This morning, the Department of Health and Human Services released a new report showing that up to 129 million Americans have a pre-existing condition and would likely be denied coverage in the individual health insurance market. During an appearance this morning on MSNBC, Secretary Kathleen Sebelius admitted that most of these individuals already have coverage, but argued that they would have a hard time finding insurance if the law were repealed and they were to lose their job. “A number of people are in jobs with large employers where people can’t be underwritten because of their health condition, that’s good news. But those folks frankly can’t look at leaving that jobs, can’t start their own business, can’t have the freedom to retiring early before they have qualify for Medicare because they are terrified they will lose that insurance coverage,” Sebelius said, pointing out that insurers deny coverage to 1 out of every 7 who apply for it in the individual market.

House Rules Committee Chairman Rep. David Dreier (R-CA) dismissed these concerns while responding to the report on Fox News, but apart from questioning the timing of the release of the study, Dreier didn’t challenge the report’s conclusion or provide a clear explanation for how Republicans would help the 129 million Americans find access to affordable insurance:

DREIER: I think that if you look at policy providers they’re saying that many of those people who fall into that category are already insured and it’s very interesting, very interesting that that study has come out literally the day that we begin the debate on this issue. We all want to ensure that people with pre-existing conditions have their needs addressed and I think we can find effective ways to do just that.

Watch it:

Republicans have suggested that they would cover sicker Americans in high-risk insurance pools, which are already part of the existing legislation and are designed to provide insurance to the sickest Americans before the exchanges become operational in 2014. Unfortunately, the high premiums associated with covering only sick people has kept these programs out of reach for most of the eligible population.

In fact, Republicans — who have long championed the pools as a means of extending coverage to those who don’t qualify for insurance in the individual market — have criticized the programs as ineffective and underfunded. The ACA provides $5 billion to run the temporary pools for three and a half years while the Republicans have proposed spending $25 billion over 10 years to keep the pools running on a permanent basis.

The Department of Health and Human Services (HHS) announced new plan options and lower premiums in the 24 high risk insurance pools that are under federal control in an effort to bolster enrollment in the fledgling program. The so-called Pre-Existing Condition Insurance Plan (PCIP) functions as a bridge to the Affordable Care Act’s exchanges for people who can’t find affordable coverage in the individual market, but thus far, the program’s high premiums have kept many eligible individuals from enrolling. The program currently boasts just 8,011 beneficiaries.

Starting January 1, however, Americans enrolled in a federally-run PCIP program, will have two new coverage options: a plan with a $1,000 deductible and $250 deductible for prescriptions, a $2,000 deductible with $500 deductible for prescriptions and the exiting option of a combined medical and prescription drug deductible of $2,500, which will be paired with a federal health savings account.

“Adjustment in rates in existing and new premiums will be nearly 20 percent below what is currently being charged today, ” Richard Popper, Director for the Office of Insurance Programs in HHS’s Office of Consumer Information and Insurance Oversight, a said on a conference call attended by the Wonk Room. He suggested that PCIP enrollment levels are comparable to the early enrollment rates in CHIP and predicted that the program’s “enrollment continue to grow and with the change in premiums we see that trend escalate.”

In working towards that end, the government is also stepping up its outreach and enrollment efforts:

- Working with states in the federally-run pool programs to encourage their state insurance departments to require individual market insurance companies to notify those who may deny coverage about the availability of PCIP.

- Encouraging insurers to notify denied applicants about the PCIP option. A number of insurers have agreed to put notice in their denial letters about availability of PCIP.

- Working with the Social Security Administration to inform individuals under 65, who are not yet eligible for Medicare, about PCIP.

- AARP has sent out notices to their 24 million members about the availability of PCIP.

Some of the 27 states that are operating their own high risk health insurance pools are already offering similar options and all states will have “the opportunity to submit any changes they would like to make in their benefits or premiums for 2011.” “But we are not requiring the states to exactly adopt the changes that we are rolling out,” Popper said. “This program is largely build on state flexibility. With that flexibility and with the available products available we don’t feel the need to require them to copy what’s being done on the federal pool level.”

