When Miles Owyang was born, six weeks premature, the doctors determined that he had a heart ailment. It was nothing serious, just something to monitor.
Today, Miles is a radiant 9-year-old and a fierce tennis and lacrosse player. Health insurance for him was never a problem until his parents, both Silicon Valley electrical engineers, lost their jobs and their employer-based insurance, and had to look for an individual family policy.
No insurer would accept Miles.
His mom, Tara Anderson, applied to join California's high-risk pool. "They told us it will probably be about three months before he's accepted," she says.
The high-risk pools in most states are largely viewed as a failure. They were originally meant as insurers of last resort for those shut out of the private health insurance market, but according to the national association of state high-risk programs, the pools cover only about 200,000 Americans.
The California plan is capped at 7,100 members and often has a waiting list. Premiums and deductibles are wildly expensive, and the policies have spending caps that are frequently exceeded.
The new federal health care law sets aside $5 billion to fund new high-risk programs that are more affordable and open to more people.
Deborah Chollet, a health insurance expert at the nonpartisan research firm Mathematica, says people who apply to the new programs will pay a standard rate, or the rate they would pay for a policy if they did not have a pre-existing condition that excluded them from coverage.
"That is an enormous benefit," she says. Medical charges for people in a high-risk pool could drop by as much as a third, and they will no longer face annual or lifetime caps, Chollet adds. A family would pay no more than $11,900 a year. Individuals would pay under $6,000 a year.
Enrollment rules will loosen as well. In some states, current applicants must prove that private insurers rejected them. Under the new law, anyone with a pre-existing condition who lacks coverage can join the program. The federal government will define what those conditions are, but they are likely to be the same long list used by insurers, including cancer, diabetes, heart disease and even pregnancy.
"My sense is they're going to let people in under all reasonable circumstances ... if someone has made every effort to maintain coverage, they would be eligible for this," Chollet says. She adds that 1 million to 2 million people could gain coverage under the federally financed program.
Some of the $5 billion federal allocation will likely go straight to states to expand their pools. However, about 15 states don't have high-risk pools, and others would have to change their laws to qualify for the funds. The federal government will likely also offer a national pool.
Still, Lesley Cummings, director of the California Major Risk Medical Insurance Program, the state's high-risk pool, says she has far more questions than answers about the new program. "We don't yet know the details of how it will work, and are eager to talk about this with our federal colleagues," Cummings says.
The federal government has begun reaching out to states, to gauge their interest in starting or expanding coverage for the medically uninsurable. States have until the end of this month to submit an application.
The law says these new high-risk pools must be implemented by mid-June. They’ll phase out in 2014 when private insurance companies will be forced to sell policies to the "medically uninsurable."