Question

Use the concept of risk pooling to discuss the reasoning behind the provision in the Patient Protection and Affordable Care Act (PPACA) to create state-based health insurance exchanges, where anyone (individuals or groups) would be eligible to purchase affordable coverage. Why private insurers, often not willing to sell insurance contracts to small employer groups before the enactment of PPACA, may be more inclined to offer an “essential benefits package” at affordable rates through such exchanges in the near future?

Answer 1

What are high-risk pools? High-risk groups are health insurance programs for people who generally cannot take out insurance in the individual market because of a pre-existing illness.

These people are commonly called difficult to insure or medically uninsured. There are currently no national high-risk groups, but 35 states, including California, currently run their own high-risk groups. Until recently, only very limited federal funds were available to risk groups that meet certain federal guidelines, and California has historically not been eligible for these funds because of its unique state benefit project. The state currently supports approximately 7,000 people as part of a high-risk grouping program, a small percentage of people not medically insured in state.

PPACA intends to make coverage more accessible and to do this, it does the following:

· Create an individual mandate. It imposes an individual mandate that requires most citizens and legal residents of the United States to have health insurance or pay a fine.

· Establish American Health Benefit Exchanges: To make coverage more accessible and affordable, PPACA creates new entities called American Health Benefit Exchanges through which people who generally do not have access to affordable employer coverage, as well as small businesses, can purchase coverage.

· Change private health insurance coverage: PPACA sets new requirements for health plans and insurers designed to expand access to affordable coverage and prevent individuals from losing coverage.

· Develop Medicaid: PPACA greatly expands the Medicaid program (known as Medi-Cal in California) primarily by making coverage mandatory for certain population groups that were not previously required, such as low-income, childless adults.

· Establish a new high-risk insurance group: PPACA establishes a federal high-risk health insurance coverage program to provide coverage for people who cannot buy coverage and who are commonly known as difficult to insure or medically uninsurable.

One of the main elements of early implementation is the establishment of a federal high-risk health insurance program.

Eligible health care plans, sold near future must meet a number of federal requirements, including the "essential benefits" set out in the Act, to include both preventative and a range of benefit categories that reflect a standard employer-sponsored plan. Qualified health care plans must also meet federal standards for the adequacy of the network of health care providers (including contracts with “necessary environmental health care providers”) and the quality of care health. In addition, qualified health care plans required to provide patients and consumers with performance information in accordance with national quality metrics. Eligible plans sold through exchanges must comply with certain fund segregation procedures if plan sponsors wish to offer abortions that go beyond those authorized by federal law (since 2010, government-funded abortions are authorized in cases of rape, incest and danger of death).