Pre-Existing Conditions? Health Insurance Options Improving

Mark Miller

Over age 50 but under 65? If so, you're at risk of falling into the pre-existing condition health care gap.

In the current health insurance marketplace, it's very difficult for people with pre-existing conditions to buy a quality policy at an affordable price. The problem disproportionately affects older people in this age group; they're too young to quality for Medicare yet very likely to have at least one chronic condition that leads health insurance companies to turn them down.

The problem impacted 15 percent of all Americans age 50-64 in 2009, according to a recent report by the Commonwealth Fund -- 8.6 million people. Meanwhile, another 9.7 million in this age group had coverage with such high deductibles that they were considered "effectively underinsured."

Starting in 2014, the new health care reform law will get these folks covered through expansion of Medicaid and the creation of new private insurance exchanges. In the meantime, the Affordable Care Act (ACA) put a Band-Aid on the problem by setting aside $5 billion to fund a pre-existing insurance program (PCIP) that operates until the end of 2013, when enrollees will shift to coverage via the new exchanges.

This bridge initiative got off to a slow start in 2010, but significant improvements are being made this year that are worth knowing about if you're struggling to find health insurance coverage.

The ACA gave states the option of using federal dollars to administer their own PCIP programs, or to offer a plan run by the federal government. Twenty-seven states are offering their own plans. But last year, only 8,000 people enrolled nationwide in these plans.

The weak start was due partly to the short ramp-up time available after the ACA became law, according to Jean Hall, an associate research professor at the University of Kansas who specializes in healthcare.

But in many cases, the plans just weren't very good deals. Premiums sometimes exceeded $1,000 per month, with annual deductibles as high as $5,000. Finally, enrollees must be uninsured for six months prior to coverage in order to be eligible, a rule that further reduced sign-ups.

The plans that did get relatively strong enrollment were in a handful of big states, including Pennsylvania, California, Illinois and Ohio. The plans in these states also decided to set their premiums at very affordable rates--which they had discretion to do under the ACA. For example, Pennsylvania's program last year had a flat monthly rate of $283 per enrollee -- for a person of any age -- with an annual $5,000 in-network, out-of-pocket limit.

Meanwhile, noteworthy improvements are being rolled out to PCIPs this year that will make them worth checking out for those struggling to find insurance.

Premiums will be reduced in many states. Moreover, the federal program will offer three plan options, two of which feature lower deductibles for prescription coverage. New child-only premium options also are being offered to reduce the cost of covering children with pre-existing conditions.

"I do believe the new federal options represent a significant change for consumers," Hall says. "People can get prescription costs covered sooner, which is potentially very important for many people with chronic conditions. Also, adding the child-only premiums creates a significant savings for families who have children with chronic conditions."

The PCIPs cover a broad range of health benefits, including primary and specialty care, hospital care, and prescription drugs. The law requires that they cover, on average, no less than 65 percent of medical costs and limit out-of-pocket spending to $5,950 for individuals. They also cannot impose preexisting condition exclusions or waiting periods.

The federal website for the ACA has a page that describes the state plans, and lists contact information where consumers can get current information on 2011 insurance options. Visit http://bit.ly/9pXgbM to learn more.

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Health - Pre-Existing Conditions? Health Insurance Options Improving