Health Risk Insurance Pool in Texas

More than 20 years before U.S. Congress passed the Health Care Reform Act in March 2010, legislation that would purportedly prohibit insurance companies from setting rates or excluding coverage due to pre-existing conditions, the State of Texas had already created its own health insurance pool for "high-risk" applicants that ushered in many of the same provisions. The Health Risk Insurance Pool in Texas provides a safety net for eligible state residents who cannot obtain coverage from individual commercial insurance companies if they have certain disqualifying medical conditions.

History

• The Texas Health Insurance Pool was established by legislation passed in 1989 but didn't receive funding until 1997, when $500,000 of appropriated state funds were provided for the pool's start-up costs. The first health insurance policies provided to individuals by the pool went into effect Feb. 1, 1998. The pool is managed by a board of directors composed of nine people appointed by the state's Commissioner of Insurance. By state law, board members must represent a variety of interests to include health insurance companies and individuals eligible for coverage by the pool or a parent of an eligible child. Doctors, hospital administrators, nurse practitioners and members of the general public may also be appointed to the board.

Eligibility

• To receive coverage under the high-risk Health Insurance Pool in Texas, applicants must meet eligibility criteria. Generally speaking, U.S. citizens younger than the age of 65 who are legal residents in Texas--and legal permanent U.S. residents of at least three years--can receive coverage if they supply proof that they've been denied coverage by another insurance company that offers a commensurate plan due to a pre-existing medical condition or if they have been diagnosed with a "qualifying" medical or health condition covered by the pool. Spouses and children are also eligible, as are certain federal employees who have lost insurance coverage and individuals who once had insurance coverage under another state's risk pool but lost coverage when they moved. Eligibility criteria is specific; contact pool's administrator at 888-398-3927 for more information.

Administrators

• The Texas Health Insurance Pool chose Blue Cross/Blue Shield of Texas as its third-party administrator. BCBSTX oversees enrollment, processes medical claims and collects individual premiums. The pool selected Medco Health Solutions as the provider of pharmacy benefits. Neither BCBSTX nor Medco decide what benefits are provided to those covered by the pool, nor do they set the cost of premium rates. According to Executive Director Steve Browning, the pool's contract with BCBSTX ends Dec. 31, 2010. Proposals received from BCBSTX and other insurance companies are being evaluated by the board of directors in 2010.

Coverage

• All policies issued by the pool include six visits to the doctor for the purpose of preventive care that come with a $30 copay. Coverage depends on the policy plan selected by the insured. Currently, the pool offers five tiers of coverage, four which have calendar year deductibles ranging from $1,000 to $7,500, and one health savings account qualified plan, which has a $3,000 calendar year medical deductible. Coverage extends to a variety of health conditions that qualify the prospective insured as "high risk" and includes cancer, diabetes, cerebral palsy, multiple sclerosis, Down's syndrome and AIDS, among numerous others.

Premiums

• Premium rates are assessed based on an eligible applicant's age, gender, ZIP code and use of tobacco products. Premiums are substantially higher than those charged in the commercial insurance market, and by law must be at least twice this amount. High premium rates still aren't enough to cover the costs of all medical and pharmacy claims--these losses are borne by health insurers must cover the pool's losses, by state law. In February 2011, a state-mandated premium discount subsidy program will go in effect to assist enrollees who are at or below 300 percent of the federal poverty level to defray the cost of coverage. In 2009/2010, the federal poverty guidelines set the 100 percent poverty threshold for a single adult (family of one) at $10,830.

Future

• Browning states that the federal Health Care Reform Act should not affect the state pool's day-to-day operations, nor will it affect eligibility criteria or premium costs. Currently, specific reforms in the Act that apply directly to the state pool are under evaluation. Browning indicates that the pool may revise its coverage so that it is consistent with that provided by the individual health insurance market in Texas, even if these provisions of the federal Act do not apply to the state. The Health Care Reform Bill mandated the creation of federal risk pools in all states; Browning indicates that the states with existing risk pools, of which there are 35 (including Texas), will likely contract with the U.S. Department of Health and Human Services to administer the federal pool program in their respective states.