Health Reformer's Lexicon: High-Risk Pools

The Health Reformer's Lexicon is a weekly feature that will examine key words, terms and phrases in health reform and explore their meaning and orbit.

The term: High-risk pools

High-risk pools are private, self-funded health insurance plans that serve high-risk individuals with costly pre-existing medical conditions such as cancer or HIV/AIDS.

Why It Matters: As the National Association of Health Underwriters explains, most Americans get their health insurance in group-purchasing arrangements—typically through their employers or the employers of family members—but some people do not have access to this type of coverage and need to buy their own insurance independently.

Unlike in the group health insurance market, however, insurers in most states traditionally have been allowed to deny coverage to individuals with serious pre-existing conditions. That’s because when you buy insurance individually, you’re essentially a “group of one.” The health insurance company has to determine how likely it is to take in more premium dollars from you than it pays back in benefits—and if it appears that the odds are you will get sick, then it is in the insurance company’s financial interest to avoid taking on the risk you represent.

(There have also been widely commented-upon incidents in which insurance companies have found reasons to rescind people’s coverage after they get sick.)

For this reason, many states offer some form of risk pool that individuals can buy into.

Roots: High-risk pools were first implemented in Minnesota and Connecticut in 1976, according to the Kaiser Foundation, and now operate in 34 states, providing insurance to nearly 200,000 people.

Where the Term Appears: The recently passed health reform law established a national high-risk pool program to insure individuals with pre-existing conditions from now until 2014, when the law’s broader provisions for expanding access to coverage begin to kick in. Getting this temporary program up and running is one of the first things that HHS Secretary Kathleen Sebelius has been tackling. She recently sent a letter to governors and state insurance commissioners asking whether they are interested in creating high-risk pools. Some states have responded that they need more time to decide.
 
Previous Lexicon entries include:
- Individual Mandate
- Uncompensated Care
- Value-Based Purchasing