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High-Risk Patients, States Prepare for New Insurance Rules

Starting this summer, high-risk patients with preexisting conditions will be able to apply for temporary insurance as part of the health care reform law passed in March. Betty Ann Bowser reports on the new program and why some states are opting out.

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    Now: a health reform update on coverage for the uninsured.

    New programs are taking effect in states this summer to provide insurance for some who have not been able to get coverage at all. But there are questions about just how effective they will be.

    "NewsHour" health correspondent Betty Ann Bowser reports.

    Our Health Unit is a partnership with the Robert Wood Johnson Foundation.


    On the outside, 58-year-old Carolyn Eaton looks like the picture of health. She eats right and keeps in shape by taking daily walks with her dog Mischa near her apartment in Northern Virginia.

    But, on the inside, Eaton is fighting a serious heart condition called cardiomyopathy that weakens her heart. Equally important, it also makes her uninsurable.

  • CAROLYN EATON, uninsured:

    It's frightening right now because my health is pretty stabilized. The only thing that I'm worried about is if I have a catastrophic event. What if I have a heart attack?

    I really love this picture of Trey.


    Eaton has had no health insurance since last fall because of her preexisting condition.

    The federal government estimates that hundreds of thousands of Americans share her dilemma and are denied insurance coverage because of health problems. Bush, starting this summer, they will be able to apply for temporary coverage through the preexisting insurance plan. It's part of the new health care reform law passed in March.

    The plan is designed to provide coverage until 2014. That's when the broader rules that will forbid insurance companies from denying coverage to all individuals with health problems kick in.

    Richard Popper heads the new program for the Department of Health and Human Services.

    RICHARD POPPER, Office of Consumer Information and Insurance Oversight, Department of Health and Human Services: The preexisting condition insurance plan is designed to provide immediate coverage, access to coverage for people who are locked out of the insurance market.


    Popper, who ran the Maryland state high-risk pool before he took his post at HHS, estimates as many as 400,000 Americans may enroll in the new federally funded program.

  • MAN:

    So, then you talk directly to the radiation oncologist.


    Twenty-nine states and the District of Columbia will run their own high-risk programs using their share of a $5 billion federal pool of money set aside. Twenty-one others have opted out. In those states, HHS will run the pools through a third-party administrator.

    To qualify, applicants must be an American citizen, have been denied coverage by an insurer because of a medical condition, and be uninsured for at least six months.

    For Eaton, all of this can't come soon enough. Right now, she's stuck paying out of pocket for her medical care and prescription medication, which she estimates total $8,000 a year.


    It's time for me to see my cardiologist again. I should have another echocardiogram. That's going to be $1,200. In the back of my mind, there's always that fear. You know, if I have a twinge in my heart or one day I might be feeling a little less energetic, then I'm always thinking, oh, God, I hope I'm OK. I hope this isn't the beginning of something that is not going to be affordable to me.


    People who sign up can be charged no more than what healthy people pay for insurance coverage in their state. But the federal government will pay the difference between that and the actual cost of the premiums. Dollar amounts will vary from state to state.

    DR. BILL HAZEL, Virginia secretary of health and human resources: The money that we believe that the federal government would provide us to operate the program wouldn't last the period needed.


    Virginia's secretary for health and human resources, Dr. Bill Hazel, says that's why his state decided not to participate.


    We went to our carriers, our vendors, and said, OK, how much would it cost if we were following the new rules, if this were to be a high-risk pool? And the answer roughly was $500 per member per month, which is about $6,000 per every individual in the plan per year.


    Hazel and his staff did projections based on a scenario of 10,000 Virginians buying in.


    And if 10,000 people signed up for this, and if 10,000 signed up for it at $6,000 per year, we would run out of money in 22 months. And we didn't need to go any further than that.

    We felt that that amount of money wouldn't cover even a small number of people with preexisting conditions coming in to a high-risk pool. So, what would then happen to Virginia when the money runs out?


    What would happen?


    Well, that's what we don't know.


    Running out of money from the federal government is the main reason most states have given for opting out of the high-risk program. So, under the new law, it's now up to the Department of Health and Human Services here in Washington to develop coverage for people who live in those states and are hard to insure.

    Even the nonpartisan Congressional Budget Office reported recently that the funding available for subsidies wouldn't be sufficient to cover the costs of all applicants through 2013. And the CBO predicted HHS would have to use its authority under the law to limit enrollment in the program.

    Popper says he thinks the $5 billion is adequate.


    We have ways of managing that money to make it last. We can adjust some of the cost-sharing. We can shift money between the states, because, in some states, you could have very dramatic enrollment growth, in other states, not so dramatic, because of the nature of their marketplace. And we can also take a look at the way the premiums are calculated.


    But the premiums, even with the federal government paying a substantial part of the cost, may be too high for some people to afford. HHS estimates premiums will run between $140 and $900 a month.

    Deborah Chollet is a health insurance expert and senior policy fellow at Mathematica Policy Research in Washington. She says who will be able to afford the program is a big unanswered question.

    DEBORAH CHOLLET, senior policy fellow, Mathematica Policy Research: There's really no good way to know. I think when people apply to the high-risk pool, even though it will be subsidized substantially, even though it is unique, and that the premiums will be at market rates for healthy people, I think they will still be amazed at how expensive it is.


    But HHS's Popper says the program is designed to be a temporary one.


    It's not a solution for everyone, because there are still a lot of issues and challenges in the insurance marketplace, but it's designed to be a bridge until 2014, when the more significant and larger health reforms take effect.


    According to a new HHS Web site, the estimated premium for a 50-year-old will be between $440 and $538 a month in Virginia.

    But Carolyn Eaton is not convinced her premiums will be that low.


    I'm really interested in finding out how much the premiums are going to be, what the deductibles are going to be. Basically, I want to know if that's going to be affordable to me.


    Eaton says she's praying the preexisting condition insurance plan will get her to 2014.