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A New Program Helps the Uninsured Get Coverage

How to qualify and apply for new federal high-risk health insurance pools

En español | Today the Obama administration rolls out the first major benefit of the new health care law—a federal “high-risk pool” intended to provide coverage for people who can’t buy affordable insurance because of preexisting medical conditions. The $5 billion program is a stop-gap measure that will last until 2014, when the law fully kicks in and nobody can be denied coverage on the basis of health.

Over the past three months, the U.S. Department of Health and Human Services (HHS) has scrambled to get the program up and running by July 1. People will be able to apply this month in many states and no later than the end of August in others. Coverage will typically begin at the beginning of the next month after an application is accepted.

About 30 states have chosen to run the federal program themselves, and others opted to have HHS administer it directly through a nonprofit insurance agency located in each of those states. Federal funding varies by state, according to the number of uninsured people and other criteria, ranging from $8 million each for North Dakota, Vermont and Wyoming to $761 million for California.

Several studies, however, have questioned whether this money will be sufficient to cover more than a fraction of uninsured applicants.

Thirty-four states already operate their own high-risk pools. These cover only about 200,000 people nationwide, mainly because they charge premiums that are higher than those in the open market, says Vernita Bridges-McMurtrey, chairperson of the National Association of State Comprehensive Insurance Plans and executive director of Missouri’s program. But the federally funded plan’s premiums are likely to be lower, “so consumers may elect to buy insurance now that rates are more competitive,” she says.

Benefits and premiums for the federal plan will vary from state to state because each can design its own version, subject to federal approval. States with existing high-risk pools will continue offering their own plans separately from the federal plan.

For example the Maryland Health Insurance Program, one of the largest in the country with more than 18,000 residents enrolled, offers four plans of its own. With funding of $85 million, the program expects to be able to cover 3,500 new applicants under the federally funded plan, says its acting director, Tate Showers. People who qualify for this plan must pay $1,500 of their medical and prescription drug costs up-front as an annual deductible. “But once they reach that, we pay for everything,” she says. Until the end of the year enrollees pay nothing more for services as long as they go to the plan’s in-network providers. Monthly premiums range from $141 a month for people under age 30 to $354 for those over 65, with someone age 55 to 59 paying $302. Maryland’s plan is “pretty generous,” Showers says.

Still, federal plans in some other states are likely to be far more expensive. California, for example, will also offer a federal plan with a $1,500 deductible, but after that is met enrollees must pay 15 percent of the cost of medical services, and a person age 50 can expect premiums of $575 a month. Other states may require even higher rates—up to $900 a month for older people, according to HHS. And although even these premiums may be lower than those charged in the commercial insurance market, they may still be unaffordable for many people, consumer advocates say.

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