Health plans for high-risk patients attracting fewer, costing more than expected

Health plans for high-risk patients attracting fewer, costing more than expected

By Amy Goldstein
Washington Post Staff Writer
Monday, December 27, 2010; 10:54 PM

An early feature of the new health-care law that allows people who are already sick to get insurance to cover their medical costs isn't attracting as many customers as expected.

In the meantime, in at least a few states, claims for medical care covered by the "high-risk pools" are proving very costly, and it is an open question whether the $5 billion allotted by Congress to start up the plans will be sufficient.

Federal health officials contend the new insurance plans, designed solely for people who already are sick, are merely experiencing growing pains. It will take time to spread the word that they exist and to adjust prices and benefits so that the plans are as attractive as possible, the officials say.

State-level directors of the plans agree, in part. But in interviews, they also said that the insurance premiums are unaffordable for some who need the coverage - and that some would-be customers are skittish about the plans because federal lawsuits and congressional Republicans are trying to overturn the entire law.

The Pre-Existing Condition Insurance Plan, the program's official name, is an early test of President Obama's argument that people will embrace the politically divisive health-care overhaul once they see its advantages firsthand. According to some health-policy researchers, the success or failure of the pools also could foreshadow the complexities of making broader changes in health insurance by 2014, when states are to open new marketplaces - or exchanges - for Americans to buy coverage individually or in small groups.

Under the sprawling health-care legislation that Democrats pushed through Congress in March, the special health plans were designed as a temporary coping mechanism for a small but important niche among the nation's 50 million uninsured: people who have been rejected by insurance companies because they already are sick.

Twenty-seven states have created their own high-risk pools. The rest used an option in the law to let their residents buy coverage through a new federal health plan.

In the spring, the Medicare program's chief actuary predicted that 375,000 people would sign up for the pool plans by the end of the year. Early last month, the Health and Human Services Department reported that just 8,000 people had enrolled. HHS officials declined to provide an update, although they collect such figures monthly, because they have decided to report them on a quarterly basis.

"Like the rest of the country, we thought we'd have pretty much a stampede. That obviously hasn't materialized," said Michael Keough, executive director of North Carolina's plan. With nearly 700 participants, it is among the nation's largest so far, but it has one-third of the people expected by now.

According to interviews with administrators of nine of the state-run plans, only one - Colorado's - is close to its forecast enrollment. Maryland, the only jurisdiction in the Washington area that has created a plan, has 97 participants, compared with 19,000 in an older state high-risk pool, according to Kent McKinney, who directs both. HHS's November report said that Virginia had 75 participants in the federal plan. The District had none.
Potential lifesaver

The plans have been a boon and a heartbreak.

"I don't mean to be gushy about it, but they potentially saved my life," said Maureen Murray, 50, of Arlington County, who had dropped her individual insurance policy in July 2009, after her work as a freelance video producer dried up. Murray was getting ready for a gym class in October when she "felt something go down my left side." It was a stroke. She was still at Alexandria's Mount Vernon Hospital when a CAT-scan detected an aneurysm on the left side of her brain.

She was discharged two days before Halloween with a $25,000 hospital bill.

A friend recommended the new high-risk pool. Four days after Thanksgiving, she was approved. It will cover her surgery in January to repair the aneurysm. The plan's premiums, Murray said, are steep - $358 a month even after a rate reduction in January. "I'm in rough financial position, but . . . I can get another job," she said. Without the insurance, "I might not have that opportunity."
Expensive coverage

On the other hand, Will Wilson, 57, of Chicago said he is "really, really, really, really discouraged." After he received an AIDS diagnosis in 2002, he discovered that his insurance at the time paid only $1,500 for medicine each year. His AIDS drugs cost $3,000 a month. He ended up in bankruptcy.

Wilson, a tourist trolley guide, now gets help from the federal AIDS Drug Assistance Program, but he has no coverage for other kinds of care.

Wilson remembers tears streaming down his face in February 2009, the night that he watched Obama vow to Congress, "Health-care reform cannot wait, it must not wait, and it will not wait another year!"

Wilson became an activist for health reform, circulating petitions, going to demonstrations. And the day after the president signed the bill into law, a Chicago Sun-Times column quoted him as saying, "I've had a grin on my face all day" at the prospect of the high-risk pool he could join. That was before the rates were announced in July and Wilson discovered that the premium - nearly $600 a month - "was almost as much as my rent. It was like, no way! I was floored."

The law contains rules to make the high-risk pools more affordable than older ones that many states have run; the new ones cannot charge more in premiums than the average premium for other individual insurance in a given state. But "the individual market is expensive," said Jean P. Hall, a University of Kansas researcher studying the new plans. "From my perspective, it is not a good match for people who have expensive conditions."

HHS has made some changes for 2011 in the federal plan on which 23 states and the District are relying. It will have somewhat lower premiums and two new options with varying deductibles, according to Richard Popper, HHS's deputy director for insurance programs.

The agency also is launching a more aggressive marketing campaign, Popper said, focused on states, including Virginia, whose residents have not had any kind of high-risk pool in the past. And the Social Security Administration has agreed to tell everyone it approves for disability benefits about the new health plans.

Among the 27 states with their own plans, 17 have submitted changes for HHS to approve so they can lower premiums, adjust other costs or alter who is allowed to join.

And they are doing more marketing. Michigan is running Internet ads through Google. North Carolina is advertising on billboards across the state and on cable television.
Fretting about challenges

Whether the marketing and plan adjustments will translate into more customers remains unclear. Cecil Bykerk, the executive director for the new plans in Montana, Iowa and Alaska, said some people are wary over whether the health-care law - and the high-risk pools it has created - will last. "I think there is a lot of concern in the public with all the [federal court] challenges and all the political rhetoric about appeal," he said.

Montana is one of a few states in which the medical bills from those who have joined are huge. New Hampshire's plan has only about 80 members, but they already have spent nearly double the $650,000 the state was allotted in federal money to help run the program, said J. Michael Degnan, its director.

The spending, Degnan speculated, might slow down if it turns out that the early bills reflected a burst of pent-up need for care. HHS agreed to give New Hampshire more money, he added.

When the law was passed, proponents of the special health plans feared the $5 billion would run out before 2014. Today, HHS's Popper says of that financial help: "We want to use it - make it last but also use it to effectively to get people covered."