Health Care Reform's 1st Challenge: Setting Up a High Risk Pool

Setting up a risk pool in 90 days for individual who cannot obtain coverage because of their health will be the task for the Department of Health and Human Services. While 34 states currently operate such programs, some are closed to new entrants and most struggle to finance coverage for approximately 200,000 enrollees nationwide. Most tend to be sicker and older than the general population, and to qualify they must have been unable to obtain coverage through other sources.

About two million people might be eligible for the new pool, analysts predict, though how it would operate is unclear – complicating a daunting timetable for implementation.

The health care law President Barack Obama signed Tuesday offers only general guidance, making the Department of Health and Human Services responsible for creating the program. It would last until 2014 when health insurance exchanges, marketplaces where companies compete for business, are scheduled to be up and running.

While people will still have to pay premiums to buy coverage, the federal government will add $5 billion to pay claims. The law allows the secretary of HHS to administer the pool or contract it out to states or a non-profit entity. Under the new law:

* Applicants must be U.S. citizens who are not covered by another form of insurance, have been denied coverage due to a pre-existing condition and have been without health care coverage for at least six months.

* Older people can’t be charged more than four times younger ones.

* The plan must cover at least 65 percent of participants’ health costs and follow annual out-of-pocket limits set in the bill.

* Premiums will be based on "standard rates," which states define as average premiums charged by private insurers for similar coverage.

Among the questions to be answered: How much will the coverage cost? Will enrollees have a choice of plans? What medical services will be covered? What hospitals and doctors and other health care providers will participate in the networks to be created? How will the new entity interact with already established state-run high-risk pools?

It will be interesting to follow the implementation of this mandate. Stay tuned.