High Risk Insurance Pools: Haven’t Needed One? You Probably Don’t Know How They Work

One of the many things touted in the health insurance reform bill was the creation or reinforcement of high risk insurance pools. To my eternal amusement, lots of people heralded this as a great thing that would magically resolve the problem of access to health care for people in the United States. First of all, health insurance is not health care, and never will be. Second of all, high risk insurance pools are only open to certain people, and third of all, they, if you will allow me to be blunt for a moment, completely suck.

The misunderstandings about high risk insurance pool are a direct outgrowth of never having needed to use one, and thus taking what is said about them at face value. Since I actually have had need for inclusion in the high risk insurance pool and know a lot of other people who have, I can tell you a little more about how they work, and what they are actually like. You can decide for yourself if you still think they’re such a great idea after learning more about them.

This is an endemic problem throughout the discussions about health care in the United States. Everyone involved is centreing personal experience, and ignoring the fact that their experiences are not universal. I have lots of friends who get terrific and very extensive coverage through the military and the VA; they’re asking me why there’s a health care crisis in the United States. I know people who get very comprehensive insurance through work that pays for everything and they’re asking me why health insurance isn’t a solution to health care access. I know people with disabilities receiving inadequate care through MediCal and similar programs. And I know a lot of people like me who need better health care, and can’t afford it, who are paying out of pocket for all medical expenses because we don’t fit in any neat categories, and we are being completely ignored in many of the discussions about health care, because we are inconvenient.

First things first: High risk insurance pools are not new. A number of states have them. In those states, companies that want to sell health insurance are usually required to participate in the high risk insurance pool. The idea is that by pooling resources, insurance companies pool liability, and incur less expense when they have to pay out as a result. These pools were created to provide access to health insurance for people who cannot get insurance coverage, usually because of existing medical conditions, and make too much money to qualify for social services that provide access to health care.

If you qualify for a state’s high risk insurance pool, you file an application laying out your medical and insurance history to demonstrate your need. The application is reviewed, and then you end up on a waiting list[1. Not to be confused with the waiting period, which can be 12-18 months without insurance after you qualify. Great if you have high health costs!]. Waiting lists can be two years long[2. Incidentally, guess what is even longer right now as a result of job losses?] in some cases, and in many regions, you are automatically booted from the waiting list after a year with no activity. This means that you need to renew your application to hold your place, and rest assured, no one is going to call to remind you to do this.

Once you hit the top of the waiting list, you will be sent a package of insurance offers. Here’s where things start getting interesting. Insurers are required to cover you if you are willing (and able) to pay for it, but the state does not have any requirements about what kind of coverage is provided. This means that what you typically get is a series of offers for what is known as ‘catastrophic coverage.’ Catastrophic coverage is what it sounds like: If there is a catastrophe, the insurance company will pay for some of your care. Think car accidents, heart attacks in the grocery store, and so forth.

Catastrophic coverage usually comes with a very high deductible. There are several reasons for this. The first is that it’s designed as a supplement for an existing policy. The second is that paying for health care in catastrophes gets very expensive, very fast, and insurance companies want to pay as little of that as possible. So, the first thing you are going to notice is that all of the plans you are looking at are rather expensive, because there are no caps on premiums, and in addition, the deductible is going to be extremely high.

The next thing you are going to notice is that these plans? Do not cover preventative care. They do not cover prescriptions. They do not cover routine doctor visits. They certainly do not cover abortions, which is why I laughed when people protested that abortion coverage would be excluded from high risk insurance pools: Newsflash, it already is. They are basically only designed to pay for emergency care (after you meet the deductible, which may bankrupt you). Everything else, you will be paying out of pocket. If your problem is that you can’t afford health care out of pocket and you are trying to get insurance to help cover expenses, these plans will probably not help. Because you are going to pay a lot out of pocket to maintain the plan, and you are going to continue paying out of pocket for most of your routine care.

Those existing medical conditions insurance companies hate so much cost a lot of money every month. There’s a reason medical expenses were a leading cause of bankruptcy in this country because the law was changed to make it difficult to declare bankruptcy on those grounds. That reason is, pure and simple, chronic illness and disability can be very costly.

I waited on the California high risk insurance pool for two years. I got my policy offers. I thought about them, I crunched the numbers, and, ultimately, I decided to reject them, because I simply could not afford them. If I am involved in a catastrophe that requires hundreds of thousands (or millions) of dollars of medical treatment, well, so be it.

High risk insurance is not a solution to health care access problems. Neither is insurance in general. The solution to access problems is to provide health care, not to force people to buy insurance.