Last summer, I wrote about GettingUSCovered’s lower-than-expected enrollment numbers and the fact that the federally-funded high risk pool in Colorado had significantly higher per-member medical costs than CoverColorado, the state’s existing high risk pool. In my article, I addressed the fact that although the eligibility guidelines are similar for the two programs (other than the requirement that the applicant be uninsured for at least six months prior to enrolling in GettingUSCovered, per federal guidelines), CoverColorado allows people to apply if they have been offered a policy by a private health insurance carrier with a premium higher than the premium for a comparable policy from CoverColorado. GettingUSCovered does not have this option. To qualify for GettingUSCovered, the applicant has to have been declined by a private carrier, or offered a policy with an exclusion rider on a specific pre-existing conditions (or have one of the medical conditions on the presumptive eligibility list, which is also used by CoverColorado). As I discussed in my previous article, pre-existing condition exclusion riders have all but disappeared in the individual health insurance market in Colorado. Nearly all carriers now use underwriting rate increases instead.
So although it is still possible in Colorado to get offered an individual health insurance policy with a pre-existing condition exclusion rider, it’s far less likely than it was a decade ago. Most applicants who don’t get a standard acceptance tend to be offered a policy with a higher premium than the base rate. If they have a serious condition, they may be declined, in which case they would qualify for GettingUSCovered (or CoverColorado, depending on the rest of their eligibility). But if they fall into that middle ground of having a rate increase (but not a pre-existing condition exclusion rider), they are not eligible for GettingUSCovered.
So where does that leave us? The people who are eligible for GettingUSCovered tend to have serious pre-existing conditions. They’ve either been declined by a private carrier or have one of the conditions on the presumptive eligibility list. Ten years ago, when most individual health insurance carriers used pre-existing condition exclusion riders for most minor/moderate health conditions (the most serious ones have always resulted in a decline), far more people would have fit the current eligibility criteria for GettingUSCovered. A lot of those people would have had relatively small medical expenses, especially when compared with the $22,500 per-insured average that GettingUSCovered spent in it’s first year.
The claims expenses for GettingUSCovered are double the national average. In terms of administration, the program is a joint effort run by Rocky Mountain Health Plans and GettingUSCovered. The administration costs are in line with federal guidelines and other states’ expenses, but the per-insured medical expenses in the Colorado program are significantly higher than they are in most other states. Along with eight other states, Colorado has asked for supplemental funding from the federal government to help cover the higher-than-expected GettingUSCovered claims costs.
The Denver Post article mentions the WI federal high risk pool program as being one that is similar in size to Colorado’s but has much lower per-insured claims expenses. Out of curiosity, I checked out their eligibility page and noticed that they have all the same eligibility standards as the Colorado program, and they also allow people to apply if they have had a rate increase of 50% or more, or at least two offers for new individual health insurance with at least a 50% rate increase over the standard rate.
I realize that premiums cover a very small portion of the claims expenses incurred by the high risk pools, so perhaps it’s a better move from a financial standpoint to limit enrollment in the high risk pool. But expanding eligibility and increasing enrollment numbers have been discussed numerous times since the pools started operating in 2010. I haven’t seen any specific details explaining why Colorado’s per-member claims expenses are so much higher than they are in other states with similar programs. It could be that it’s random, but if that’s the case we should expect to see Colorado’s numbers even out with other states as time goes by. If we don’t, we can assume that there’s something specific to Colorado that is causing the difference – either healthcare is far more expensive here, or our federally funded high risk pool is enrolling applicants who are – on average – far sicker than applicants in other states. Once the program has had another year of claims data, it will be interesting to revisit the numbers and see whether Colorado is still spending significantly more than other states, or whether the numbers have started to equalize.