High-Risk Insurance Pools: A Shaky Debut

Government-funded health plans for high-risk patients, an early feature of the new health-care law, have attracted just 2 percent of expected users. The disappointing start has given Republicans, once champions of the plans, ammunition in their push to repeal President Barack Obama's entire health-care overhaul passed last March.

Much of the law phases in over time: A ban on private insurers denying adults with preexisting medical conditions doesn't start until 2014. To fill the gap for those consumers, $5 billion was set aside to fund high-risk insurance pools that were put into effect in July, offering one of the first tests of the overhaul's usefulness. One problem: Although the new health-care law requires premiums for the high-risk plans to track those charged by private insurance plans for customers in good health, those rates have still proven unaffordable for many, according to Jean Hall, an associate research professor at the University of Kansas in Lawrence who has studied the program. Pennsylvania's program, which has the top enrollment among states (1,657 as of Oct. 1), charges $283 per month for coverage, one of the lowest premiums in the nation. The Medicare program's chief actuary predicted in April that 375,000 people would enroll nationwide by the end of 2010. Only 8,011 had signed up as of Nov. 1, government figures show.

Republicans say the disappointing enrollment is a reason to repeal reform. "If the main goal of passing a trillion-dollar bill was to help people with preexisting conditions, this is a striking statement about the law," says Laena Fallon, a spokeswoman for Eric Cantor (R-Va.), the House majority leader.

High-risk pools were key features of health-care plans introduced in 2008 by Presidential hopeful Senator John McCain (R-Ariz.) and by current House Speaker John Boehner (R-Ohio) last year. Republican versions would be better funded than Obama's and would allow the states to build on existing programs, decreasing administrative costs, says Fallon.

The Administration hasn't had enough time to publicize the plan or experiment to see which benefit packages would be most affordable, says Richard Popper, a director of insurance plans with the U.S. Office of Consumer Information and Insurance Oversight. Still, for those enrolled, the program is "making a difference in people's lives, saving people's lives," he says.

The federal government plans to increase its marketing of the plans for 2011, and private insurers like Humana (HUM), UnitedHealth Group (UNH), and WellPoint (WLP) have agreed to tell people they denied coverage to, Popper says. Premiums this year will also be trimmed by 20 percent for the U.S.-run program's basic plan. The program will also add two more benefit options and offer a lower deductible for drug coverage, he says.

The bottom line: Low enrollment in government-funded insurance programs aimed at sick patients has emboldened GOP critics of health-care reform.

    Before it's here, it's on the Bloomberg Terminal.