Health Insurance Risk Pools – What are they? Viable Options for Pre-existing Risks?

Final approval of the Tax Cuts and Jobs Act occurred as predicted in December 2017. A key component of the new tax rules include the elimination after 2018 of the individual taxpayer mandate that imposed a penalty on taxpayers that do not purchase insurance under the requirements of the Affordable Care Act (“ACA” or “Obamacare”).  That action ultimately removes the primary ingredient underpinning the ACA.

Though the ACA initially attempted to make unparalleled strides in universal health coverage for the United States, the mixing of the many possible health circumstances became an overwhelming task. Requiring insurers to ignore pre-existing conditions of plan enrollees as a component of the overall pricing and coverage process became one of the key encumbrances to the program. So, what are potential options for offering health care alternatives to better serve and provide cost favorable alternatives to this ACA dilemma?

One option being earnestly considered is the employment of Health Insurance Risk Pools (HRP) – a health coverage alternative that has been in place for a number of years. So, what exactly is a HRP and how could it supplant ACA offerings? HRP’s were originally designed to accept the uninsurable risks turned down by the insurance companies.  It has proven more efficient to identify a patient’s healthcare requirements in light of the needs of similar patients.  In other words, place similar uninsurable risks together.  The caregivers and facilities are structured around a particular diagnosis group.  Using HRPs removes the medically needy from the competitive arena and places them in a segregated environment that is familiar with the pricing and treatment matters.  They have the infrastructure (billing, managed care arrangements, etc.) to manage pricing and costs.

Federal and state authorities are keenly interested in the HRP concept as one Obamacare alternative. Wisconsin’s HRP had been considered a national model.  It ran from 1979 to 2014 at which time the Obamacare exchange program came into being and effectively cancelled the program. Studies of its general process proved promising to federal regulators.

An HRP is generally funded via a combination of consumer premiums, insurance company premium assessments and reduced payments to providers. HRPs are not necessarily inexpensive, and many times the HRP base is too narrow to absorb proper pricing. So, there are challenges to overcome.  Though healthcare challenges will always be present, the HRP concept remains a viable option to what has not worked in the past, and for providing a method to efficiently manage healthy risks in conjunction with uninsurable risks.