Health care reform’s growing pains

Gail O'Brien: She now has health insurance (AP)

It’s a centerpiece of President Barack Obama‘s health care remake, a lifeline available right now to vulnerable people whose medical problems have made them uninsurable.

But the Pre-Existing Condition Insurance Plan started this summer isn’t living up to expectations. Enrollment lags in many parts of the country. People who could benefit may not be able to afford the premiums. Some state officials who run their own “high-risk pools” have pointed out potential problems.

“The federal risk pool has definitely provided critical access, in some cases lifesaving access, to health insurance,” said Amie Goldman, chair of a national association of state high-risk insurance pools. “That said, enrollment so far is lower than we would have expected.” Goldman runs the Wisconsin state pool, as well as the federal plan in her state.

California, which has money for about 20,000 people, has received fewer than 450 applications, according to a state official. The program in Texas had enrolled about 200 by early September, an official in that state said. In Wisconsin, Goldman said they’ve received fewer than 300 applications so far, with room for about 8,000 people in the program.

That’s not how it was supposed to work.

Government economists projected as recently as April that 375,000 people would gain coverage this year, and they questioned whether $5 billion allocated to the program would be enough.

Federal officials won’t provide enrollment figures, saying several large states have yet to get going.

“We don’t think this is getting off to a slow start,” said Jay Angoff, director of a new insurance oversight office at the Department of Health and Human Services. “We think this is getting off to a good and orderly start.”

Angoff said he’s confident more people will sign up, and he pointed out the program was set up in near-record time.

What happens with the Pre-Existing Condition Insurance Plan is important because it could foreshadow problems with major changes under the law that are still a few years away.

For those who get into the program, it can be a life changer.

Preschool teacher Gail O’Brien, 52, was uninsured and facing cancer treatments that would have left her family deeply in debt. She now pays $495 monthly for a plan with a $5,000 annual deductible. She has a type of immune system cancer, and just one chemotherapy treatment runs to $16,000.

“When I was diagnosed, they told me I had a 60 percent chance of being cured,” said O’Brien, of Keene, N.H. “That’s pretty good odds, but I was also terribly worried about finances. Now I don’t feel like we can’t afford the treatment. It’s manageable to us … and I know I’m going to beat this.”

Obama announced the plan last fall in his health care speech to Congress.

“For those Americans who can’t get insurance today because they have pre-existing medical conditions, we will immediately offer low-cost coverage that will protect you against financial ruin if you become seriously ill,” he pledged.

The result was a program that offers health insurance to people with medical problems at prices the average healthy person would pay, although that’s not necessarily cheap. To qualify, you must have had a problem getting insurance because of a medical condition, and have been uninsured for at least six months. Only U.S. citizens and legal residents can get help.

The program will last until 2014, when the new health law requires insurers to accept all applicants regardless of medical history. Most states have opted to take federal money and design their own programs. But in 23 states and the District of Columbia, the federal government runs the plan directly.

In interviews, state officials and independent experts raised several potential problems.

_Premiums may be out of reach. In many states, people in their 40s and 50s face monthly premiums ranging from $400 to $600 and higher. “I think there’s some sticker shock going on,” said Sabrina Corlette, a Georgetown University research professor. “People who may be eligible are finding out that even if they can get the insurance, the price is too high.” Pennsylvania, which set a premium of $283 for all ages, has had no problem getting applicants.

_A barrier may include requirements that people be uninsured for at least six months and that people provide documentation that they’ve been turned down by an insurer. “There are many people who don’t meet the criteria for the federal pool, particularly the six months without coverage,” said Goldman.

_In states where the federal government runs the program directly, the insurance plan doesn’t provide coverage for prescription drugs until people have met a $2,500 annual deductible. “Applying this high … deductible to the pharmacy benefit is a real barrier to consumer access to medications,” Steven Browning, a Texas official, wrote HHS last week.

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Online:

Pre-Existing Condition Insurance Plan: http://www.pcip.gov

National Association of State Comprehensive Health Insurance Plans: http://naschip.org

Office of Consumer Information and Insurance Oversight: http://www.hhs.gov/ociio

Copyright © 2010 The Associated Press

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How an insurance company targets cancellations

Shortly after they were diagnosed with breast cancer, each of the women learned that her health insurance had been canceled. There was Yenny Hsu, who lived and worked in Los Angeles. And there was Patricia Reilling, a successful art gallery owner and interior designer from Louisville, Kentucky.

