Kentucky Has A History With High-Risk Health Insurance Pools. It Isn’t Good.

May 9, 2017

Federal lawmakers are moving ahead with a new approach to health care that includes changing the way insurers cover pre-existing health conditions.

But the American Health Care Act that House Republicans voted to advance last week could bring back a program with which some Kentuckians may be familiar: high-risk pool health insurance.

Until 2013, these high-risk pools operated in Kentucky and other states. And if the provisions of the final bill allow states to do away with coverage for pre-existing health conditions — which were made possible under President Barack Obama’s Affordable Care Act — they could be coming back.

In Kentucky, the high-risk pool program was called KY Access. It ran until 2013. Prior to Obamacare, Kentuckians who had chronic conditions and couldn’t get health insurance on the individual market were routinely denied, or charged premiums so high that coverage wasn’t affordable.

It sounds good on paper, but high-risk pool insurance only worked for a fraction of the people who needed it. At the program’s 13-year-long peak, only 4,837 people were enrolled. Now, almost half a million people are enrolled in the expanded Medicaid program. And 81,000 people signed up for coverage on Healthcare.gov for 2017.

“[High-risk pool insurance] was for people higher on the income scale if they could afford it,” said Richard Seckel, director of the Kentucky Equal Justice Center.

Seckel’s group provides free legal aid to low-income people and helps connect clients with health care services if needed. He said many clients who didn’t have insurance previously now have coverage through Medicaid expansion and couldn’t afford what the high-risk pool coverage used to cost.

“We didn’t spend a lot of time saying you might quality for this, and this is what you need to prove,” Seckel said. “This was not really a solution for any of them.”

The high-risk pool wasn’t intended to be so expensive for people.

In 2001, yearly payments were up to $11,056. But that out-of-pocket payment rose almost by a quarter by 2013. Costs to both the state and individuals rose so much because there weren’t any young, healthy people to balance out all the high medical costs. That’s according to Advocacy Action Network executive director Sheila Schuster. She helped oversee the rollout of KY Access.

“It was essentially a conglomeration of people with high-risk, chronic conditions that were going to be very costly,” Schuster said. “The premiums were very high, but it was the only game in town.”

Because of more moderate Republicans’ concerns over eliminating pre-existing conditions, Congressman Fred Upton(R-Mich) added $8 billion to the legislation to be spent over five years for people in high-risk pools across the country.

“This amendment would provide additional funding to ensure a strong safety net and reduce premiums, or other out-of-pocket costs, for those with pre-existing conditions,” Upton said in a release.

But that money would be shared by states. Even if Kentucky got the entire pot of money, it would take the commonwealth less than three years to spend that amount. The federal government sent $3.5 billion this year alone to Kentucky to pay for people with Medicaid coverage and subsides on Healthcare.gov.

“It’s a drop in the bucket and nowhere close to covering folks that really need it,” said Dustin Pugel with the Kentucky Center for Economic Policy.

Pugel said at the time, high-risk pools were the best thing out there for people. But there was also a $2 million lifetime cap on what KY Access would pay per enrollee. Those caps went away with the Affordable Care Act.

“In hindsight they didn’t cover nearly as many people, they provided inferior benefits at a much higher cost,” Pugel said. “Going back would be a bad idea for half a million Kentuckians who are getting coverage right now [through the ACA].”

The legislation now goes to the Senate, where Republican leaders have said they are drafting their own proposal.

Doug Hogan, public affairs executive director for the Kentucky Cabinet of Health and Family Services, said Gov. Matt Bevin’s administration will respond once the legislation is final.