In the past month approximately 2,400 Americans have signed up for President Obama’s high risk health insurance pools.  This information comes from Gene Rickman’s “2,400 Apply for High Risk Health Insurance Pool,” in Top News. The exact state by state data is not yet available, but this number includes members in both states that are running their own high risk pools and states like South Carolina that are letting the government run the high risk pools for them.  Beginning in 2014, health insurance companies like UPMC will not be able to deny insurance coverage because of any preexisting conditions.  To bridge the gap between now and then, the U.S. federal government has required these high risk health insurance pools.

The Affordable Care Act passed earlier this year calls for the mandatory stop to preexisting condition denials by health insurers in less than four years.  Preexisting conditions can include cancer, asthma, diabetes, HIV or AIDS, and even pregnancy.  It is currently almost impossible to get health insurance coverage from companies like Fallon Health Insurance if you have one of these or another preexisting condition.  Within the last month, Americans have been able to sign up for individual state high risk health insurance pools where they will be able to obtain some type of health insurance coverage.  The federal government offers the states subsidies for this program, but states do have to utilize their own government funds as well.

The Patient Protection and Affordable Care Act contains a provision that may force smaller insurance companies like Fallon Health Insurance out of the individual insurance market completely.  According to “Actuary: Act Fast, Or Individual Health Insurers Will Flee,” Allison Bell of Life and Health National Underwriter summarizes the dilemma.  The minimum medical loss ratio requires health providers to spend 80% or more of their premium revenue on paying the medical claims of their insureds.  Experts recommend regulators come up with a way for companies to make this transition.  They worry that smaller companies will opt out of providing individual health insurance because of this new provision.  If that is the case, they would most likely have to let insureds know by June to give them a 6 month warning that they won’t offer individual coverage next year.

Those hoping for some transitions to be spelled out would like to see them immediately so companies know before making the decision to leave the individual market.  The idea behind the 80% medical loss ratio is that insurance companies like UPMC would just reduce administrative costs and other costs they have not related to claims.  It might be hard for insurers to reduce those costs so quickly, not to mention the fact that it will likely hurt smaller insurers much more.  In order to stay competitive, smaller insurance companies offer lower rates for the same coverage as larger companies and have higher marketing and administrative costs.  One suggested solution is to make the minimum medical loss ratio smaller for insurance companies with less market share or for those who sell low-cost plans like high deductible insurance.  Without any changes it is very possible that more smaller insurers will stop selling individual health plans.