California Major Risk Medical Insurance Program Unaffordable, Inaccessible For Some Residents

Main Category: Health Insurance / Medical Insurance
Article Date: 30 Oct 2008 - 8:00 PST

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Rising premiums and limited subsidies have made California's Major Risk Medical Insurance Program -- a high-risk pool that provides health coverage to uninsurable residents with pre-existing health conditions -- "either unaffordable, unavailable or ineffective for many of those who most need health insurance," the Los Angeles Times reports. Under MRMIP, residents pay about two-thirds of the cost for coverage, while the state covers the rest of program's costs with funds from the state tobacco tax. Insurers voluntarily participate in the program.

According to the Times, the program covers about 2%, or 13,000, of the state residents considered medically uninsurable, but enrollment in the program has declined by about one-third during the tenure of Gov. Arnold Schwarzenegger (R). Because funding for the program has been kept at or below $40 million annually, the program's administrators were required to cap enrollment and the program has had a waiting list of hundreds of people during most of Schwarzenegger's tenure. Schwarzenegger and state lawmakers this year provided $10 million to expand the program to 915 additional people, including everyone on the waiting list. However, the Times reports that even with the one-time allocation, "the pool will assist half the number enrolled at the program's apex in 1999."

"One of the major obstacles" the program faces is the cost of premiums, which are set at about 125% of private insurance rates. More than one-third of program participants who withdrew this year said they could no longer afford the coverage, the Times reports. In addition, the program "is of limited use for people needing extensive medical care" because benefits are capped at $75,000 per year -- the lowest limit of the 35 states that have high-risk pools. According to a legislative estimate, the cap makes the state ineligible for between $4 million and $8 million in federal funding for the program.

State lawmakers this year passed legislation that would have imposed a $1 per customer monthly fee on insurers who sell individual health plans. The funding would have allowed the program to eliminate the annual cap on benefits, reduce premiums and increase enrollment. Schwarzenegger vetoed the bill (AB 2), saying that such a fee would be passed on to consumers and "only exacerbates their burden." Schwarzenegger said "the only solution for our health care crisis" is a complete overhaul of the state's health care system, such as the $14.9 billion plan the governor introduced last year, which was rejected by the Legislature (Rau, Los Angeles Times, 10/28).

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