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The illness: Expensive insurance for serious health problems

The cure: Diving into the high-risk pool

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Universal health insurance? Massachusetts enacted it last year, and California could follow suit this year (and in both states, the leadership came from Republican governors), but North Carolina--with an estimated 1.4 million people uninsured--is still a long way from even thinking about it, let alone doing it, according to Adam Searing, director of the N.C. Health Access Coalition.

Exhibit A in that regard, he says: The failure in the last legislative session of a bill to create a high-risk health insurance pool, a relatively small but nonetheless critical first step toward universal coverage that Massachusetts and California had already taken.

Indeed, at least 30 other states have taken it, too, and Searing is optimistic that North Carolina will finally have joined them by the time the new General Assembly is finished.

What's a high-risk pool? Very simply, it's folks with serious medical problems whom insurance companies don't want, except at exorbitant rates that violate the fundamental idea of insurance—which is shared risk. Searing says there are 18,000 such people in North Carolina. And while Blue Cross Blue Shield of North Carolina (BCBS), which insures more than half of all North Carolinians, has agreed to be their insurer of last resort—to offer them insurance if no one else will, in other words—the rates it charges are so high that only about 100 of them can afford to buy it.

Take, for example, a 45-year-old male with multiple sclerosis, Searing says. In BCBS's "last resort" pool, he'd have to pay more than $20,000 a year for coverage, or about 700 percent more than he'd be charged if he were "healthy."

So last year, reformers like Searing and state Rep. Verla Insko, D-Orange, got behind a proposal developed by the N.C. Institute of Medicine. The idea was to insure the 18,000 in a pool that the state and every health insurance company would subsidize so that no one would be charged more than 150 percent of their "healthy" rate.

To keep the rates that low for people whose care is, by definition, the most costly, the insurers would've been required to contribute $30 million—each assessed according to their share of the voluntary insurance market.

Then the state was to contribute another $30 million so that low-income folks, for whom 150 percent rates would still have been out of reach, could be put on a sliding rate scale according to their ability to pay.

In the House, the state's $30 million was quickly stripped from the bill, which then passed by a 95-10 vote. But that was late in the session, and the Senate never took it up. Searing blames BCBS, saying it killed the bill with backroom lobbying. He believes Blue Cross wants pool rates set higher—at 175 percent, say—as it did when it helped kill a similar proposal 15 years ago.

BCBS denies that, and says it supported the House bill as passed.

If so, the high-risk pool should be law early in the new General Assembly term, and that would remove a major impediment to universal coverage of the kind Massachusetts has and California Gov. Arnold Schwarzenegger is supporting. Those states' plans require employers and individuals to buy health insurance, with subsidies for low-income people who, nonetheless, make enough money that they're not eligible for Medicaid, which covers only the poor.

But unless insurers' rates are capped, the people who need health insurance the most—those with persistent, serious illnesses—won't be able to buy it.

"It's a good question," Searing says, "why other states are doing all these innovative things, and why aren't we? But we need to do these other, critical steps first."

A high-risk pool, he adds, is the most "conservative" kind of reform. The fact that North Carolina, so far, hasn't been able to do even that is indicative of how far we are from attempting more universal reform.

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