Since 1998, the Texas Health Insurance Pool (the state’s high risk pool) has been providing health insurance coverage to Texas residents who cannot get coverage in the private market because they have pre-existing medical conditions. Since its inception, the pool has offered a lifeline to many Texans, but because its coverage is expensive—as required by state law, pool premiums are generally twice as high as comparable coverage—many more Texans with preexisting conditions have remained uninsured.
The national health reform law, the Affordable Care Act, makes fundamental changes to the insurance market that remove the need for states to have high risk pools. Starting on January 1, 2014, health insurance companies can no longer deny a person coverage because of pre-existing conditions or charge them higher premiums. Texans covered by the pool today will be able transition into the new Health Insurance Marketplace, where they can choose among a wider array of plan options and have access to some benefits, like maternity, that are not offered by the pool. For example, Sally Jo Hahn, profiled in this YNN story last year, pays $640 a month in Texas’ high-risk pool, and she’s looking forward to more affordable coverage in 2014.
Coverage in the Marketplace will be more affordable than the state’s risk pool. Low- and moderate-income pool enrollees who get pool subsidies today will pay less in the Marketplace, where more generous subsidies are available. And even higher income pool enrollees who will have to pay full-price premiums in the Marketplace will fare better, because if the risk pool were to stay open, its premiums would have to climb to twice that in the Marketplace.
SB 1367 by Senator Duncan and HB 2791 by Representative Smithee both wind down the state pool in a responsible manner, by directing the pool board to develop a plan to dissolve the pool, transferring pool authority to the Texas Department of Insurance (to ensure medical claims will be paid, for example), and ensuring that pool coverage doesn’t end before Marketplace coverage takes effect. Abolishing the pool when it is no longer needed makes sense, and helping pool enrollees move to the Marketplace as soon as it opens not only will result in lower costs for pool enrollees, but also will mean they enter the Marketplace when the most generous federal “reinsurance” funding is available to lessen costs for Marketplace plans that enroll a larger share of less healthy enrollees.
It is important that the pool stay open long enough to allow members to move into the Marketplace. The Marketplace is scheduled to begin open enrollment on October 1, 2013 with coverage taking effect on January 1, 2014. The bill requires risk pool coverage to end as of January 1, 2014 (as long as the Marketplace has guaranteed-issue coverage effective). That means pool members will have less than 3 months to shop for and enroll in Marketplace coverage if they want to avoid any gaps in coverage and have their new policy effective on January 1. That is a quick transition, but doable if the pool provides meaningful education and transition assistance to its 23,000 members. We are pleased to see that the pool’s outreach and education efforts about Marketplace coverage are already underway.