A healthy high-risk pool

RALEIGH -- The General Assembly is finally working on a serious proposal to make health insurance more affordable. State Rep. Verla Insko's health insurance high-risk pool bill has already passed two House committees. The debate offered a preview of what's ahead for the state's first significant health reform in years.

Some people, because they have a serious health condition such as multiple sclerosis, are quoted $1,000 to $2,000 a month premiums when they try to buy insurance. A high-risk pool for health coverage -- like the high-risk insurance pool for automobile insurance -- puts people with serious health problems (or risks) into a pool where they pay still-high but more affordable premiums for decent coverage.

Even though people in the pool pay a higher premium than those without serious health problems, it still costs more to insure them than the premiums collected to cover medical costs, because people in the pool are so sick. So all insurance companies are assessed a fee based on the number of people they insure, to help cover the excess cost.

This is exactly how the high-risk pool for automobile insurance works -- we spread the costs for riskier drivers out over the entire insurance pool. With more expensive but still-affordable coverage available, more people buy auto insurance. This means there are fewer uninsured drivers and rates for everyone are lower, because even the riskiest drivers pay premiums and fund the insurance pool, instead of driving uninsured and making everyone else pay if they have an accident.

As a result, according to the Insurance Information Institute, North Carolina has one of the lowest rates of uninsured drivers, and rates in our auto insurance market are low.

This type of conservative, common-sense health-care reform can drive its opponents into ideological knots. Some conservatives are all for the pool -- so long as taxpayers fund it, not the insurance industry. Their assumption is that if taxpayers save money for the insurance industry by helping fund sick people who are expensive to insure, the resulting savings will be passed along to customers, and won't go into insurance industry profits and executive salaries.

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Another argument against the high-risk pool is that costs will fall on only a relatively small percentage of those insured because of a restriction in federal law that prevents states from requiring fees from so-called self-insured plans. This is where a company, instead of buying insurance from Blue Cross or another carrier, funds its own insurance plan.

The high-risk pool bill gets around this restriction by requiring not only insurers to pay, but also the companies that administer self-insured plans, plus reinsurance companies that provide additional insurance to self-insured plans. The Society of Professional Benefit Administrators estimates that 91 percent of self-insured plans use some sort of third-party administrator, so almost every health insurer in the state will share in the cost of the pool.

Finally, there's the effect of this reform on people who have insurance right now. With about 5 million people privately insured in North Carolina, either individually or through their employers, spreading the pool costs above the premiums paid by the 8,400 people estimated to enroll in the pool means minimal individual impact. Any cost is reduced even more under Rep. Insko's bill because the state does kick some funding into the pool, based on the number of people enrolled in the State Health Plan. Also, some federal funding will be used for pool administration.

A high-risk pool is the essential first step to building an economy where everyone can afford health insurance coverage. If we don't have an option for those with serious health conditions that are the most expensive to insure, costs go up for every other health reform proposal.

Each insured person already pays $438 a year in extra premium costs just to cover health care for North Carolinians without health insurance. Bringing at least some of these people into the health insurance market means more security for those with serious illnesses and their families, and more premium dollars available to cover the cost of everyone's care.

(Adam Searing is project director of the N.C. Justice Center's Health Access Coalition.)