Some ‘uninsurables’ face extra hurdle in getting coverage for preexisting ailments

Correction: An earlier version of this story included Kansas and Oklahoma among the states that do not allow third-party payments for individuals buying insurance from high-risk pools. This version has been corrected.

March 19, 2012

The “uninsurables”— people with serious medical conditions who can’t buy health coverage on the private market — are supposed to have a safety net to rely on in the new preexisting condition insurance plans (PCIPs). These comprehensive plans, created by the federal health-care law, take all comers who have been uninsured for at least six months. The premiums can be expensive, however, running several hundred dollars a month.

In many states, people with medical conditions such as HIV/AIDs, hemophilia, kidney disease and cancer can get a helping hand from government programs or nonprofits that pay the PCIP premiums on their behalf. But a handful of states have decided to prohibit third parties from picking up the tab.

Iowa is one of them, and in recent months the situation there has generated plenty of public controversy.

Some Iowa health officials would like to use federal funds from the AIDS Drug Assistance Program to pay the PCIP premiums for residents who have HIV/AIDs.

“When [officials] announced the PCIPs, they conveyed that this would be one of the solutions for people with HIV,” says Randy Mayer, the Iowa public health bureau chief in charge of HIV, sexually transmitted infections and hepatitis. He estimates that at least 100 Iowans could benefit.


A handful of states are prohibiting third parties from covering the expensive premiums of those with preexisting condition insurance plans. (GETTY IMAGES/STOCK ILLUSTRATION SOURCE)

But the board that runs the Iowa PCIP sees the situation differently. “We’ve been given a certain amount of money to manage this program, and we don’t know what will happen if we run out,” says Cecil Bykerk, the executive director of the board that manages the Iowa program. Bykerk, a former chief actuary in the insurance industry who has extensive experience working with state high-risk pools, also oversees the programs set up by Montana and Alaska.

Overall, the PCIP program received $5 billion to fund plans nationwide until 2014, when insurers will be required to cover everyone regardless of their health. Although only 49,000 have signed up, far fewer than originally projected, those who are enrolled have higher medical costs than expected.

Iowa was allocated $35 million until 2014. By April 1, the Iowa plan will have 282 members — slightly under projections for that date, says Bykerk.

A number of states, including Alaska and Montana, have overrun their spending projections and received additional federal funding. But Bykerk doesn’t want to risk that in Iowa. “Being unsure of all this, the board is hesitant to move forward and ask to amend the contract” to permit third-party payment, he says.

There are legitimate reasons why states have concerns about third-party payments: If an employer or insurer is permitted to pay someone’s PCIP premium, for example, it may be tempted to dump people into those plans.

Likewise, hospitals and other health-care providers might benefit financially by paying the premiums for people with serious medical needs, thereby encouraging them to receive care at those institutions, including possibly unnecessary care.

The federal government runs the PCIPs in 23 states, including Virginia, and in the District. Those jurisdictions permit third-party payment, at least for now. In its guidance on the plans, the Department of Health and Human Services says it will monitor such payments closely, and “to the extent that HHS finds that these payments present conflicts of interest or contribute to greater than projected spending, HHS anticipates that it will issue further guidance that restricts or even prohibits third-party payments for premiums.”

The remaining 27 states, including Maryland, run their own PCIPs with federal dollars. A handful of them don’t allow third-party payment, according to HHS. They include: Arkansas, Connecticut, Iowa, Maine, Montana, Pennsylvania and Rhode Island.

In New Mexico, about 11 percent of the 950 people enrolled in the PCIP get their premiums covered by such third parties as the American Kidney Fund, the University of New Mexico and the New Mexico Department of Health, says Deborah Armstrong, executive director for the New Mexico Medical Insurance Pool.

A year ago, Eli Valdez, 36, had full-blown AIDs. Uninsured and earning just $1,000 a month as a cashier at a pizza parlor, he had racked up more than $35,000 in medical bills. The $1,600 he needed monthly for prescriptions was covered by the state, but because he couldn’t afford physician visits or blood work, the Albuquerque resident wasn’t monitoring the medications as he should have.

Now he has comprehensive insurance through the New Mexico PCIP, for which the nonprofit New Mexico AIDS Services pays the premium.

“Now I have more access to health care, and I get seen more often,” says Valdez. “I’m a lot healthier.” His viral load is now undetectable.

This column is produced through a collaboration between The Post and Kaiser Health News. KHN, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health-care-policy organization that is not affiliated with Kaiser Permanente. E-mail: questions@kaiserhealthnews.org.

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