In what is going to be the largest program yet under the health care reform authorized by President Obama in March this year, the U.S. Department of Health and Human Services (HHS) will allocate $5 billion to states to extend insurance for people previously discriminated against or denied an insurance cover owing to pre-existing medical conditions. The federal program will help people with pre-existing conditions get insurance on a nationwide basis even as some states have been funding their own programs.
Thirty states and the District of Columbia will use the funds to create a new high-risk pool or enhance funding for existing ones or contract with an insurance carrier to provide subsidized care for eligible residents. For the remaining 20 states that chose not to participate in this funding program, HHS will run such programs through a private third-party administrator.
So, whom will the funds help:- As per a 2009 survey, 12.6 million people were either discriminated against by way of a higher premium or denied a health cover in the past three years for reasons of having a pre-existing condition. That’s a whopping 36% of all people denied or discriminated against out of the total who attempted to get private health cover. Another study in 2009 that has been cited by HHS found that 1 in 10 cancer patients couldn’t get health coverage while 6% of previously insured lost their coverage owing to their diagnosis.
Individuals who have a pre-existing health condition and have remain uninsured for at least six months are eligible for coverage. By law, the premium can’t cost more than the state’s average rate for individual plans.
How will the funds be allocated: – Population size, the number of uninsured as well as geographic costs in addition to other factors will determine how the $5 billion will be divided among the states. The HHS will reallocate funding after two years.
Based on a formula that takes into account the key factors, the highest allocation is for California which will receive $761 million. North Dakota, Vermont and Wyoming each will be allocated the smallest amount of $8 million.
The ambitious program is scheduled to run last until Jan. 1, 2014 by which time the reform law will necessitate insurance companies to cover people regardless of their pre-existing conditions. However, Congressional Budget Office (CBO) estimates that the federal funding will be exhausted in less than 3 years sometime in 2013 in case more than 200,000 people avail themselves of coverage under this plan. Additionally, CBO expects that by 2013 enrolment under the program will reach as high as 700,000 and consequently the federal spending to ensure the coverage will become thrice as the initial budget at $15 billion.
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