the pool, transferring pool authority to the Texas Department of Insurance (to ensure medical claims will be paid, for example), and ensuring that pool coverage doesn’t end before Marketplace coverage takes effect.  Abolishing the pool when it is no longer needed makes sense, and helping pool enrollees move to the Marketplace as soon as it opens not only will result in lower costs for pool enrollees, but also will mean they enter the Marketplace when the most generous federal “reinsurance” funding is available to lessen costs for Marketplace plans that enroll a larger share of less healthy enrollees.

It is important that the pool stay open long enough to allow members to move into the Marketplace.  The Marketplace is scheduled to begin open enrollment on October 1, 2013 with coverage taking effect on January 1, 2014.  The bill requires risk pool coverage to end as of January 1, 2014 (as long as the Marketplace has guaranteed-issue coverage effective).  That means pool members will have less than 3 months to shop for and enroll in Marketplace coverage if they want to avoid any gaps in coverage and have their new policy effective on January 1. That is a quick transition, but doable if the pool provides meaningful education and transition assistance to its 23,000 members. We are pleased to see that the pool’s outreach and education efforts about Marketplace coverage are already underway.

Written by Stacey Pogue, Center for Public Policy Priorities, and cross-posted from the Better Texas Blog.

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4 responses to “Bills Wind Down The Texas Health Insurance Risk Pool When It Is No Longer Needed”

  1. The transition from the Texas High Risk Pool is one that we can’t wait to see. The THRP has been so expensive and benefits so limited that we are excited to see it go away. Our clients will see enhanced benefits, more affordable pricing, and most of all the stigma with being in the pool will be gone.

    You make an excellent point that shoppers need to make sure that they take advantage of any new premium subsidies they qualify for. We’ve written about it here in the post, SAVE MONEY – LOSE THE TEXAS HIGH RISK POOL.
    http://texashealthdesign.com/thdblog/

  2. Carra Kiener says:

    So what happens to my Texas risk pool coverage if the Government comes to a stand still and the Affordable Care Act fails to get passed? I am really worried at this point!

    • Lmoskowitz says:

      You can rest assured that the Affordable Care Act has already passed, and is the law of the land. The partial government shutdown will not stop coverage under the Marketplaces which is available for enrollment starting today.

      The Texas Legislature opted to close the Texas Health Insurance Pool (commonly called the risk pool or high risk pool) at the end of 2013. The reason we have a risk pool is that insurance companies have historically been allowed to deny coverage to people with pre-existing conditions or charge them much more. That all changes as of January 1, 2014. Insurance companies cannot deny coverage or charge you more based on your health status. Starting now, people who’ve never had coverage options other than the risk pool will have many new options that will be more affordable.

      Some people in the Texas risk pool have been in there since 1998 when it opened. And everyone in the risk pool understands exactly how valuable the coverage is since they would have been excluded all together without it. You are certainly not alone in feeling anxiety about this change. Here are some things to consider as you move forward applying for new coverage in the Marketplace:

      · You will have many more options in the Marketplace than the risk pool. The risk pool had 5 plans to choose from that varied in their cost-sharing (deductibles that ranged from $1,000-$7,500 a year). The Marketplace will offer policies from several different brand-name insurance companies, and coverage will be offered at many levels (platinum, gold, silver, and bronze). None of the plan in the Marketplace will have deductibles as high as the highest-deductible plan in the risk pool.

      · You’ll want to pay attention to the networks of the plans you are considering, if it is important to you that certain doctors or hospitals are covered. If you are taking medications, you’ll also want to review plan formularies. The insurer that administers the risk pool today, and whose network is used for the risk pool will be offering plans on the Marketplace. It is possible that you can find Marketplace coverage that has the same network you have today. But, if your network today is lacking some of the specialists you need, for example, you may be able to find other plans that include them. The same is true of formularies.

      · You will pay less in the Marketplace that you would if the risk pool remained open. Texas state law sets risk pool premiums at twice the market rate for coverage. If the pool remained open, its premiums would rise to the rate of twice similar coverage within the Marketplace. Also, the Marketplace has subsidies that reduce premiums for people from 100-400% of the federal poverty level. The risk pool had subsidies for people up to 300% of the federal poverty level, but they are less generous than the Marketplace subsidies.

      · If you need help understanding all of your plan options or enrolling in new coverage, you can get knowledgeable, in-person assistance at no cost to you. You can find certified community groups that can help you enroll at https://localhelp.healthcare.gov/ or you can also get help from a health insurance agent.

      · To maintain seamless coverage, you need to select, enroll in, and pay your first month’s premium for Marketplace coverage by DECEMBER 15. The only way to get a Marketplace coverage effective date of January 1, 2014 is to complete all enrollment steps and pay your premium by December 15. You have plenty of time to shop, but please be mindful of the deadline.

  3. Carra, the ACA has been passed and the exchanges will open Tuesday. Despite political posturing from both sides, the money is already allocated and the ACA is already law. As the central accomplishment of the Obama administration I feel as though there is little chance that the ACA won’t go live 1/1/14.

    The administration has also stated that even if the government is shutdown, the ACA has funding and won’t be stopped. We’d love to help you look at all of your options “on exchange” or “off exchange” in the coming months. The great news though is that if you are on the Texas High Risk Pool now, it is fairly certain your rates will be lower in the coming year.

    Read our commentary about the Texas High Risk Pool to gain insights and direction in the coming weeks.
    http://www.texashealthdesign.com/thdblog

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