“We are doing everything we can do get as much enrollment and we’re doing as much outreach and we think premiums will help and hope that other states will follow suite,” Liz Fowler, Director for Policy in HHS’s Office of Consumer Information and Insurance Oversight said on the call.

In July, following GOP allegations that states would be able to use federal dollars to cover none-Hyde abortions in the temporary high risk insurance pool program, HHS issued regulations prohibiting states from covering the procedure. “The (high-risk pool) program,” the regulation states, “is Federally-created, funded, and administered (whether directly or through contract); it is a temporary Federal insurance program in which the risk is borne by the Federal government up to a fixed appropriation. As such, the services covered by the PCIP program shall not include abortion services except in the case of rape or incest, or where the life of the woman would be endangered.”

Progressive pro-choice advocates felt betrayed. Since there is no over-arching law that prevents states from using federal dollars to fund abortion services, the administration was not required to alter the state’s proposals. Writing at RH Reality Check, CAP’s Jessica Arons accused the administration of applying the Stupak amendment to the high risk pools and going beyond the bargain it struck. Now, 19 national pro-choice groups have “signed on to public comment, submitted Monday, urging HHS to ‘revise this rule and remove the ban.’” The group, Raising Women’s Voices has released a video and letter writing campaign, “highlighting stories of women with pre-existing conditions who have had abortions,” urging Sebelius to “lift the harmful abortion restrictions”:

My doctor said my health is at risk. Here is a Catch-22. My insurance will pay for the pregnancy that can seriously injure me, but it won’t cover the abortion that can protect my health. I don’t get it.

Watch it:

It’s unclear if the group can change the rules after it’s been written, but it’s fairly obvious that the pro-choice community was outmaneuvered by the Right. Few realized that Nelson’s amendment did not apply to every federal dollar in the health care law, and the administration seemed unprepared to fight once conservatives organized around the issue. In fact, when I spoke to some state sources who were implementing the pools, they were surprised to learn that the Hyde restrictions did not apply to the federal funds earmarked for the program. But what’s disappointing is that the administration felt so compelled to issue its restrictive regulations so quickly and reactively. If it was hoping to appease conservatives, then it overestimated the GOP’s willingness to recognize its concessions and underestimated its supporters ability to just accept the slight (yet again).

Public comment on the high risk pools closed Tuesday at midnight.

This morning, following GOP allegations that states would be able to use federal dollars to cover none-Hyde abortions in the temporary high risk insurance pool programs, HHS issued regulations prohibiting states from covering the procedure. “The (high-risk pool) program,” the regulation states, “is Federally-created, funded, and administered (whether directly or through contract); it is a temporary Federal insurance program in which the risk is borne by the Federal government up to a fixed appropriation. As such, the services covered by the PCIP program shall not include abortion services except in the case of rape or incest, or where the life of the woman would be endangered.”

The controversy that sparked the new rules originated in a press release from the National Right to Life Committee, which claimed that the Obama Administration “has quietly approved a plan submitted by an appointee of Governor Edward Rendell (D) under which the new program will cover any abortion that is legal in Pennsylvania.” The charge bounced around conservative circles, despite the administration’s swift promise to issue new guidance preventing states from covering abortion services. House Republicans wrote a letter HHS Secretary Kathleen Sebelius asking her “to supply them with the applications from all the states administering their own high-risk pools” and yesterday, 13 Republican Senators penned their own missive urging Sebelius to do what the administration had already promised.

