By ROBERT PEAR
c.2010 New York Times News Service
WASHINGTON - The Obama administration is poised to award contracts worth hundreds of millions of dollars to about 20 states to run new insurance pools for people with serious medical problems.
In another 20 states, where local officials chose not to participate, the federal government will run the pools through a private nonprofit entity.
Applications will be available to the public in many states on Thursday, and coverage could start as early as August, said Richard A. Popper, deputy director of the new federal Office of Consumer Information and Insurance Oversight.
After struggling for months to fend off Republican attacks on the new health care law, White House officials hope the high-risk insurance pool will produce tangible benefits for people who are uninsured - and for Democrats running in midterm elections this fall. The law has become an issue in many races.
Colorado, Maryland and North Carolina are in the vanguard of states planning to run high-risk pools with federal money.
"We are ready to go," said Michael T. Keough, executive director of the North Carolina Health Insurance Risk Pool. Keough said he was prepared to start taking applications as soon as the federal government approved his program.
Some states, like California and New York, are just finishing their proposals. Several others are tinkering with their plans to get federal approval.
Congress provided $5 billion for the program, which is expected to help 200,000 to 400,000 people, or fewer than 10 percent of those denied health insurance because of pre-existing medical conditions.
Democrats describe the program as a bridge to 2014, when insurers will be required to accept all applicants and consumers can do comparison shopping in marketplaces known as insurance exchanges.
In soliciting state proposals, Kathleen Sebelius, the secretary of health and human services, emphasized that states must not allow spending to exceed their allotments of federal money.
State officials said they would freeze enrollment if necessary to keep within their budgets. It is not clear who would be legally responsible for claims that remain unpaid after a state's allotment runs out.
The temporary program for uninsured people with pre-existing conditions was supposed to be established within 90 days after President Barack Obama signed the health care law - that is, by last Monday.
Thirty states have informed the federal government that they want to run their own high-risk pools with federal money. About 20 of them have filed formal proposals. Federal officials said they hoped to approve many of the proposals by Thursday.
At the White House last week, Obama said, "On July 1st, uninsured Americans who've been locked out of the insurance market because of a pre-existing condition will now be able to enroll in a new national insurance pool, where they'll finally be able to purchase quality, affordable health care, some for the very first time."
A new study by the Congressional Budget Office says the money will "not be sufficient to cover the costs of all applicants." If more than 200,000 people participate, the budget office said, "the available funds will probably be exhausted prior to 2013." Consumers or states could then be left in the lurch, seeking other sources of coverage. Some governors cited this concern in deciding not to apply for federal money.
Richard S. Foster, the chief actuary at the Department of Health and Human Services, said 375,000 people could gain coverage in high-risk pools this year. But he predicted, "By 2011 and 2012, the initial $5 billion in federal funding would be exhausted."
Richard W. Figueroa, an aide to Gov. Arnold Schwarzenegger of California, said the state expected to submit its proposal this week. The goal, he said, is to start enrolling people in August, for coverage that would start in September, assuming the legislature authorizes the program.
California expects to receive $761 million in federal money, which is 50 percent more than any other state, and expects to enroll about 25,000 people.
Thirty-five states already have high-risk pools, financed by a combination of state money, premiums and assessments on insurance companies. Enrollment totals about 200,000. The state pools all operate at a loss, even though they generally charge premiums higher than what will be allowed in the federal program.
Richard Cauchi, a health policy expert at the National Conference of State Legislatures, said states were pursuing different approaches:
- At least 21 states, including Alaska, California, Maryland and North Carolina, have high-risk pools and will set up new programs with federal money.
- Some, including Massachusetts, Michigan, New York and Pennsylvania, do not have high-risk pools and will create and administer new programs with federal money.
- Some states, like Alabama, Minnesota and Texas, have high-risk pools but will not apply for federal money and will let the federal government run the new pools.
- Other states, like Arizona, Georgia, Nevada and Virginia, never had high-risk pools and will allow federal officials to run the program within their borders.
Travis R. Ford, a spokesman for the Missouri Insurance Department, said the state expected to hire two Blue Cross and Blue Shield plans to manage its new program.
Karen J. Larson, executive director of the Washington State Health Insurance Pool, estimated that 2,300 people would qualify. But she said premiums could be high - $800 a month for a 45-year-old buying a policy with a $500 deductible.