Reuters Money

Relief. That’s the sentiment Ellena Young repeats again and again as she describes the passage of President Obama’s massive healthcare overhaul last March.

Not yet 30, Young (pictured left) has survived three bouts of cancer, including genetic melanoma at age 10. Doctors have removed most of her gastrointestinal tract, and when the PhD student was seven months pregnant with her now infant son, she developed life-threatening blood clots. “My entire life, every decision I’ve made has come up against the algorithm of how I was going to obtain health coverage,” Young, who lives in upstate New York, said. Time and again, she added, “My insurers have tried to find ways not to cover the medications or treatments I need to live.”

By 2014, the Affordable Care Act will ban insurers from denying insurance coverage due to pre-existing conditions. In the meantime, however, the U.S. Department of Health and Human Services (HHS) in July unveiled the Pre-Existing Condition Insurance Plan, a $5 billion federal program that creates a temporary high-risk pool to provide health coverage to Americans with pre-existing conditions who have gone uninsured for six months or more. “For too long, Americans with pre-existing conditions have been locked out of our health insurance market,” HHS Secretary Kathleen Sebelius said when the plan was announced. “This program will provide people the help they need as the nation transitions to a more competitive and fair market place in 2014.”

A pre-existing condition is essentially any ailment a policyholder suffers before they enroll in a health plan. In the past, insurers regularly turned away applicants with chronic diseases or disabilities, including arthritis, diabetes or heart disease. When those impacted are approved for coverage, it is usually at considerably high and sometimes unaffordable rates. In 2008, a Harvard Medical School study found as many as 11.4 million working adults in the U.S. who suffered chronic conditions were uninsured, many of whom had forgone medical care. In a later study, the same researchers also concluded 45,000 annual deaths could be linked to a lack of health insurance.

It’s a reality that Young and her family know well. Over the past decade, she has often had to make tough decisions about how much debt to take on in order to cover medical claims denied by her insurance provider. “During my pregnancy I maxed out my policy and had to come up with $1,000 a week to pay for medicine,” Young said. In the days before having a complex surgery, she weighed applying for more student loans versus a credit card to cover the cost. “I needed a procedure to save the life of my baby, and I was choosing between interest rates.”

Starting September 23, lifetime and annual caps on coverage will also be phased out. Insurers will be banned from denying children under 19 with pre-existing conditions coverage, and if a claim is denied, policyholders will have the right to an internal and external review of the carrier’s decision. “It’s an incredible relief to know my son will never have to go without insurance,” Young said.

HHS will manage the high-risk plans of 21 states while the other 29 will operate their own plans, all of which should now be accepting enrollment applications. Benefits must, by law, cover 65 percent of participants’ medical costs but could cover more. There is also no waiting period for enrollment, making the plans particularly attractive to those with newly diagnosed conditions.

Premiums will vary by age, family composition and state of residence. They will not, however, be based on health status of the enrollee. Out-of-pocket maximums, too, will be limited annually to $5,950 for individuals and $11,900 for families. By 2014, these individuals should be able to purchase coverage through newly-created, competitively-priced health insurance exchanges.

“In the past, state-run high-risk pools were expensive to operate and therefore premiums could be prohibitively high,” said Julie Sonier, deputy director of the State Health Access Data Assistance Center, a program based at the University of Minnesota. “What the federal subsidy does is allow plans to offer the same premiums as the general population.”

One concern is whether $5 billion will be sufficient to keep these plans up and running until 2014. Richard Foster, the chief actuary at the Centers for Medicare and Medicaid, suggested in April that these funds could be exhausted as early as 2012.

That could, in turn, lead to higher premiums, fewer benefits or even limited enrollment. The Congressional Budget Office also estimates that unless the program is capped at 200,000 participants, another $5 to $10 billion will be needed to fund it.

Still, the new high-risk pools create a safety net people with pre-existing conditions could never count on before. Morgan Banning is only 17, but she knows how important insurance is. Diagnosed at age 10 with juvenile diabetes, the Lawrence, Kansas, high school student has always gotten coverage through her parents’ jobs. In the back of her mind, however, has been a lingering fear of what would happen once she needed to qualify for health care on her own. “Before I wasn’t sure if I’d be able to get coverage,” Banning said. “Now I’m confident I’ll have a lot of options to explore.”

Photo: Ellena Young