By Michelle Andrews

The 2010 health-care overhaul creates state-based health plans for those who have medical conditions that make them uninsurable in the private market.

These “preexisting-condition insurance plans” (PCIPs) are intended to act as a bridge until 2014, when insurers will no longer be able to refuse to cover people with medical problems or charge them more than other consumers.

As of November, about 45,000 people had signed up for those plans, far fewer than the up to 400,000 that was originally projected.

However, there is a much larger group, more than 220,000 people, who have coverage through 35 state high-risk pools that were in existence before the overhaul was passed.

Because of restrictions in the new law, they can’t sign up for the PCIP plans, even though the coverage is often cheaper (thanks in part to federal funding) and more comprehensive. For these people, 2014 can’t come soon enough..

Together they pay $1,304 a month for coverage. Chris’s plan has a $2,500 deductible while Kristi’s is $1,000. The plans generally cover 80 percent of their medical bills.

Chris Petersen, who supported the health-care overhaul, nevertheless thinks the law failed him and his wife. “This is the biggest check I write out every month,” he says. “The new federal plan would have been a lot cheaper.”

If the Petersens had been allowed to sign up with the PCIP in Iowa, their combined premium would have been $958 for policies with $1,000 deductibles.

More From This Series: Insuring Your Health

People such as the Petersens, however, are stuck between a rock and a hard place: To qualify for a PCIP, they must first be uninsured for six months.

Experts say this requirement was included in the law to discourage people in the existing state high-risk pools and other private insurance plans from doing exactly what they would do if better, cheaper coverage became available: switch plans.

It’s clear why they might be tempted. Premiums in the new pools can’t exceed rates for standard individual coverage in the state, while the high-risk pools in some states charge twice that. The new plans must also cover preexisting conditions immediately, in contrast to the older state pools, some of which exclude such coverage for up to a year.

“Much as everybody would like to drop [the six-month requirement], if you did you’d have to increase expenditures,” says Sandy Praeger, the Kansas insurance commissioner, who chairs the health insurance and managed-care committee of the National Association of Insurance Commissioners. Federal funding for the program through 2013 is $5 billion.

Learn about Washington State’s Pre-existing Condition Insurance here.

Although enrollment in the PCIPs has been far lower than originally projected, health-care spending by the individuals who have signed up for coverage has been much higher than anticipated, say experts.

“The people coming into the PCIPs act more like the long-term uninsured,” says Jean Hall, an associate research professor at the University of Kansas who co-authored a report about the PCIPs for the Commonwealth Fund. “They’re not accustomed to managing on a day-to-day basis; they’re accustomed to going to the emergency department when things get bad.”

Nine states have asked the Department of Health and Human Services for more money to fund their PCIPs in 2012. However, it appears the program won’t run out of money soon. Through the end of September 2011, just $386 million of the $5 billion allocated had been spent, according to HHS figures.

(Some experts caution against relying too much on September spending figures, since enrollment has increased since then and claims may take months to clear.)

“As you would expect, some states have exceeded projections and others have not,” says an HHS spokesman. “We have the capacity to accommodate the needs of the program.”

For people who can’t get into the new plans, however, that’s small comfort.

Jill Judy and Mark Brown signed up for the Arkansas high-risk pool a few years ago when Mark’s benefits ran out after his retirement from a management job at a company that repossesses boats. Judy, 49, has mild cerebral palsy, which she hasn’t been treated for since she was a child, and Brown, 62, had an angioplasty 15 years ago and still sees a cardiologist.

Individual insurers wouldn’t cover them, so they ended up in the state’s high-risk pool. Although Judy says she’s grateful that she has coverage, it’s hardly ideal.

The premiums for the two of them come to just under $1,000 a month. But the plan has a $10,000 deductible and a $1 million cap on lifetime benefits. “People like my husband and myself are paying $12,000 a year for nothing,” she says.

She estimates they could get better coverage and save 30 percent in the Arkansas PCIP. “But we don’t qualify because we’re not willing to be uninsured for six months,” she says. “It’s screwy.”

Please send comments or ideas for future topics for the Insuring Your Health column to questions@kaiserhealthnews.org.

Local Resources:

• Statewide Health Insurance Benifits Advisors (SHIBA) provides free, unbiased advice from volunteers: www.oic.wa.gov/shiba/
• Benefits.gov: www.benefits.gov
• King County Project Access: www.kcprojectaccess.org
• Washington Basic Health (insurance assistance): www.basichealth.hca.wa.gov/understanding.shtml
• Washington Health Plan: www.washingtonhealth.hca.wa.gov
• Washington State Office of the Insurance Commissioner: www.insurance.wa.gov
• To search for a community clinic near you go to: http://findahealthcenter.hrsa.gov

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

Photo by Sanja Gjenero

Imagine if finding out the cost of a particular treatment or procedure at a doctors’ office was as easy as locating the prices of entrees at a restaurant. The menu might read: school physicals – $40; office visit for a cold – $80; diabetes screening – $200.

But to the dismay of some consumer advocates, this push for health care pricing transparency never made it out of the kitchen.

While a Florida state House committee approved legislation that would expand the state’s requirement that certain providers post the out-of-pocket prices of common health care services, a state Senate committee shot down a similar measure after an aggressive lobbying push by health care provider groups.

Organizations representing the state’s doctors weren’t wild about the idea that certain facilities would have to display bulletin-board sized postings of their prices.

