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I Ran Wisconsin's Successful High-Risk Pool Before Obamacare. It Actually Worked.


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Ted Nickel is the insurance commissioner for the state of Wisconsin. 

Individual markets across the country have evaporated or are rapidly moving towards a death spiral. Tragically, in Wisconsin we aren’t immune either. We have seen insurers leave the exchange, significantly reduce service areas and leave the individual market altogether.

Congress is attempting to solve this problem through repeal of Obamacare known as the American Health Care Act (AHCA). It provides a number of options including the ability for states to operate a high-risk pool or participate in a new federal invisible high-risk pool, which will offset high claims costs which currently increase rates for all consumers in the individual market.

My staff and I have spoken to members of Congress about the pre-Obamacare market in Wisconsin and our highly successful high-risk pool. Here's what we tell them.

Prior to the ACA, Wisconsin consumers could choose from over 20 individual insurance companies offering coverage in our state. These included for-profit and not-for-profit companies; HMO’s and PPOs; and local and national insurers. There were a variety of plan options to meet a range of coverage needs.

While these plans were underwritten, individuals denied coverage would receive coverage from Wisconsin’s high-risk pool known as the Health Insurance Risk Sharing Plan (HIRSP). HIRSP provided Wisconsin consumers with peace of mind by providing high quality, comprehensive coverage to over 20,000 of our friends and neighbors.

Unlike the current ACA market where most people must wait until open enrollment to purchase coverage, consumers could enroll in HIRSP at any time. There were no pre-existing condition limits for people signing up for coverage if they had prior coverage. If consumers had no prior coverage, they would receive coverage for most conditions, but had to wait six months for pre-existing conditions.

In contrast, with Obamacare you may have to wait up to 11 months for any coverage if you miss open enrollment.

Once enrolled in HIRSP, consumers chose from a variety of benefit plans including both high and low deductible plans. While Obamacare plans are criticized for having narrow networks, there were no network limitations for HIRSP; members were able to visit any medical provider in our state and receive coverage when traveling outside of Wisconsin. Subsidies were also available to offset premiums, deductibles and prescription drug out-of-pocket maximums for low-income members.

HIRSP benefit and administrative costs were funded by member premiums and contributions from insurers and providers. No state dollars were needed to support this program.

Though not perfect (no program is), HIRSP was well-run and kept the needs of its members a priority and was structured in a way which allowed sufficient flexibility to address member needs and respond to evolving market dynamics. Former members of HIRSP continue to call legislative offices requesting a reinstatement of this program.

AHCA provides a strong starting point for implementing a HIRSP 2.0 utilizing federal dollars to ensure affordable and accessible coverage for all individuals with pre-existing conditions.

Critics of AHCA are quick to claim the bill will provide no coverage for any pre-existing conditions and high-risk pools will literally kill people. AHCA specifically states, “Nothing in this Act shall be construed as permitting health insurance issuers to limit access to health coverage for individuals with pre-existing conditions.”

The Affordable Care Act (ACA) is falling apart. One third of US counties have only one health insurer offering coverage on the federal exchange. Last year, Tennessee indicated its market was very near collapse, and it hasn’t gotten any better. Currently, no health insurers in Iowa will be participating on the exchange. Minnesota is planning on spending $800 million tax dollars just this year to shore up its individual market. Alaska is spending its entire premium tax to keep their one health insurer in the market.

This is not sustainable. If insurers cannot remain viable in the individual market due to Obamacare rules and fees, consumers will not have health insurance products available for them to purchase.

Standardized federal market rules have stifled innovation and fail to take into account the diversity of markets across the country. State flexibility is necessary to address state specific health care coverage needs and market dynamics.

The ACA is in trouble, but with AHCA help is on the way to stabilize insurance markets and return access to affordable health insurance choices for consumers. It is the failure of Obamacare which is going to leave people without coverage. This failure created an individual market not viable either in the short term or long term.

As a state insurance regulator responsible to Wisconsin consumers, we need solutions now.

View Comments(26 comments)
Bob ConnorsThere's something else that isn't being addressed. The cost of insurance needs to reflect the actual value of that insurance to the buyer. What we have now is a system where charity care and a whole bunch of government initiatives are buried in the cost of insurance, unnecessarily inflating the cost and complicating the system. You don't charge people double the cost of groceries to fund the groceries we give away to the poor. Likewise, the cost of insurance should be what it costs to treat paying customers who purchase insurance. Charity care should be funded by the government through a tax and through a separate program.
Robin HoodPrior to the Obamacare, Wisconsin's HIRSP provided coverage at its height of operation to 21,000 people. This, at the same time that the state's Medicaid program covered adults up to 200% of the federal povery level, and yet still the state of Wisconsin had over 500,000 uninsured residents.  HIRSP was not affordable for many, even with its discounts, and had a six month waiting period for pre-existing conditions.  It also required applicants to present proof of refusal of coverage from two insurance companies, but some people with pre-existing conditions were not even able to submit applications so could not readily garner such proof.
Joules BeafeaterThis  simply isnt true. For a majority of the poor, they still couldnt afford the insurance.to do this nation wide the right could NOT cut the ACA taxes and they refuse to allow them to remain.For a majority of the poor, it was far more expensive and provided less coverage than ACA.. for some of the wealthy,  especially those on the indivual market, did see significant savings from paying for their massive premiums, on the indivual market, and in stead going into the government subsidized high risk pool.. which is the group market.I WILL GIVE YOU.. the high risk pool was better than what we had most places before ACA. It was a better than doing nothing idea, But the facts are, it wasnt better for most people, hardly covered most peopel with preexisting condition. And was more expesive with less benefits than ACA and cant be done nationwide anyways and the right will never ever provide the same level of funding as wisconsins high rsk pool;