New program for uninsured individuals with pre-existing conditions now accepting applications

A key provision of the health care reform law passed in March creates new insurance options for individuals with pre-existing health conditions. The new program, known as the Oklahoma Temporary High Risk Pool, began accepting applications this week. Click here for further information about eligibility and how to apply. Here is our blog post on the subject from May.

It’s a widely known and much lamented fact that our current health insurance system can place the greatest obstacles in the path of precisely those most in need of affordable and adequate coverage. Individuals with pre-existing medical conditions who are unable to obtain coverage through their employer or government programs tend to be left uninsured or paying exorbitant premiums for insurance that may exclude their chronic conditions or disabilities.

A central goal of the new health care reform law passed in February is to solve this problem by prohibiting insurance companies from denying coverage based on pre-existing medical conditions. This prohibition will apply both to employer-based coverage and to products offered through the new health insurance exchanges, where those not covered by employer or public insurance will be able to purchase coverage, with sliding scale subsidies available for those with income up to 400 percent of the federal poverty level.

The problem for many Americans is that  the provisions creating the exchanges and prohibiting pre-existing conditions for adults don’t kick in until 2014 (for children, the prohibition takes effect later this year). In the interim, the  law creates new temporary high-risk pools that will operate from 2010 until the launch of the exchanges. The new high-risk pools will be available only to individuals who have a pre-existing condition and who have not had creditable health coverage for the previous six months. The premium cost for high-risk pool coverage will be established for a standard population in the non-group market and will not be based on the health status of enrollees.

Oklahoma currently operates a high-risk pool primarily for individuals who have been denied coverage on the individual market due to pre-existing conditions.  However, those who enroll in the high-risk pool are subject to a 12-month exclusion for coverage of their pre-existing condition. In addition, premiums are expensive – up to 150 percent of standard rates for the individual’s age and gender – and there are no premium subsidies for low-income applicants. As a result, current enrollment in the high-risk pool is less than 2,000 individuals.

By eliminating the waiting period for pre-existing conditions and setting costs at standard rates, the new temporary high-risk pool promises better coverage at more affordable cost for enrollees. The catch, however, is that limiting enrollment to those who have been uninsured for six months  excludes those currently enrolled in state high risk pools. As Oklahoma Insurance Commissioner Kim Holland has stated, this situation “effectively penalize(s) the people who have been doing the sacrificing all along.”  State and federal officials are exploring options for more equitable treatment of those in existing pools.

The other major issue surrounding the new high-risk pools, which are scheduled to begin operating by July 1, 2010, concerns responsibility for administering them.  The federal government has given the states the option of operating their own temporary high-risk pool or allowing the U.S. Department of Health and Human Services carry out the program in their state. While the health reform law allocated $5 billion to go toward health care claims and administrative costs that exceed the premiums collected for the pool, some observers, including the chief actuary of the Centers for Medicaid and Medicare Services, are concerned that the allocation will run out well in advance of 2014, potentially forcing states either to cap enrollment or assume new financial obligations.

States had until May 1st to make a preliminary decision on whether to administer the new temporary high-risk pool. According to data supplied us by the Insurance Commissioner, 31 states have notified the Secretary of Health and Human Services of their interest in operating their own program, while 18 have opted to punt to the federal government, and two remain undecided. Oklahoma is among those tentatively committed to pursuing a state-operated program, subject to continued discussions within the state and rule promulgation by the federal government.

Similarly to the temporary high-risk pool, the bill creates a temporary reinsurance program for employers providing health insurance coverage to retirees over age 55 who are not eligible for Medicare. This early retiree program, intended to lower insurance costs to plans that offer coverage for what is often an expensive population, is also funded with a $5 billion appropriation and is due to kick off July 1st of this year and operate until January 1, 2014.

These temporary, fast-tracked programs will only affect a sliver of the entire population that will be affected by health care reform, but may provide an early indication of whether the new law’s goals of covering those most ill-served by the nation’s existing health insurance system will eventually be met.

For eligibility information and an application form for the Oklahoma Temporary High Risk Pool, click here.