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Bargain-basement health insurance rates available in some states

In an era when double-digit premium increases are the norm, a “low health insurance rate” is almost a contradiction in terms.

But if you qualify for the government's Pre-Existing Condition Insurance Plan (PCIP), you can get a good bargain on coverage.

The PCIP, created under the Affordable Care Act, is for people with medical conditions who can't find affordable health insurance coverage in the private insurance market. Private insurers typically exclude coverage for pre-existing conditions, such as cancer, pregnancy or diabetes.

affordable health insuranceAs of July 1, the U.S. Department of Health and Human Services slashed rates for the plan in 17 states and the District of Columbia by as much as 40 percent. The rate cuts were in states where the federal government administers the plans.

Twenty-seven other states run their own plans using federal money and some of those states have also cut their rates. California, for instance, announced rate cuts ranging from 8.2 percent to 24.3 percent. The new premiums in California will take effect Oct. 1.

What you pay depends on where you live

PCIP rates are higher in some states than others because they're based on average rates for healthy people in those private insurance markets. Therefore, PCIP rates will generally be higher in states that typically have high health insurance prices in the private market.

All the federally administered plans have a full range of coverage but vary in their deductibles:

  • The standard plan has a $2,000 deductible for in-network providers and a $3,000 deductible for out-of-network providers.
  • The extended option has a $1,000 deductible for in-network and $1,500 deductible for out-of-network providers.
  • The HSA plan features a $2,500 in-network deductible and $3,000 out-of-network deductible.

Rate examples

Pre-Existing Condition Insurance Plan rates for a 40-year-old who buys a standard plan in states where the plan is federally administered.

Alabama $197

Arizona $188

Delaware $195

District of Columbia $253

Florida $211

Georgia $264

Hawaii $209

Idaho $239

Indiana $222

Kentucky $177

Louisiana $231

Massachusetts $325

Minnesota $174

Mississippi $263

Nebraska $237

Nevada $203

North Dakota $239

South Carolina $250

Tennessee $239

Texas $239

Vermont $266

Virginia $168

West Virginia $214

Wyoming $227

Co-pays for primary and specialty care office visits are $25 for all the plans. Preventive care is fully covered with no deductible, co-pay or co-insurance. You pay 20 percent co-insurance for other services, such as hospitalization, outpatient surgery, lab work, and maternity and newborn care.

Among states where the plan is federally administered, Virginia has the lowest rates. A 40-year-old would pay $168 a month for the standard PCIP, $226 for the extended plan and $174 for a plan with a health savings account (HSA).

In Massachusetts, a 40-year-old would pay $325 for the standard plan, $438 for the extended plan and $338 for the HSA plan.

Comparing costs among states that run their own PCIP program is more difficult because the plans are uniquely designed, so it's impossible to do an apples-to-apples comparison.

Low enrollment leads to insurance rate cuts

Federal and state officials hope recent rate cuts will boost enrollment in the PCIP. Only 24,712 people had signed up nationwide at the end of May.

"We've heard the premiums are tough, and we're hoping this will prompt some people to take a second look at PCIP," says Jeanie Simian, a spokesperson for California's Managed Risk Medical Insurance Board, which operates the plan in California.

In some cases, new rates for the California PCIP are better than what consumers without pre-existing conditions could find in the private health insurance market, Simian says. Besides not charging higher premiums for pre-existing conditions, such as diabetes or cancer, the California plan does not penalize people who smoke or are overweight.

Wayne Nelson, president of Communicating for America, says he thinks the rate cuts will help boost enrollment. "But I don't think it will help enough."

Communicating for America is a nonprofit based in Fergus Falls, Minn., representing self-employed people and small businesses.

In a recent survey of about 200 uninsured Americans, the group found that 90 percent felt a six-month waiting period for coverage was too long. To qualify for the PCIP, subscribers must have gone without health insurance for at least six months. About three-quarters, 76 percent, said high premium costs had been the main factor in not purchasing insurance, and 69 percent said they believed having a licensed agent assist them was important.

Nelson suggests the government shorten the waiting period for the program to three months. He also attributes low enrollment to a lack of good marketing. Until recently, he points out, the government didn't allow agents to sell the plan and did no advertising.

Nevada, where PCIP rates dropped 37.5 percent, is among states trying to get the word out about the program. The Nevada Division of Insurance is running a public service announcement in the state's TV and radio markets to draw more people.

"I hope that these lower rates will encourage more uninsured individuals with pre-existing conditions to sign up for the program and get the coverage that they need," says Amy Parks, acting insurance commissioner at the Nevada Division of Insurance.

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