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Thursday, August 19, 2010

Temporary Federal High Risk Health Insurance Pool Program

Mark Newsom
Analyst in Health Care Financing

This report briefly describes the temporary federal high risk pool (HRP) program established by the Patient Protection and Affordable Care Act (PPACA, P.L. 111-148, as amended). Under PPACA, the federal HRP program is intended to help individuals with preexisting conditions who have been uninsured for six or more months to obtain health insurance coverage before 2014. States can run the program or elect to have the Department of Health and Human Services (HHS) operate the program in their states. The majority of states (29 states and DC) contracted to operate their own HRPs. HHS administers the HRPs in 21 states, under the Pre-Existing Condition Insurance Plan (PCIP) name. 

To be a qualified HRP, the high insurance coverage must have an actuarial value (the average percentage of expenses that the plan covers) at least equal to 65% of total allowed costs, and out-of- pocket costs cannot exceed $5,950 for an individual in 2010. The premiums must be established at a standard rate for a standard population, and age rating cannot exceed a factor of 4 to 1. Claims and administrative costs will be subsidized by the federal government. 

PPACA appropriates $5 billion of federal funds to support the program, available beginning on July 1, 2010, until the program ends on January 1, 2014. Several observers think this will not be enough to cover the costs of the program. HHS has proposed allocating funds to states by using a combination of factors, including nonelderly population, nonelderly uninsured, and geographic cost as a guide, with the intention of reallocating funds based on actual enrollment and expenditure experiences. The HHS Secretary has the authority to make any program adjustments necessary to eliminate or prevent any deficit. 

This report provides an overview of the temporary federal high risk pool program and will be periodically updated to reflect any legislative or regulatory changes.

Date of Report: July 28, 2010
Number of Pages: 19
Order Number: R41235
Price: $29.95

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