High-Risk Health Insurance Plans Have Surprisingly Low Enrollment

One of the aims of the Obama administration's healthcare reform law is expanding coverage to nearly all Americans. Eventually, health insurance companies will be forbidden from denying coverage to individuals based on their health status. However, the legislation gives health insurers time to adjust their business models. They will not be required to accept all comers until 2014, the same year that the controversial individual mandate is set to take effect. The mandate would bring more younger, healthier people into the fold to pay premiums--making up for the increased cost of patients with pre-existing conditions they would previously avoid.

As a stopgap measure, high-risk health insurance pools were created by the law. These are heavily regulated programs that allow those with serious pre-existing conditions to buy health insurance coverage. Some subsidies for the program were also funded by Congress.

Over 20 states have agreed to create their own high-risk health insurance plans that comply with the federal law, while the rest have refused to participate (due to financial and/or political concerns). The latter states are directing their residents towards the federal high-risk pool (which has the ironic effect of giving the federal government even more control over the program). Some states already have their own high-risk pools, although they may not comply with the legislation as a result of their high costs and limits on enrollment. Granted, the new program also has its own limitations: patients must provide proof that they were rejected by at least one health insurer, and have to have been uninsured for the past six months.

The high-risk health insurance plans launched in July. However, so far they have not been as successful as proponents hoped. Although a handful of larger states have yet to fully launch their programs, enrollment is far lower than expected, with only several hundred applicants in most states. This may be because the premiums are often prohibitively expensive, with monthly premiums sometimes reaching nearly $500.

Despite those expenses, it is still preferable to the alternative for those with cancer or other serious diseases. For example, the plan in New Hampshire includes an annual $5,000 deductible: the patient is only responsible for out-of-pocket expenses up until that point. While the cost is still significant, it is still cheaper than the $16,000 a single chemotherapy treatment can cost.