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To Join or Not to Join State Insurance Pool?

Six-month no-insurance clause means some people won't join federal pool

When the construction business slowed to a crawl in Raleigh, Jeff Allen was out of a job and lost his health insurance. His wife, Debbie, was able to find private insurance for herself, but Jeff, 54, was classified as "uninsurable" because the medications he was taking to ward off heart disease made him too high a risk for private insurance.
"It's a Catch-22," she said.
North Carolina's high-risk insurance pool was Jeff's only alternative. Since it began in January 2009, it has provided coverage to about 4,000 state residents who had been rejected by private insurers. It is one of 35 state-run high-risk pools created before the new federal health care law was enacted.

As of July 1, those who have been without insurance for six months because of preexisting conditions have another choice. They can join the new federal high-risk plan, which features:

Rates that are a third lower than the state plan; for example, the monthly premium is $346 for a plan with a $2,500 deductible; the state's comparable plan costs $561.
No waiting period for coverage; the state's plan sometimes has a 12-month waiting period.
Lower premium increase for older adults; they can be charged only up to 4 percent more than the rate for younger people, while the state plan can charge up to 6.5 percent higher.

North Carolina's share of the $5 billion federal pool is $145 million, enough to cover 8,000 of the estimated 100,000 uninsured people eligible for the federal program.

The premiums for high-risk pool insurance are based on the price of insurance for those without preexisting conditions. The state rate is 50 percent higher than the average cost for someone without preexisting conditions.

But since the federal pool was created to help those who have been uninsured for at least six months, people like Jeff Allen aren't immediately eligible. Debbie Allen said she didn't think it wise for her husband to drop his state plan for six months just to become eligible for the federal plan's lower rates.

Michael Keough, executive director of Inclusive Health, a state-created nonprofit organization that administers both the state and federal high-risk pools, isn't sure whether there will be a stampede or trickle of applicants for the federal program.

"The uninsured are not an easy population to attract. They're uninsured for a reason, either because they can't afford it or have chosen not to for reasons that have to do with their situation," he said.

"It's not like you can go to the senior center, for example, and talk to them. They're dispersed. So the question is, if you build it will they come? If you lower the price to what it would be if they didn't have a preexisting condition, would that be low enough to attract a lot of people or not?"

Many of those who are eligible for the pools have illnesses that put them in the high-risk category. Private insurance rates could be 300 to 400 percent higher than the "standard risk" rate offered by the federal plan, Keough said.

The state pool's clients are mostly middle-class and middle-age, and Keough said he hopes the federal plan, with its lower rates, will reach a more diverse population. The federal law helps by reducing the price, but people still have to have some resources to be able to pay even the lower federal rates, Keough said. "Is that going to be low enough to attract a lot of people or not?"
 AARP North Carolina, health insurance agents, hospitals and advocacy groups are urging people to join the federal pool if they can't find or afford private insurance, Keough said.

Jeff Allen's state plan includes prescription coverage but has a high deductible.

"That's the only way we can afford it," Debbie Allen said. "I can imagine [for] somebody who's working a minimum wage job, the premium would still be high."

For details on the federal and state plans, go to Inclusive Health website.
Sue Price Johnson is a freelance journalist based in Raleigh, N.C.

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