Meanwhile, progressive pro-choice advocates felt betrayed. Since there is no over-arching law that prevents states from using federal dollars to fund abortion services, the administration was not required to alter the state’s proposals. It had already promised to segregate abortion funds within the exchanges and to prohibit community health centers from using federal funds to provide abortion services, but it had said nothing of shielding funds elsewhere — including high risk pools. Writing at RH Reality Check, CAP’s Jessica Arons accused the administration of applying the Stupak amendment to the high risk pools and going beyond the bargain it struck:

It is understandable that the Administration might now feel the need to honor the “spirit” of the compromise that resulted in the Executive Order. But the whole point of the compromise was to preserve the status quo, which included both restricted and unrestricted spheres of abortion funding. Moreover, the terms of the agreement were carefully negotiated. Abortion opponents who participated in the bargaining did not raise concerns about high risk pools or other specific potential sources of federal funding, and they should be able to live with the deal they made.

Indeed, rather than developing a compromise that would have either allowed states to decide whether to cover abortions with federal funding or required them to segregate funding and use private or state money to pay for the abortion services, the administration prohibited abortion coverage almost instantly. White House Office of Health Reform Director Nancy-Ann DeParle insists that “no new ground has been broken” and that “the program’s restriction on abortion coverage is not a precedent for other programs or policies” — and hopefully that’s true. But it’s hard to understand why the administration felt so compelled to make this decision so quickly and reactively. If it was hoping to score points with conservative pro-life voters, then it overestimated the GOP’s willingness to recognize its concessions and may be surprised when Republicans continue to send fundraising letters about the abortion issue.

Starting today, Americans who have been uninsured for more than six months and denied coverage on the individual market will be able enlist in a temporary high-risk pool program the government is calling, Pre-existing Condition Insurance Plan (PCIP). Each PCIP will be run by the state or the federal government and will have to keep their premiums at “standard rates,” limit on out-of-pocket medical costs to $5,950 a year for an individual, and maintain an actuarial value of at least 65%. Plans will also be prohibited from varying premiums on the basis of age by a factor greater than 4 to 1.

State and federal governments will have just $5 billion to spend on the program and many expect that the limited resources and the high cost of covering very sick applicants could lead to steep premiums or force states to limit eligibility. Iowa, for instance — which will receive $35 million of the $5 billion federal pot — predicts that it will only have enough dollars to cover 975 sick residents and the federal government says that premiums will vary nationwide:

Prices will vary by state and type of coverage from a low of $140 a month to as much as $900, said Richard Popper, deputy director of a new insurance office at the federal Health and Human Services department. Officials provided details of the plan, which starts enrolling people Thursday.

The price range is so wide because premiums will be keyed to standard individual health insurance rates in each state, which can differ dramatically because of medical costs and the scope of coverage. Independent experts estimate premiums will average around $400 to $600 a month. Younger people will pay less. “There are going to be meaningful premiums that are going to be required to stay in this plan … in the hundreds of dollars,” said Popper, with the Office of Consumer Information and Insurance Oversight.

The pools are an interim measure that will go away after the exchanges become operational in 2014, but if Democrats want to live up to the name of the health care law, they will have to figure out a way to appropriate more funds for the program. The Congressional Budget Office has concluded that the $5 billion will last for approximately two years and many states are worried what happens once that money runs out.

Nobody is protesting louder than the GOP. Last week, 28 Senate Republicans wrote to Health and Human Services Secretary Kathleen Sebelius arguing that the CBO findings are proof that the pools “will fail to provide the assistance promised by supporters of the new law” and this week the office of Rep. Dave Camp (R-MI) put out an entire release complaining about the lack of funds.

Their point is certainly well taken, but given their opposition to spending money on health reform and commitment to repealing the entire law, it’s hard to take seriously. After spending the last year and a half claiming that the government was spending too much money to reform health care and that it should put all of it back, the GOP is now accusing Democrats of not pumping enough money into the system. Should the Democrats move to add more money into into high risk pools, however, the Republicans will probably revert to their original criticism.

The federal government will unveil the first real benefits from the health care reform law this week, as states begin enrolling sicker individuals into health insurance policies and the federal government rolls out a new web portal designed to help Americans compare and purchase insurance products.

