Funds run low for health insurance in state ‘high-risk pools’

By N.C. Aizenman, Published: February 15 | Updated: Saturday, February 16, 12:50 PM

Tens of thousands of Americans who cannot get health insurance because of preexisting medical problems will be blocked from a program designed to help them because funding is running low.

Obama administration officials said Friday that the state-based “high-risk pools” set up under the 2010 health-care law will be closed to new applicants as soon as Saturday and no later than March 2, depending on the state.

But they stressed that coverage for about 100,000 people who are now enrolled in the high-risk pools will not be affected.

“We’re being very careful stewards of the money that has been appropriated to us and we wanted to balance our desire to maximize the number of people who can gain from this program while making sure people who are in the program have coverage,” said Gary Cohen, director of the Department of Health and Human Services’ Center for Consumer Information and Insurance Oversight. “This was the most prudent step for us to take at this point in time.”

The program, which was launched in summer 2010, was always intended as a temporary bridge for the uninsured. But it was supposed to last until 2014. At that point, the health-care law will bar insurers from rejecting or otherwise discriminating against people who are already sick, enabling such people to buy plans through the private market.

From the start, analysts questioned whether the $5 billion that Congress appropriated for the Pre-Existing Condition Insurance Plan — as the program is called — was sufficient.

Initial fears that as many as 375,000 sick people would swamp the pools and bankrupt them by 2012 did not pan out. This is largely because, even though the pools must charge premiums comparable to those for healthy people, the plans sold through them are often expensive.

But it was also because the pools are open only to people who have gone without insurance for at least six months. The result is that, while only about 135,000 people have gotten coverage at some point, they are proving far more costly to insure than predicted.

Many people who are uninsured go untreated, exacerbating their medical problems. When they finally do get coverage through a high-risk pool, they are in immediate need of expensive care.

“What we’ve learned through the course of this program is that this is really not a sensible way for the health-care system to be run,” Cohen said.

Of the original $5 billion, about $2.36 billion remains available for the last three quarters of 2013 — enough only to continue coverage for those already in the pools, according to administration estimates.

The law gave states the option of either administering their pools directly or allowing federal authorities to operate them. In 27 states that have chosen direct management, applications for new enrollment can be accepted only through March 2. In 23 states and the District, where the pools are operated by the federal government, only applications received through Friday will be considered.

Obama administration officials said they did not have estimates for how many more people would have sought coverage through the pools beyond then. But Cohen said that new enrollment has averaged about 4,000 people per month in the past several months, suggesting that the figure could number in the tens of thousands.

Asked why the administration has not requested additional money from Congress to keep the program open — admittedly a tough sell in the current political and budgetary environment — Cohen said, “My responsibility is to work with the appropriation we have.”

About 129 millionpeople nationwide have a medical condition or prior illness that would make it hard for them to buy their own insurance plan.

Large numbers of them can and still do obtain full coverage through employer-sponsored plans, which generally do not treat sick people differently.

An additional 215,000 people are insured through separate high-risk pools that 35 states fund through their own budgets — although the policies often do not pay for treatment of the person’s preexisting illness, only covering new illnesses the person may develop.

Between 9 million and 25 million people with preexisting conditions are uninsured, depending on the estimate.

Among those stunned by Friday’s news was a 61-year-old Virginia woman who is battling stage-four breast cancer. The woman, who asked to be identified by her middle name, Joyce, because she wants to keep her illness private, is self-employed and had bought her own insurance for years.

Late in 2010, however, the insurer that Joyce was using pulled out of Virginia. She was healthy at the time. But when she applied to other companies, she was told that because she had been diagnosed with— and successfully treated for — an earlier breast cancer, she was ineligible for coverage.

Joyce said she was unaware of the high-risk pools at the time and remained ignorant of the option even as she was diagnosed with her current cancer. As the disease has progressed, the cost of her treatment has skyrocketed. The latest expense, a 10-week course of chemotherapy that she expects to total about $30,000, as well as additional tests that could top $8,000, has forced her to dip into her retirement savings.

It is only in the past several weeks that Joyce learned of the high-risk pool, and she was on track to finalize her application Sunday.

On Friday, she scrambled to get it in by the unexpected new deadline. She said the computer system appeared to accept her entries, but she will be on tenterhooks until she finds out for sure.

“I feel like the rug has been pulled out from under me,” Joyce said. “On every level, this is just beyond discouraging.”