If you want to manage your health, follow RATS.
Health care and health insurance relies on risk management and cost control. RATS focus on risk through reduction, avoidance, transfer, and self-funding. Reduction means you take your vitamins and go to the gym. Avoidance means you don’t smoke or drive without a seat-belt. Transfer means you buy insurance to cover health care costs. Self-funding is obvious. You pay as you go out of your own pocket and hopefully, with forethought and budgeting.
The best health plans focus on RATS. The plan encourages risk reduction and avoidance through plan coverage of things like preventive care, annual check-ups, and smoking cessation programs. A successful plan also properly prices benefits and scrutinizes claims to ensure the best use of funds paid for the health risks accepted. Ideally, the plan is managing the premium you paid to maximize the available benefit. Finally, a good plan has designed the cost sharing so everyone has “skin in the game” and financial incentives to engage in healthy behavior.
But, even if you follow RATS, sometimes a health risk cannot be avoided or transferred. No health insurance premium will cover the cost of a catastrophic injury or illness like an aggressive cancer. That’s where the pool comes in – the high risk pool.
Under federal health care reform, a high risk health pool was created to insure individuals who suffer from health conditions that prevent or limit the ability to buy health insurance. The program will provide insurance without exclusion or limit of coverage for these conditions. The price for coverage cannot exceed the standard non-group rate for coverage in the market. Other benefit designs will be worked out by the U.S. Department of Health and Human Services (HHS).
For Washingtonians, this is nothing new. Washington has provided a high risk health pool for state residents since 1987 – WSHIP. People who have completed the state standard health questionnaire and failed to qualify for health insurance in the private market can apply for coverage from WHSIP. Like the new federal program, benefits and prices must be designed to meet explicit statutory and regulatory standards.
Unlike the new federal program, the state program allows for higher prices and more limits on coverage. Not anymore. HHS will soon set standards for the federal program. States who want a share of the $5 billion appropriated for the program must change the state pool to meet federal standards. Since the funds will be available after July 1st, expect swift changes to the WSHIP program in the coming months. HHS has asked that states submit their letter of intent to contract with HHS to run a federally qualified high risk pool by April 30th.