In at least 20 states, uninsured individuals with pre-existing conditions who have been without coverage for six months will be able to enroll in the new pools starting Thursday, but coverage will not begin until sometime in August. Under the new regulations, high-risk insurance pools will not be able to impose preexisting condition exclusions, will have to keep their premiums at “standard rates” (or no higher than the average person of that age would pay for insurance in the private market), limit on out-of-pocket medical costs to $5,950 a year for an individual, and maintain an actuarial value of at least 65%. Issuers will also be prohibited from varying premiums on the basis of age by a factor greater than 4 to 1.

According to Politico’s The Pulse, NASCHIP, a trade organization of high risk pools, is negotiating between the states and the federal government, pressing HHS for a “fair contract in terms of protecting states so that when they enter into this agreement, they’re not exposing themselves in terms of financial or legal liabilities,” and clarifying that states do not have “a financial commitment to run the pool if HHS funds run out.” The health care law gives states $5 billion establish the pools as an interim measure to provide coverage for Americans with pre-existing conditions until the exchanges become operational in 2014. Thirty states have announced that they will be administrating their own pools, but only 20 have submitted proposals to do so. The federal government will administer pools “through a private nonprofit entity” in the 19 states that have decided against implementing the measure.

On Thursday, HHS is also scheduled to unveil it’s new insurance portal, HealthCare.gov. The new website that will allow individuals and small businesses to comparison shop between different coverage options, “including private insurance plans, high risk pools, CHIP and Medicaid.” Initially the site will only list the different insurance plans, but will eventually expand to include information about pricing and quality measures.

Yesterday, our old friend and former McCain campaign adviser Douglas Holtz-Eakin wrote an editorial distancing the former presidential candidate from the high-risk insurance pools in the new health care law. President Obama has argued that the program — a temporary measure designed to provide coverage for individuals who are uninsured for at least six months — was modeled off of McCain’s proposal to cover every American with a pre-existing condition in state-based high-risk policies, and has touted the provision as an example of the Republican ideas contained in the health care bill.

Under the law, a state can meet the new HRP requirements (the pools have to cover at least 65 percent of costs, have limited out-of-pocket expenditures, have no exclusions for pre-existing conditions and cost no more than a standard rate for a standard population) by 1) improving the affordability standards in its existing program, 2) building a new pool that meets the federal requirements or 3) allowing the federal government to enroll its residents into a national program. Holtz-Eakin takes exception to the notion that this has anything to do with what his boss was proposing on the campaign trail:

In contrast, McCain’s GAPs would have emphasized best practice as a condition for federal assistance — including permitting GAPs to band together with other states’ GAPs to enlarge pools, purchase coverage across state lines and lower overhead costs.

It would have provided incentives for use of innovative tools to reduce health care costs. As a condition of federal assistance, states would have permitted a broad range of insurance, including preferred-provider organizations and health savings accounts. McCain’s GAPs would have addressed both cost and coverage, improved competition in insurance markets and expanded the quality of insurance offerings.

In addition, McCain’s plan would have put serious money behind the needs of those with costly conditions. How much? More than $20 billion annually, according to Lewin Group estimates.

There is a clear bottom line: Obamacare marches into a state with no regard for the existing high-risk strategy and no attempt to coordinate to achieve sensible coverage, competition and budgetary outcomes. In return, states get a temporary program with a 2014 expiration date.

Thus, at its best, it is a bandage that won’t foster market reforms.

I’m not going to deny that there are some differences here, but I also don’t believe that the Democrats were under any kind of obligation to adopt McCain’s “GAPs” since the senator ultimately voted against the measure, along with every other Republican. The final provision was a compromise between McCain’s proposal and Democrats’ principles but the basic concept is the same incredibly expensive proposition: bring all the sick people together, put them in a single risk pool and see how much that costs you. Holtz-Eakin says that McCain would have put “serious money” behind the proposal, more than $20 billion annually. But during the campaign, he suggested that far less would be needed.

