People with preexisting medical conditions are stuck in high-risk pools until 2014

The 2010 health-care overhaul creates state-based health plans for those who have medical conditions that make them uninsurable in the private market. These “preexisting-condition insurance plans” (PCIPs) are intended to act as a bridge until 2014, when insurers will no longer be able to refuse to cover people with medical problems or charge them more than other consumers. As of November, about 45,000 people had signed up for those plans, far fewer than expected.

However, there is a much larger group, more than 220,000 people, who have coverage through 35 state high-risk pools that were in existence before the overhaul was passed. Because of restrictions in the new law, they can’t sign up for the PCIP plans, even though the coverage is often cheaper (thanks in part to federal funding) and more comprehensive. For these people, 2014 can’t come soon enough.

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Chris and Kristi Petersen raise 600 antibiotic-free Berkshire hogs and grow hay on 75 acres near Clear Lake, Iowa. Their health insurer dropped them in 2008 because, among other things, the company claimed that Chris, now 57, had failed to report a preexisting hernia that he subsequently had surgically repaired and that Kristi, who’s 55, was shorter, and thus had a higher body mass index, than she had reported. Lacking other options, the couple signed up for Iowa’s state high-risk pool.

Together they pay $1,304 a month for coverage. Chris’s plan has a $2,500 deductible while Kristi’s is $1,000. The plans generally cover 80 percent of their medical bills.

Chris Petersen, who supported the health-care overhaul, nevertheless thinks the law failed him and his wife. “This is the biggest check I write out every month,” he says. “The new federal plan would have been a lot cheaper.”

If the Petersens had been allowed to sign up with the PCIP in Iowa, their combined premium would have been $958 for policies with $1,000 deductibles.

People such as the Petersens, however, are stuck between a rock and a hard place: To qualify for a PCIP, they must first be uninsured for six months.

Experts say this requirement was included in the law to discourage people in the existing state high-risk pools and other private insurance plans from doing exactly what they would do if better, cheaper coverage became available: switch plans.

It’s clear why they might be tempted. Premiums in the new pools can’t exceed rates for standard individual coverage in the state, while the high-risk pools in some states charge twice that. The new plans must also cover preexisting conditions immediately, in contrast to the older state pools, some of which exclude such coverage for up to a year.

“Much as everybody would like to drop [the six-month requirement], if you did you’d have to increase expenditures,” says Sandy Praeger, the Kansas insurance commissioner, who chairs the health insurance and managed-care committee of the National Association of Insurance Commissioners. Federal funding for the program through 2013 is $5 billion.

Although enrollment in the PCIPs has been far lower than originally projected, health-care spending by the individuals who have signed up for coverage has been much higher than anticipated, say experts.