Rosita Velez seems like just the sort of person federal lawmakers had in mind when they included a provision in the sweeping health reform law creating new high-risk insurance pools for people who are uninsured and have serious health problems.

Velez has not seen a doctor since losing her health benefits after being laid off by AT&T in 2008. The 34-year-old Bridgeport resident no longer fills the four prescriptions she needs for rheumatoid arthritis. Instead, she soaks her hands and feet in hot water.

“I just deal with the pain,” says Velez, the single mother of a 7-year-old girl. “Some days are better than others …, but what can I do?”

Right now, Gov. M. Jodi Rell and top state health officials are trying to determine whether Connecticut residents like Velez would be a better off under a state-run high-risk insurance pool or a federally-run program. Some outside experts say a federal program might be better, but not enough information is publicly available to determine how much someone like Velez would have to pay in monthly premiums.

Indeed, Velez, who barely scrapes by right now on her limited income, might not be able to take advantage of this new program at all, no matter who runs it.

At issue is a provision in the federal health-care overhaul that called for the creation of new high-risk insurance pools, designed to provide coverage for people with pre-existing health conditions and who have been without insurance for at least six months. Congress established a $5 billion pot of money to create the new insurance pools and gave states the option of running their own program or having the federal government run it for them.

The high-risk pools are a stop-gap measure, set to expire in 2014, when insurers will no longer be able to deny coverage to people with pre-existing conditions and will be required to charge those patients standard rates.

Connecticut officials initially said they would set up a state-run pool, a path that 28 other states and the District of Columbia are taking. (Twenty-one states have said they would opt to have HHS run the program for them.) Officials at the federal Department of Health and Human Services (HHS) said Connecticut would get an estimated $50 million over 3 ½ years to run its state-administered pool.

But last Thursday, as HHS officials in Washington were rolling out the new program and starting to accept applications, Rell told top state officials to delay signing a contract with HHS.

In a letter to Department of Social Services Commissioner Michael P. Starkowski and other state officials, Rell said the premiums set for the program may be “beyond the reach” of residents the program is supposed to reach. She asked DSS and two other agencies to review the rates and compare them to what residents would be charged if HHS ran the program instead.

The rates under a Connecticut-run program would range from $436 for someone under 30 to nearly $1,500 a month for those over 65, although state officials have not provided more detailed breakdown. Rell asked for the review to be done by July 15, when many other states will already be working to enroll prospective consumers.

Rell’s move has sparked criticism from U.S. Sen. Christopher J. Dodd, D-Conn., and others.

Connecticut’s House Speaker, Christopher G. Donovan, D-Meriden, said in a statement Monday that he was “disappointed” the state had let the July 1 deadline pass and was still not able to take applications from needy residents. “This program will allow us to provide health care to chronically ill people at a better rate,” he said, adding that while he is encouraged the governor is still moving ahead, he hopes she will speed up the process.

As of yet, the federal Department of Health and Human Services has not publicly provided state-by-state specifics about what its premium rates would be, or how a benefits package might differ from a tentative plan crafted by Connecticut government officials.

But some general information HHS has given suggests that the federal government’s rates could be lower than the monthly tab under Connecticut’s proposed plan. HHS has said, for example, that the premiums for a 50-year-old enrollee could range from $328 to $675 per month, and the broader range, without factoring for age, would likely run anywhere from $140 to $900 per month-less than the $436 to $1,485 scale Connecticut’s actuarial consultants came up with.

Ellen Andrews, executive director of the Connecticut Health Policy Project, said she thinks a federally run program would save money for Connecticut consumers. She noted that the federal government would be able to spread administrative costs over the 21 states that are opting to have HHS run the program.

Connecticut’s initial plan called for having the state’s high-risk pool operated jointly by the Department of Social Services and Health Reinsurance Association, an existing state-run high-risk pool. United Healthcare would be the insurance carrier. Andrews said she’s afraid too much of the federal funding would be tapped by the state for administrative costs, leaving little left to deliver health care to those in need.

Courtney Burke, director of the Rockefeller Institute’s New York State Health Policy Research Center and an expert on high-risk pools, agreed that the federal government’s administrative costs might be slightly lower. But Burke also said that Connecticut’s proposed premium rates were generally in line with what she and others expected-that younger consumers would pay $400 to $600 a month to participate in a high-risk pool and the costs would be significantly higher for those over 65.

New Hampshire, which has opted to run its own program, has estimated state residents would pay anywhere from $283 to $1,691 per month in premiums. North Carolina officials said its program would cost anywhere from $183 to $729 per month. (Benefits and other expenses will vary from state to state.)

Burke also said there are benefits to states like Connecticut in running its own program. For one thing, HRA has been operating the state program since 1976, so officials there have more than three decades of experience operating such a high-risk insurance program in the state, and they likely know the needs of residents better than the federal government does, Burke said.

In 2008, the most recent data available, HRA covered only about 2,300 people. The program’s limited reach is more the rule than the exception. Nationwide, 35 states currently operate high-risk programs, but they only cover a total of approximately 250,000 people, according to Richard Cauchi, health program director at the National Conference of State Legislatures. That’s a fraction of the estimated 4 million people eligible for such programs based on their health status and inability to find or pay for coverage.

The reason for the low enrollment numbers is that these pools are very expensive to run, so states limit eligibility. And the premiums can be very high-125 percent to 200 percent more than the average person pays for insurance coverage, along with high out-of-pocket expenses.

For seriously ill patients with, for example, cancer, diabetes, or AIDS, their annual health care costs can easily exceed $100,000. Insurers often decline to cover these patients, or offer insurance at exorbitant rates. “So programs like these [state high-risk pools] are a lifesaver and they’re happy to pay 140 percent above standard rates,” Cauchi said.

Congress created the new federally-funded high risk pools to help expand the reach of existing state programs. The new health reform law mandates that the programs cannot charge more than the standard market rate and set limits on out-of-pocket costs, with the $5 billion pot of federal money established to subsidize the costs.

But as Connecticut officials have discovered, even with those new requirements, premiums could still be fairly high. The low end of the proposed state scale-$436 a  month-is well beyond the means of Velez, and whatever the federal government proposes isn’t likely to be affordable for her either.

Her monthly income is about $2,400, which includes her unemployment compensation and her late husband’s Social Security benefit, and she said the most she could possibly spend on insurance is about $40 a month. “I have to pay rent, utilities, and my car payment,” she said, plus $40 a month for her daughter’s health insurance through a joint state-federal Medicaid program for children.

The health care reform provisions most likely to help Velez-such as a significant expansion of Medicaid and federal subsidies to help low-income people pay for insurance-will not kick in until 2013 and 2014. That’s a long time to wait for health care coverage, said Velez.

“I’m worried about it, because my daughter doesn’t have anybody left now that her dad is gone,” said Velez. “So I have to stay healthy for her.”

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