States resist creating pools to help people denied health insurance

As many as 20 states probably will not operate new insurance programs for Americans who have been denied health coverage, forcing the federal government to step in to implement one of the key elements of the healthcare overhaul legislation, according to administration officials.

Democrats earmarked $5 billion to create state-based high-risk pools as a way to help sick, uninsured Americans between now and 2014, when new insurance regulations will prohibit insurers from denying coverage to people because of preexisting medical conditions.

Led by the Georgia insurance commissioner, however, a succession of mostly Republican state officials has been rejecting the idea of creating state pools, voicing concerns that state governments would end up having to pay some of the costs of operating them over the next 3 1/2 years.

“We are very concerned that funding will not be sufficient,” Nebraska Gov. Dave Heineman, a Republican, wrote to Health and Human Services Secretary Kathleen Sebelius this week, explaining his decision to opt out of the program.

By Friday afternoon, a deadline set by Sebelius, 15 states had informed the Department of Health and Human Services that they would not set up new pools, including South Carolina, Minnesota and Wyoming.

Twenty-eight states, including California, New York and Illinois, indicated they would set up their own pools.

In the capital, administration officials said they were preparing to operate the pools in any state that chooses not to participate, and they expect to be able to fund all the programs without putting new burdens on states.

“The goal of the temporary high-risk pools is to help people who haven’t been able to get coverage … by setting up programs or working to fund state programs with 100% federal dollars. We anticipate that we will meet this goal,” Health and Human Services spokeswoman Jenny Backus said in a statement.

Consumers will be eligible for the new pools if they have preexisting medical conditions and have not had insurance for at least six months.

They will pay premiums that parallel rates being offered by commercial insurers to healthy people on the individual market. Many existing high-risk pools charge such high premiums that many people cannot afford the coverage. Today, such pools in 34 states cover only about 200,000 people.

Individuals who sign up for the new pools also will not have to pay more than $5,950 a year out of their pockets for medical care, according to the legislation.

The high-risk pools were a central feature of several Republican healthcare proposals. And in a nod to Republicans, who expressed concerns about the expansion of federal authority, Democrats gave states the choice of operating the pools themselves with federal money or having the federal government run them.