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High risk pools find support among insurers, cause concern for some families

SALT LAKE CITY — Kat Martinez's husband suffers from epilepsy, so when health insurance was made available on the federal exchange in 2014, the Murray woman signed her family up.

The family had been uninsured for a long time, she said. Martinez runs a home day care, and her husband is in school — not a combination lucrative enough to approach paying for expensive medications and a litany of brain scans and neurologist appointments.

So the coverage, she said, is a godsend.

"We're really lucky it's very controlled right now," Martinez said of her husband's epilepsy.

It was an anxious Wednesday morning for Martinez, one of several dozen onlookers at the Capitol to hear presentations to state lawmakers from executives with Intermountain Healthcare and University of Utah Health Plans.

Leaders from both organizations told the Utah Legislature's Health and Human Services Interim Committee that they support the concept of a high risk insurance pool as a vital way to control premium costs.

That support was disappointing for Martinez, she said. If a high risk pool in Utah were reinstated, it would mean both drastically higher payments and lifetime restrictions on the amount of coverage her husband could receive, Martinez said.

"Everytime they said the word(s) 'high risk pool,' I had a little mini heart attack," she said.

Martinez said her husband's expensive treatments would mean her family would hit their lifetime cap within just a few years. Because people with pre-existing conditions "really set people up for failure in a long-term way," she contends that more should be taken into consideration than just their effect on relatively healthy people's subsidies.

But Greg Poulsen, senior vice president and chief strategy officer at Intermountain, told the committee that serious steps are needed to fix the nongroup insurance market, particularly the federal exchange. The structure of that market, he says, is fundamentally broken.

Poulsen said he believes a high risk pool for people with predictably very high medical expenses would significantly drop premium costs on the exchange and entice more young and healthy people to purchase insurance there, something the marketplace badly needs to be sustainable, he said.

"We think the exchange is probably something that can be fixed if we take the right steps," Poulsen said.

He cited the hypothetical example of a 24-year-old healthy woman who could be expected to pay only a little more than 40 percent of her current premium, and a 64-year-old man who could pay less than 75 percent of his current monthly cost — so long as a 44-year-old man with hemophilia was moved to a high risk pool.

Removing the most expensive patient from the others' pool, Poulsen said, would make it much easier to offer more affordable premiums and likewise draw in more healthy people, creating a positive cycle.

"Premiums can become significantly more affordable, which we think will reduce the need for mandates," he said.

Currently, high premiums present a barrier to young, healthy individuals, who don't want to pay an exorbitant monthly amount for something they don't see benefitting them, according to Poulsen. He called it the No. 1 problem facing the nongroup market. Over time, a lack of young and healthy people will continue to drive costs up, he said.

"Over time, the exchange (itself) could become a high risk pool if we don't do something about it," Poulsen said.

The exchange is unstable, but Intermountain and University of Utah Health Plans continue to offer insurance there "in spite of major negative financial impact," according to Poulsen's written presentation.

That's because, "with few exceptions," the "prior insurance options" of those who buy nongroup insurance on the federal exchange "no longer exist" under the Affordable Care Act, according to the presentation.

That's despite 80 percent of people joining the exchange initially switching from existing insurance rather than from no insurance at all, Poulsen said.

Government taxation, he said, is the best way to fund the high risk pool, a suggestion that drew sharp questioning from Rep. Ray Ward, R-Bountiful.

Once a person is determined to belong in a high risk pool, Ward asked, does Poulsen believe it's appropriate to "move them from your books to our books?"

"So as soon as we knew they became expensive, you wouldn't have to take care of them anymore?" he asked.

Poulsen said it's most practical to allow the government to pay the intensive costs of a high risk pool. In his presentation, Poulsen indicated he believes it's feasible for the federal government to foot that bill.

"The intent clearly here is not that anybody would reap a windfall on this but … that those people would have lower premiums reflecting the actual costs that they have," he said. "Right now the cost that (young, healthy people are) being expected to pay is not worth it."

Rep. Edward Redd, R-Logan, asked for clarification on how a person being moved from the regular nongroup market to a high risk pool would be decided.

"Who makes that decision?" Redd asked.

Decisions over who qualifies for a high risk pool — through incurring high medical costs on a predictable basis — would be a "government function," Poulsen said. That's how it worked in Utah when the state ran a high risk pool prior to the Affordable Care Act, he explained.

Poulsen also cited a federal waiver Maine obtained in 2011 that allows for the flow of federal funds to make insurers whole for their coverage of patients who chronically incur high medical costs. Such a program is known as reinsurance.

Before the passage of that sweeping federal law in 2010, Utah and 34 other states had created such pools for people who could not otherwise obtain insurance because of pre-existing conditions.

The reinstating of risk pools was discussed as a possible piece of strategy in the debate over the Affordable Care Act repeal this year, but repeal efforts ultimately died in the U.S. Senate.

Still, some insurers have contended the reintroduction of high risk pools as a method of controlling premium costs should be considered in any health reform that manages to get passed by Republicans in Congress, who have largely — and vocally — opposed the Affordable Care Act for several years.

Martinez takes issue with what she calls an "underlying level of blame" that she believes insurers use in the health care debate when identifying chronically sick or disabled people as the reason for others' dissatisfaction with their premiums.

"I get really anxious anytime when people with disabilities or who have pre-existing conditions are kind of singled out," she said. "It's really scary to me."

Kristen Wolfe agrees. The 26-year-old Salt Lake City woman has lupus and believes she would be a clear candidate for being put in a high risk pool.

Wolfe, an office administrator at the I.J. & Jeanné Wagner Jewish Community Center, estimates she would hit her cap on coverage within four years, leaving her without options for many decades afterward.

"It's scary," she said.

Wolfe said she has a problem with discussions about health care that focus only on economic issues — "they only ever talk about the money" — and not the hope that the eradication of high risk pools has given to people like her.

She said she hopes legislators will be careful not to "let the insurance companies start making the rules again."

Chad Westover, CEO of University of Utah Health Plans, indicated to the committee that he favors either creation of a high risk pool or a government reinsurance program. Reinsurance can be defined as government funds that help make carriers whole for coverage of their most expensive enrollees.

Westover's presentation also promoted more stringent control of cost-shifting — or rather, the way providers charge insured patients higher rates to account for medical costs not collected from those who are uninsured — and improving mental health care treatment in the state.

Westover said the cost of health care, which has risen more than 800 percent over the past half-century, is a problem that Utah lawmakers need to address without banking on the federal government to get it right.

"If we ignore this problem and continue up this trajectory … it will be fixed for us probably at the federal level and probably (be accompanied by) unintended consequences," he said.

Westover added that the U. is using multiple methods to help reduce unnecessary emergency room visits and hospitalizations among health plan enrollees who utilize those services the most.

"We're investing so that we can bend that cost curve, so we can keep people healthier, keep them at home when appropriate," he said.