Affordable health insurance has been a hot topic of discussion over the last several years in light of the federal government’s passage of the Affordable Healthcare Act in 2010. At the center of the discussion has been what’s known as “pre-existing conditions,” something that prevents high risk consumers from procuring their own private insurance. If you’re one of those consumers, there are resources available to help you purchase a high risk health insurance policy.
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For purposes of definition, a “high risk” consumer in regards to health insurance is one with a serious, pre-existing condition. For example, if you were diagnosed with lymphatic cancer or HIV prior to seeking insurance, you would be categorized as high risk. This designation relates to the very strong possibility that an insurance company will pay out more in medical bills than it will take in through your premiums. You are high risk to them because of the increased potential for them to take a financial loss.
Is a high-risk insurance pool a good option for this type of consumer?
According to the National Association of Health Underwriters, 33 states have high risk insurance pool programs. This is a good option because it’s one of the most effective ways for states to administer coverage for high-risk individuals. If your state has such a pool, you’ll have to apply and meet whatever requirements the program has established. Most states use a private insurance company or PPO program to administer their insurance, so you might end up dealing directly with one of these companies.
A high risk insurance pool is usually a private entity, but still a quasi-public corporation, much like the affordable housing entities most states operate. The high-risk insurance pool is a self-funded through a variety of means and may or may not receive federal and state tax dollars.
Be advised that in order to prevent what’s known in the insurance industry as “adverse selection,” there is usually a waiting period involved with high-risk insurance pools. This is unless the consumer has had private insurance covering pre-existing conditions prior to his inclusion in the pool.
How do high-risk insurance pools stay in business?
This is an excellent question, which perfectly illustrates why private insurance companies cannot afford to be forced to cover pre-existing conditions. According to the National Association of State Comprehensive Health Insurance Plans, virtually every state high risk insurance pool operates at a financial loss and must be subsidized. Those subsidies are the only thing that keeps most of these high-risk pools operational. That’s one of the reasons why they implement waiting periods for people who have not had health insurance previously.
It should be noted that high risk insurance pools are not designed to provide coverage for the chronically poor, the homeless, the indigent, etc. They are designed for people who could normally afford private insurance, but have been excluded because of a pre-existing condition. Premiums for high-risk insurance are going to be higher than for standard insurance, for obvious reasons. Therefore, the poor and indigent will not be able to afford these premiums anyway. Instead, they are funneled to Medicaid or other government-funded programs.
What if my state doesn’t have a high-risk insurance pool?
Of the 17 states that don’t offer high risk pools, 12 do provide some other means of at least partial relief to high risk consumers. For example, some states require private insurance companies to offer some amount of temporary coverage in extreme cases. What each state mandates will be somewhat different, so it’s best to check with your state health department or insurance department for the details. As for the other five states, they provide no regulatory mandate to protect high risk consumers who cannot purchase private insurance.
If all else fails, the one remaining option is to consider joining the healthcare cooperative. A healthcare cooperative is a group of people who have banded together in order to provide “health insurance” through shared payment of bills.
These cooperatives are in no way considered health insurance by any stretch of imagination; rather, they are voluntary programs by which each member agrees to help others pay their medical bills. Some of these health care cooperatives are formed on religious grounds, other times it’s simply a group of people with a common interest.
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