“When Mr. McCain unveiled his high-risk pool proposal, his chief domestic policy adviser, Douglas Holtz-Eakin, the former director of the Congressional Budget Office, estimated the federal cost at $7 billion to $10 billion. Mr. Holtz-Eakin said five million to seven million uninsured people would be singled out for coverage,” the New York Times reported in July of 2008. “But in a recent interview, Mr. Holtz-Eakin emphasized that the projections “could change dramatically” depending on how the program was structured.”

The point of all this is to say that HRP are just a very expensive way of doing business, no matter whose version you consider. The states that are choosing to opt out of the program are arguing that $5 billion over three and a half years is not nearly enough and who’s to say that they would be satisfied with the kind of funding McCain was proposing? According to a 2008 report from the Tax Policy Center, using high-risk pools “to prevent large losses in insurance coverage among the sick and needy” would require far more than $100 billion over 10 years. The real cost would be “on the order of $1 trillion over ten years given projected health care costs.”

No matter how much better Holtz-Eakin believes McCain’s proposal was at containing costs, he can’t possible agree that the GAPs were sustainable over the long term. Obama’s approach is an interim measure which may require more funding, but at least it ends once the exchanges begin.

On July 1st, the new health care law will begin providing temporary health care coverage to Americans who can’t find affordable insurance in the individual health care market through high-risk insurance pools. The law allows states to decide whether they will participate in a new high-risk health-insurance pool, build on an existing program (if they have one), establish a separate state-based high risk pool with federal funding or do nothing at all, in which case the federal government would come in and administer the program.

At least 35 states are already operating their own high-risk pools but states that choose to build off their existing programs will have to meet new federal requirements. High-risk insurance pools will not be able to impose preexisting condition exclusions, will have to keep their premiums at “standard rates” (or no higher than the average person of that age would pay for insurance in the private market), limit on out-of-pocket medical costs to $5,950 a year for an individual, and insurers will have to maintain an actuarial value of at least 65%. Issuers will also be prohibited from varying premiums on the basis of age by a factor greater than 4 to 1.

Last month Kathleen Sebelius wrote states to ask how they plan to implement the high-risk insurance pool provision and on Friday, most of the states responded:

The states that opted out of the program complained that the $5 billion in federal dollars would not be enough to fully fund their pools and said that they could not cover the uninsured with state funds. “We cannot afford to expose Minnesota taxpayers to added potential costs and administrative burdens now,” Minnesota Gov. Tim Pawlenty (R), said. “Unfortunately Florida is not in a position to authorize new financial obligations,” Gov. Charlie Crist (I-FL) added. Their complaints highlight two important contradictions. First, if the states can’t find enough dollars to cover the uninsured for three and a half years, how in the world would they have enough money to develop reform on a state level, as Republicans argue they should? Second, POLITICO notes that the decision came down across party lines — Democrats agreed to establish state-pools using federal dollars, while “Most Republican governors decided to allow the federal government to establish its own high-risk insurance pool in their states, essentially punting.” But as I’ve pointed out before, this too is counter-intuitive. Republicans are relying on the federal government to cover the uninsurable population, helping bring about the very thing they fear — greater government involvement in the health care sector — while Democrats are employing state-based solutions.

Moreover, the idea of the high-risk pool was first proposed by then-presidential candidate John McCain, who believed that he could cover everyone with a pre-existing condition for just $10 billion. Conservative organizations like the Heritage Foundation supported the idea, but Democrats saw it as an incredibly inefficient way of expanding coverage. Now that Obama has accepted the idea into health reform, Republicans are taking their swings and opting out of McCain’s idea.

(Map designed by Nick McClellan.)

Nevada Gov. Jim Gibbons (R)

Nevada is the third state to officially opt-out of the interim high-risk pool program put forward in the new health care law, paving the way for the federal government to enroll uninsured state residents in a federal high risk pool program. The health care law established the pools as an interim measure to provide coverage for Americans with pre-existing conditions until the exchanges become operational in 2014. States that fail to build upon their existing programs or establish new pools will cede control to the federal government. Georgia does not currently operate such a program.

