Health Law

New health care law traps some in pricey state plans

About 200,000 Americans whose illnesses have kept them from getting regular health insurance will not be allowed to enroll this summer in a new lower cost federal program for people like them because they already buy pricey state-run plans.

The nation's new health law creates a far cheaper insurance program opening July 1 for people with pre-exisiting medical conditions. To qualify, a person can't have had health coverage for six months.

The result is it excludes people already enrolled in 35 state high risk pools offering insurance of last resort. The state pools charge high premiums — often double standard rates for healthier people in the individual market — to help cover costs.

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The new law provides $5 billion and says federal risk pools can't charge more than standard rates.

The situation troubles Oklahoma Insurance Commissioner Kim Holland because it hurts consumers who have gotten coverage despite high costs.

"The unintended consequence of this important piece of legislation is we're going to effectively penalize the people who have been doing the sacrificing all along," said Holland, who likes the law's expansion of coverage.

People in Oklahoma's pool pay 50% more than standard rates. For a 44-year-old man who doesn't smoke, a high-risk plan with a $500 deductible costs $577 a month.

Participants in California's pool, who pay 25% to 37% more than standard rates, are disappointed to learn they can't be in the lower-cost federal program, said program deputy director Jeanie Esajian. "I don't think that was really highlighted in the debate at all," she said.

California and Texas are urging applicants to their state pools to consider waiting for the federal program. Premiums "will be approximately half the rates Texas law requires for the State Pool," warns a letter to applicants.

The pricing disparity is among concerns state insurance officials are raising to Health and Human Services Secretary Kathleen Sebelius as her department scrambles to set up the first major program under the new health law. Sebelius has asked states to say by Friday whether they want to run a risk pool that meets the federal requirements or have federal officials run it.

HHS spokeswoman Jenny Backus said the federal pools are a temporary fix to help uninsured people with pre-existing conditions get coverage until 2014. That's when most of the health law's provisions take effect and new health insurance exchanges are created, replacing the pools.

"The important thing is helping people who have been shut out of the market for so long," she said.

Vicki Hall, 49, of Norman, Okla., is grateful for her state's pool, despite her $881 monthly premium:

"Would I like it to be cheaper? Sure. Right now I'm living paycheck to paycheck to pay the premium."

(Published by USA Today - April 29, 2010)

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