Tuesday, July 26, 2005

Risky Business, Part 2...

In the first part of this series we learned about what High Risk Health Pools (HRP) are, what they do, and a little about how they work. The Ohio Department of Insurance commissioned a study [ed: your tax $ at work] to determine how such a plan might work here in the Buckeye State.
Conducted by Leif Associates, the study concluded (ALERT: Shocking Conclusions Follow]:
  1. An HRP is a “viable option” for Ohio residents who are uninsurable
  2. HRP’s charge high rates, “therefore a high-risk pool does not entirely solve the problem of affordability.
I suspect most people saw that one coming. According to the report, “many states have adopted discount programs to assist low-income participants.” Isn’t that just a fancy way of saying “raised taxes on everyone to help uninsurable folks buy insurance?”
Will it work? That is to say, will it dramatically reduce the number of uninsureds? Well, according to the report, there are about 1.3 million Ohians currently without health insurance. Some of these folks will be eligible for coverage under an HRP plan, and some of those will be able to afford said coverage. Okay, then, how many people are we talking about here? Well, Leif estimates than less than 3,000 folks will purchase coverage through the HRP in the first year (that’s 2 tenths of 1%, for those of you keeping score at home), growing to almost 13,000 in the fifth year (ooooh, 1% of the estimated total number of uninsured).
The report goes on to claim that as many as 15,000 people could potentially be covered (no real definition of “potentially;” could be in 6 years, or 60). And there’s this:
All high-risk pools lose money,” says the report, which adds “(a)dditional funding from some source is therefore required.” Didn’t we cover that in the 3rd paragraph? Boiled down, the report posits that these “additional sources” are increased taxes, and assessments on insurers. Although the report doesn’t explicitly say so. these assessments would then be passed along in the form of rate increases.
So, how much does all this cost? Leif estimates that individual premiums will come in around $476 per month. Claims and admin costs are projected to be about $976 per, which leaves the state holding the bag on about $500 a month, or $6,000 a year – per participant. Ouch. But there’s good news: by the 5th year, the premium’s expected to rise to about $800 a month, and the shortfall to almost $11,000 a year.-In all, the HRP plan is expected to cost $20 million it’s first year. To cover maybe 3,000 people. That’s over $6,000 per participant. Seems like a pretty hefty price tag for such a small group of people. On the other hand, the report notes that no HRP has yet become unsolvent, and claims that adequate oversight is the key. I’m not so sure I agree with that conclusion, but the report goes on to acknowledge that “the impact of future increasing costs could be minimized by limiting enrollment…reducing benefits…or increasing cost-sharing [premiums].”
For those who want to read the whole thing for themselves, the report is available (in pdf form) here. Be forewarned, though: it runs 67 pages.
My real dilemna here is that I really do like the idea of an HRP, and I really don’t have a better alternative to suggest for covering the uninsurable. I see the potential high costs of the HRP idea, but I also see the here-and-now costs of the current system.
What do y’all think?
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