After last-minute delay, state decides to run its own high-risk health insurance pool

Gov. M. Jodi Rell announced Monday that the state will move forward to set up its own insurance plan for people with serious health problems, instead of letting the federal government run the program.

The new insurance option, called the Pre-Existing Condition Insurance Plan, is part of the federal health care reform overhaul. It is designed to provide health insurance for people who have pre-existing health conditions, such as cancer or diabetes, and who have been without insurance for at least six months.

The state will begin taking applications for the program on Aug. 1 and prospective patients could gain health coverage as early Sept. 1, according to the governor’s office. Rell said in the statement that she decided to go ahead with the plan after state officials determined they could offer lower premiums than originally estimated.

Rell’s move came more than two weeks after other states, in coordination with the federal Department of Health and Human Services (HHS), rolled out similar programs around the country. In the health care reform law, Congress established a $5 billion pot of money to create the new high-risk insurance pools and gave states the option of running their own programs or having the federal government run it for them. HHS launched the program on July 1 and many states said they would start offering the new coverage on Aug. 1.

But Connecticut’s effort got off to a bumpy start when, on the day the program was supposed to begin taking applications, Rell said she wanted to defer signing a contract with HHS. Rell said at the time that the premium rates calculated by Connecticut’s actuarial consultants for a state-run program were too expensive. She asked the Department of Social Services and other state agencies to review those rates and see if it would be better for HHS to run the program.

In that review process, state officials concluded they could offer significantly lower premiums than what the actuaries initially came up with. The original premiums calculated by Connecticut’s actuaries ranged from $436 per month for adults younger than 30 to $1,365 for those 65 and older. The newly revised rates run from $285 per month for those under 30 to $893 for those 65 and older, according to the governor’s office.

“The first rate proposal was simply unaffordable,” Rell said in her statement. “It would have created a program in name only – one with no members because no one could have afforded to participate. Instead of accepting these rates, we took the two weeks we needed to develop a workable and affordable plan for people who desperately need this coverage. The new and much lower rates are clearly worth the wait.”

Connecticut is eligible for $50 million in federal funds over 3½ years to run the new program. The state’s high-risk pool will be managed by DSS and the Health Reinsurance Association, an existing state-run high-risk pool. United Healthcare was initially set to be the insurance carrier, but it was unclear Monday evening if that would remain the same with the new lower rates.

Donna Tommelleo, a spokeswoman for Rell, said she was not sure how the state came up with the lower rates. She said more details, including where prospective patients should go for more information or applications, would be forthcoming in the next few days.

Rell had come under fire for delaying a decision on the high-risk pools, with critics saying it could mean deferred health coverage for desperately ill, uninsured patients. And indeed, while HHS had said Connecticut’s initial plan would provide coverage starting Aug. 1, the new plan will not begin until at least Sept. 1.

Tommelleo defended the governor’s handling of the matter, saying that it was better to wait for better rates than to go ahead with a program that would be too expensive for most patients.

Although some states have already started taking applications and will start offering coverage within two weeks, other states have similarly had trouble getting their programs underway. Some state insurance officials said HHS’s tight deadline for the program was difficult to meet.