Neither of these women knew about the other. But besides their similar narratives, they had something else in common: Their health insurance carriers were subsidiaries of WellPoint, which has 33.7 million policyholders — more than any other health insurance company in the United States.

The women paid their premiums on time. Before they fell ill, neither had any problems with their insurance. Initially, they believed their policies had been canceled by mistake.

They had no idea that WellPoint was using a computer algorithm that automatically targeted them and every other policyholder recently diagnosed with breast cancer. The software triggered an immediate fraud investigation, as the company searched for some pretext to drop their policies, according to government regulators and investigators.

Once the women were singled out, they say, the insurer then canceled their policies based on either erroneous or flimsy information. WellPoint declined to comment on the women’s specific cases without a signed waiver from them, citing privacy laws.

That tens of thousands of Americans lost their health insurance shortly after being diagnosed with life-threatening, expensive medical conditions has been well documented by law enforcement agencies, state regulators and a congressional committee. Insurance companies have used the practice, known as “rescission,” for years. And a congressional committee last year said WellPoint was one of the worst offenders.

But WellPoint also has specifically targeted women with breast cancer for aggressive investigation with the intent to cancel their policies, federal investigators told Reuters. The revelation is especially striking for a company whose CEO and president, Angela Braly, has earned plaudits for how her company improved the medical care and treatment of other policyholders with breast cancer.

The disclosures come to light after a recent investigation by Reuters showed that another health insurance company, Assurant Health, similarly targeted HIV-positive policyholders for rescission. That company was ordered by courts to pay millions of dollars in settlements.

In his push for the health care bill, President Barack Obama said the legislation would end such industry practices.

But many critics worry the new law will not lead to an end of these practices. Some state and federal regulators — as well as investigators, congressional staffers and academic experts — say the health care legislation lacks teeth, at least in terms of enforcement or regulatory powers to either stop or even substantially reduce rescission.

“People have this idea that someone is going to flip a switch and rescission and other bad insurance practices are going to end,” says Peter Harbage, a former health care adviser to the Clinton administration. “Insurers will find ways to undermine the protections in the new law, just as they did with the old law. Enforcement is the key.”

In a statement to Reuters, WellPoint said various specified criteria trigger rescission investigations, including certain types of medical claims. The company said it changed its rescission practices to ensure they are handled appropriately after a 2006 review of its policies prompted by public concern over rescission.

WellPoint also said it created a committee which includes a physician for making rescission decisions. The company also noted that it established a single point of contact for members undergoing an investigation and enacted an appeals process for applicants who disagree with the original determination.

During the recent legislative process for the reform law, however, lobbyists for WellPoint and other top insurance companies successfully fought proposed provisions of the legislation. In particular, they complained about rules that would have made it more difficult for the companies to fairly — or unfairly — cancel policyholders.

For example, an early version of the health care bill passed by the House of Representatives would have created a Federal Office of Health Insurance Oversight to monitor and regulate insurance practices like rescission. WellPoint lobbyists pressed for the proposed agency to not be included in the final bill signed into law by the president.

They also helped quash proposed provisions that would have required a third-party review of its or any other insurance company’s decision to cancel a customer’s policy.

A WellPoint spokeswoman on Thursday denied such lobbying took place.

The new law does leave open the possibility of reform in this area, these sources say. The reason, they say, is that much of the new legislation is essentially a roadmap, with regulations to be decided later.

“The lack of specificity doesn’t mean that nothing is going to be done,” said a senior congressional staffer who has played a key role in the health reform debate. “The law grants HHS (the Department of Health and Human Services) the discretion to promulgate regulations. This is very much a work in progress.”

Among other things, the staffer said, the White House could revisit proposing tough new regulations requiring third-party review of policy cancellations.

Victoria Veltri, the general counsel of Connecticut’s Office of Healthcare Advocate, a state agency that investigates complaints by policyholders, says she has seen the success of such a process in her home state. One company, Aetna, has voluntarily agreed to engage in the third party review, with what she described as favorable results.

“I haven’t seen an Aetna case in our office since they went to the third party review process,” she said. “It’s a powerful tool to have a third set of eyes required before someone is rescinded.”

For its part, WellPoint said it began offering third-party reviews in 2008.

A senior Obama administration official said he remained confident that mandatory third-party reviews of rescissions is not entirely out of reach.

“It might take some wrangling with the insurance industry, some strong-arming, maybe even use of the presidential bully pulpit,” he said on condition of anonymity.

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