The centerpiece of Sen. McCain’s plan to “help” those with chronic conditions to get health insurance is the creation of high risk pools in every state.
But, McCain has also said that he would ask the nation’s governors how to create these pools (with about 30 states having one today). Since Alaska is one of the states with a high risk pool, it might be interesting to get a sense of how Governor Palin might advise McCain on the creation of these pools.
Based on the high risk pool in her state, Palin’s advice would clearly be to create a high risk pool that: offers very expensive coverage, puts as much burden on individuals as possible, excludes preexisting conditions, and limits benefits as much as possible.
Alaska’s pool is one of the smallest in the country, with 510 enrollees (end of 2006). And, Alaska is one of the most expensive programs in the country—the total cost per enrollee of the program is $18,569 (when you include the enrollee premium spending and subsidies). In the US, the average family premium for an employer sponsored health plan is roughly $13,000—yes, that is for a whole family, not for an individual in Alaska.
Alaska’s high risk pool imposes very high cost sharing on enrollees, which limits enrollment and access to care:
- Premiums: Overall, the monthly premiums are very high. For example, if you are 55 years old and elect the PPO with the $1,000 deductible, your monthly premium cost is $1,404 a month ($16,848 a year). Assuming a two-person, middle class household making $43,750 a year (250 percent of the federal poverty level in Alaska), the premium cost for that one person would consume 39 percent of household income.
- Deductibles: Alaska has a minimum deductible of $1,000 (which is high, but not uncommon for high risk pools). Options exist to allow enrollees to choose from a range of deductibles up to $15,000 (which is very high, even for high risk pools).
- Out-Of Pocket Costs: The premium and deductible are not the only costs to the individual. When seeing an in-network provider, the individual is still responsible for 20 percent of the cost of most services. There is an overall cap on out-of-pocket costs, but that is as high as $25,000 a year for one of the policies.
Alaska’s preexisting condition exclusion and limited benefits hut enrollees:
- Pre-Existing Condition Exclusion: For many individuals in the Alaska high risk pool, pre-existing conditions are excluded for six months. This means that if you are in the pool because you have ovarian cancer, then you will not get any coverage for cancer-related services for six months.
- Limits on Benefits: The PPO plan does not cover many services, including for the following from Part I of the PPO contract: maternity coverage and fertility tests, routine physicals, immunizations, eyeglasses, and mental health benefits services are capped at $4,000 a year.
Alaska’s high risk pool discourages individuals from seeking preventative care and chronic disease services by making such care subject to a deductible. A plain reading of the benefits package shows that preventative care and chronic care services are part of this deductible. Many states will exclude those services from the deductible to encourage patients to get the chronic care they need. Instead, Alaska makes you pay out-of-pocket for such services until the deductible is met.