Federal rule hampers enrollment in new state insurance plan

The state’s new insurance plan for people with pre-existing conditions, one of the first programs made available under the federal health reform law, offers lower premiums than the high-risk plans the state already offers.

But for close to 2,000 people in those existing plans, the new pool offers little benefit. A federal “crowd-out” rule prohibits anyone who has had health insurance in the previous six months from joining the new pre-existing condition plan.

That means that for someone in a high-risk pool to join the new plan – and save, in some cases, hundreds of dollars a month – he or she would have to give up health insurance for six months – not an appealing prospect for people with medical conditions.

In part, that reflects the goal of the new program, which is aimed at covering more people, not lowering costs for those with coverage. The pre-existing condition insurance plan was intended to offer a coverage option for people who have been unable to get health insurance because of pre-existing conditions, said Keith Maley, a spokesman for the U.S. Department of Health and Human Services.

So far participation in the new Connecticut Pre-Existing Condition Insurance Plan, which began offering coverage this month, has been limited.

In August, the first month applications were available, only two people signed up, according to the state Department of Social Services, which cited the crowd-out rule as a barrier to enrollment. Another 61 people were deemed qualified to join the plan but had not enrolled. Figures for September enrollment to date were not available, according to the department.

The Patient Protection and Affordable Care Act called for states to have insurance pools for people with pre-existing conditions who had no insurance, and provided $5 billion for the pools. The plans are intended to run only until 2014, when the health reform law will prohibit insurers from excluding people with pre-existing conditions.

“Crowd-out” policies exist in some public insurance programs as a way to keep people from dropping private insurance to join a public program. They typically require people to go for a certain period of time without insurance before being eligible for public insurance.

During a meeting last week, state Rep. Vickie Nardello urged the Department of Social Services to raise concerns about the crowd-out policy in the pre-existing condition pool to the federal government.

“If I were one of those individuals and I were looking forward to the coverage and the fact that now my pre-existing condition would be less of a problem, and to know that there is no change for me and in actuality I’d be paying more, I think I’d be somewhat disturbed by that,” Nardello said.

Mark Schaefer, the department’s director of medical care administration, said the policy reflects a desire to use the new plan to cover people who did not already have health insurance.

“It’s one of the fundamentals of the affordable care act,” Shaefer said. “They had $5 billion to spend and they wanted to ensure that they could get new folks in. But it does create a sense of inequity to the extent that you’re locked into a previous pool and you’d have to go without insurance for six months in order to get access to the PCIP.”

Schaefer also noted that some people who apply for the pre-existing condition insurance plan might find the state’s Charter Oak Health Plan more affordable. Charter Oak also restricts people who have had insurance in the past six months from enrolling, but the state allows exceptions.

Charter Oak has a $307 monthly premium for new enrollees. The new pre-existing condition insurance plan has premiums ranging from $285.16 a month for adults under 30 to $893 a month for people 65 and up.

The monthly premiums in the state’s other high-risk pools, meanwhile, cost $372.52 for men  under 30 and $724.98 for women under 30. For those aged 60 to 64, the monthly premiums are $1,618.02 for men and $1,370.64 for women.