Monthly premiums for federal health care program get slashed

  • Article by: WARREN WOLFE , Star Tribune
  • Updated: May 31, 2011 - 10:53 PM

But a similar state program is probably still more attractive.

Health insurance for people who are unable to buy private coverage -- a core benefit of the 2010 federal health law -- became hugely more attractive Tuesday when federal officials announced a big cut in monthly premiums and an easier enrollment procedure.

Starting July 1, monthly premiums for the federal Pre-Existing Condition Insurance Plan in Minnesota will drop $60 to $257, depending on the enrollee's age and which of three policies is chosen. Premiums for someone age 35 with a $2,000 annual deductible, for instance, will drop from $281 to $174 per month. For someone 55 or older, premiums will fall from $498 to $307.

High premiums and difficulty enrolling have been blamed for disappointing enrollment since the federal plan started last fall. Instead of the hundreds of thousands forecast by federal officials, just 18,303 people had enrolled as of March 31 -- only 37 of them in Minnesota.

In Minnesota, by contrast, some 27,000 people are enrolled in a state high-risk pool established by the Legislature in 1976. The Minnesota Comprehensive Health Association (MCHA) has offered plans that are less expensive than the federal program and do not require that enrollee go uninsured for six months, as the federal program does.

The Minnesota pool might remain more attractive to consumers, even after Tuesday's announcement, local insurance executives said.

"Even with the drop in premiums, I doubt if there will be anything more than a blip up in enrollment" in the federal program, said Abir Sen, chief executive of Bloom Health, a Minneapolis health insurance broker. "Nobody wants to go without insurance for six months. That's the deal-breaker."

The federal high-risk pool was created by the Affordable Care Act of 2010, the landmark health care law signed by President Obama last year. It is meant to provide temporary coverage for uninsured Americans until 2014, when insurance will become mandatory and insurers will no longer be allowed to deny coverage to people with poor health.

The changes announced Tuesday are likely to knock the federal premiums below those offered by Minnesota's plan, said Peggy Zimmerman-Belbeck, acting executive director of MCHA.

Starting July 1, the MCHA premium for a $2,000-deductible plan for someone age 35 will be $250.73; for a person age 55, the premium will be $556.97.

While premium costs will be higher for the MCHA plans, actual costs may be lower for those who need care, Zimmerman-Belbeck said. The federal plans require enrollees to pay 20 percent of medical costs once their deductible is met; the state plans do not.

"Enrollment has remained very steady, with about 500 new people a month," she said. The program serves a wide range of people, including some who need coverage for years, and some who need it for a few months until they find new jobs with group health insurance that covers pre-existing conditions.

The federal announcement Tuesday covered the 23 states and District of Columbia that chose to have the federal government run the programs. The remaining 27 states, which run their own plans, also were given permission to reduce premiums.

Warren Wolfe • 612-673-7253

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    Minnesotans who have been turned down for health insurance because of pre-existing conditions may seek help from either a federal or a state program.

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