In a letter to HHS Secretary Kathleen Sebelius, Gov. Jim Gibbons (R) blamed the feds for not providing enough money for the pools:

In a letter to U.S. Health and Human Services Secretary Kathleen Sebelius, Gibbons said the estimated $61 million Nevada would receive to implement the pool under the recently signed federal health reform bill would be “grossly inadequate” to serve as many as 100,000 people who may be eligible.
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“We estimate Nevada’s share of the $5 billion national pool will only allow approximately 2,900 individuals to be served,” Gibbons wrote, adding that more than 500,000 Nevadans are uninsured and an estimated 100,000 may be eligible to join the pool. “We do not believe financial or human resources are available to manage the pool,” the governor wrote. “There will be a significant problem managing the few who become eligible, but an even larger problem managing the frustration of people not eligible for the pool.”

Gibbons isn’t wrong to argue that the federal government will probably need to put more money towards the program, but the sentiment seems to contradict the often repeated Republican claim that the federal government should stay out of the health care business altogether. In fact, the three other states that have chosen not to build their own pools or embellish their existing programs — Georgia, Louisiana, and Nebraska — have all portrayed the federal health care law as a grotesque abuse of federal power. Earlier this month, Gibbons even signed an “executive order appointing a Las Vegas attorney to represent Nevada in a multistate lawsuit filed in Florida challenging the constitutionality of the law after Democratic Attorney General Catherine Cortez Masto refused.” Now, he’s relying on the federal government to cover the uninsurable population, helping bring about the very thing he fears — greater government involvement in the health care sector.

Sen. John McCain (R-AZ) initially proposed state-based high-risk pools as a way to cover Americans with pre-existing conditions during the presidential campaign (conservative organizations like the Heritage Foundation seem to support the idea as well) and was heavily criticized by Democrats for underfunding the initiative. Now that Obama has accepted the idea into health reform, Republicans are taking their swings and opting out of McCain’s idea.

States have until Friday to tell the federal government if they will voluntarily establish or build upon an existing state-based high-risk pool program.

Jennifer Haberkorn, formerly of the Washington Times but now with Politico, is reporting that states will face the “first real test of how cooperative the states will be in implementing the massive new health care reform law comes on Friday,” when they have to decide if they’re willing to cooperate with the interim high-risk pool provision of the law — which encourages states to establish coverage pools for individuals who cannot find affordable coverage in the individual health insurance market. If states chose not to implement the high risk pool program, the federal government will enroll eligible state residents into a national pool.

Georgia’s insurance commissioner John Oxendine, a Republican who is also running for Governor, already announced that the state won’t participate in the high-risk pool requirements, thus inviting the federal government to directly contract for the provision of services within the state. And now, Kansas has also made the “preliminary decision” to opt out of the measure and bring about the very kind of federal intrusion that Republicans seek to avoid:

“From our standpoint, we just want to do what’s right for Kansas,” said John Meetz, a government affairs liaison at the Kansas Insurance Department. “We’re not looking at it as a political decision.”

Louisiana Gov. Bobby Jindal and Insurance Commissioner James J. Donelon have made a preliminary decision to opt out of the program, Donelon said Monday.

He is a Republican and one of the dozen elected insurance commissioners in the country. But he said Louisiana’s decision was based largely on the concern that the states will be stuck with the bill. “On the surface, it appears to me to be a no-brainer,” Donelon said. “We can’t afford this.”

Jindal’s decision to invite the federal government into Louisiana — rather than using the new federal funds to improve the state’s existing high risk pool program — seems to contradict strong opposition to federal overreach into state health care policy. “I encourage those in Washington, D.C. to pick up a U.S. Constitution and read it,” Jindal has said of the bill. “If the 10th Amendment of the Constitution means anything, we need to stand up for the fact that the federal government can’t force Americans to buy a certain product as a requirement to be an American. If the federal government can do this, what can’t they do? Where does it stop?”

Apparently, it starts with Louisiana residents enrolling in a federal high risk pool program.