New Law: Patients With Pre-Existing Conditions Covered
Life + Money

New Law: Patients With Pre-Existing Conditions Covered

Elective abortions will be prohibited and people with pre-existing conditions will be able to get comprehensive benefits without paying any more than healthy people, under new federal regulations for high-risk health insurance pools released today by the Obama administration.

The state-based pools provision is one of the high-profile features of the new health law taking effect this year. It allocates $5 billion to create plans to cover people who have been uninsured for at least six months and have a pre-existing health condition.

The 108-page rule detailing how the  new plans will work won praise from consumer advocates for helping to make insurance more affordable and from Republicans, who had opposed any coverage of abortion except in cases of rape, incest or the life of the mother.

"It appears the rule includes a strong prohibition on federal coverage of abortion," said Jessica Straus, spokeswoman for Sen. Michael Enzi, R-Wyo., who along with a dozen other Senate Republicans earlier this week called on the administration to make sure the plans did not cover abortion.

John Hart, a spokesman for Sen. Tom Coburn, R-Okla., added: "Dr. Coburn is pleased (HHS) Secretary (Kathleen) Sebelius is taking to heart our concerns that the health care law will fund abortion. He’s still reviewing the new regulations but is encouraged they are making a serious attempt to address the problem."

“Similar to What Congress Gets”

The benefits in the new plans would be similar to those given to members of Congress and other federal government workers, the regulations said. Covered benefits include hospitalization, outpatient care, maternity care and home health care.

"This new coverage will help all of us by reducing medical debt, improving health and worker productivity and reducing the amount of uncompensated care provided to the uninsured, potentially by billions of dollars," Nancy-Ann DeParle, director of the White House Office Of Health Reform, wrote Thursday in a blog post.

Expenses not covered by the premiums, deductibles and copayments will be covered by the $5 billion from the federal government.

Consumer advocates worry, though, that the $5 billion could run out eventually.

The pools will be in place until 2014, when health insurance companies will no longer be allowed to deny coverage or charge higher rates due to pre-existing illnesses. Consumer advocates worry the $5 billion could run out long before then.

But the health plans could cap enrollment or change premiums and benefits to help manage costs, which may be necessary to stretch the federal funding.

Michael Degnan, executive director of the New Hampshire high risk pool, said the rules mean premiums will be 25 percent less for its new, federally funded high-risk pool than for the state’s existing pool. “It’s a nice move,” he said. New Hampshire started its new high risk pool in July. So far, demand has been light.

Affordability Issues

To make the plans more affordable, the regulations said that premiums in the new pools cannot exceed the average “standard” rate in the individual insurance market. Existing  state high risk pool premiums today vary -- with some having rates more than double those in the individual market. States had set higher rates for their existing high risk pools so that they wouldn't compete with plans in the private market.

“That is a big plus for consumers,” said Cheryl Fish-Parcham, deputy director of health policy at consumer group Families USA. While the rates can’t be set any higher than for healthy individuals, she said, premiums, deductibles and co-payments could still be an obstacle to many potential applicants.

Premiums will still vary based on age and whether the applicant is a smoker. In Pennsylvania, the average monthly premium for the high risk pool will be $283 a month with a $1,000 deductible. In New Hampshire, the premium ranges from $177 to $1,127 for non-smokers based on age and type of health plan.

Excluding premiums, patients annual out-of-pocket costs in the new plans will be limited. This year, that maximum for co-pays and deductibles is $5,940.

No More Waiting Time

The new risk pools will also not require waiting periods before pre-existing conditions can be treated; currently many states have such waiting periods. New Hampshire has had a nine-month waiting period in its existing state-funded high risk pool, Degnan said.

About 30 states have opted to set up their own high-risk insurance pools using the federal money that is allocated based on states’ populations, health costs and number of uninsured residents. The federal government is stepping in to run risk pools in states that don't set up their own.

About 200,000 to 400,000 people are expected to enroll in these new “Pre-Existing Condition Insurance Plans,” the Department of Health and Human Services said in commentary issued along with the regulations. That would double or triple the number of people in existing high risk pools in 35 states today. But these existing pools only catch a fraction of the uninsured largely because of their high costs.

Applicants to the new high-risk pools will have to prove they have a pre-existing condition by showing documentation from their doctors or showing they’ve been turned down by an insurer, the regulations said.

Coverage for enrollees under the pools has started in Montana, South Dakota and New Hampshire, though in most states it is not expected to begin until Sept. 1. So far, demand has been modest. In New Hampshire, 10 people have applied. In Montana, which has set a cap of 400 slots for the high risk pool, 60 people have applied.