Jeff Scott, general counsel for the Florida Medical Association, said that providers are all for transparency, but they don’t need the government telling them exactly how they should do it.

“Next thing you know they’re going to say it has to be neon or include pictures,” he said.

But providers’ most strenuous objections were to provisions in the legislation that would require providers to disclose prices to out-of-network patients and limit so-called balance billing, which happens in health care settings when providers bill patients the difference between what they charge for a service and what insurers pay it.

Meanwhile, the state already requires urgent care centers to post in their reception area the prices of their 50 most frequently used services, and the posting must be at least 15 square feet.  Physicians are not required to do so, but they must follow the same rules if they post prices voluntarily.

Under the proposed legislation, ambulatory care centers and diagnostic-imaging centers would have had to follow the same rules as urgent care centers, and the original bills also would have expanded the requirement to physicians.

The House committee-approved bill softened this language to maintain the voluntary status quo for doctors. Both bills would have required physicians to provide patients with a written statement of prices at each visit.

Richard Polangin, health care policy coordinator for the Florida Public Interest Research Group, said the legislation would have been a boon for consumers, many of whom are unaware that prices can vary among doctors and facilities.

The bills would “enable persons who must pay for doctor visits, diagnostic images such as CT scans and MRIs, and for care at ambulatory surgery centers, to know the cost in advance,” he said. “The uninsured and persons with insurance deductibles would be able to make more informed health care decisions.”

Insurers and business groups also supported the legislation. And, though the measure’s future is uncertain, at least one person involved in the lobbying effort said work would continue.

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

The latest casualty of the Great Recession may soon be the nation’s elderly. Cuts in government payments for patient care and less construction of new nursing homes are already taking a toll.

Add to this the aging baby boom generation and you have a worst-case scenario in which older people who need full-time care won’t be able to get it.

“We believe we’re at a tipping point,” says Mark Parkinson, head of the American Health Care Association (AHCA), which represents nursing homes.

If so, the timing couldn’t be worse. The first baby boomers hit age 65 last year. By 2030, 20 percent of the U.S. population will be at least 65, up from 13 percent today.

Number of Persons 65+ in the U.S. 1900 - 2030 (numbers in millions) - U.S. Administration on Aging

In that same period, the number of 85-year-olds will increase more than 50 percent and the number of 100-year-olds nearly triple. But the number of nursing homes dropped almost 9 percent from 2000 to 2009.

Nursing homes and hospitals are places that everyone wants to avoid … until they can’t. Most people say they want to age at home, but as retiring boomers get older, more will need the type of 24-hour care that only a nursing home or hospital can offer.

That’s because the prevalence of chronic illnesses like Alzheimer’s disease, cancer and diabetes increases with age. Fifty-five percent of all cancers are diagnosed in individuals 65 and older, and by 2030, 7.7 million of those 65 and older will suffer from Alzheimer’s, 50 percent more than today according to the Alzheimer’s Association.

Several trends are cutting into the number of nursing homes. Many homes were constructed during the 1960s under Lyndon Johnson’s Great Society programs. Often those homes are closed because they are old or, with their long hallways and large, multi-resident rooms, don’t fit what current residents want, says Robert Kramer of the National Investment Center for the Seniors Housing and Care Industry.

But the recession has made getting private financing for new nursing home construction tougher. From 2007 to 2011, the number of under-construction nursing home units (the sections of a facility that provide only nursing care) declined by a third.

“I cannot tell you of anyone who has actually developed a new skilled nursing facility in at least the last five years in California,” says Edward Steinfeldt, a consultant to developers of retirement housing and health care.

And existing nursing homes are struggling. They long have lost money on patients whose stays are covered by state-run Medicaid programs, which pay for long-term care for chronically or terminally ill patients who have run out of money.

According to a report this month by the AHCA, in 2011 nursing homes lost at least $20 per Medicaid resident per day nationwide. Total losses came to $6.3 billion nationally, the highest yearly total ever, with higher deficits to come next year, according to the report.

That’s a huge hit since Medicare payments are responsible for more than 20 percent of nursing home revenues. (Medicaid provides about 50 percent of revenues, and most of the rest comes from private long-term care insurance and people who pay out of pocket.)

For the 187-bed nonprofit Lutheran Home in Milwaukee, which has gross receipts of about $20 million, the Medicare slash will take $700,000 to $750,000 straight off the organization’s bottom line this year says CEO Scott McFadden.

The real estate crash has added to nursing homes’ budget crunch. Many clients sell their homes and use the money to pay out of pocket for long-term care services from a nursing home.

Related Article: Tools to help you choose a good nursing home.

By obliterating more than $8 trillion in home equity, the collapse cut the number of patients who can pay their own way. McFadden says that the private-paying clients his home serves used to run out of money in two or three years. Now they’re broke much more quickly.

Once they can’t pay, Medicaid picks up only some of the tab, and the Lutheran Home then starts losing money on them. It’s illegal for a Medicaid-certified nursing home to ask a patient to leave just because they run out of money.

Residing at a nursing home is not cheap. The median annual cost of a private U.S. nursing home room rose to $77,745 in 2011—up almost 30 percent from 2005.

People without chronic conditions have less costly options—it takes about $43,500 yearly to pay for a home health care aide who doesn’t have specialized medical skills, and $39,000 to live in an assisted living facility that provides help with activities of daily life like cooking, but doesn’t necessarily offer health care services.

If nursing homes continue to be squeezed, they may need to cut more staff. A November 2011 report by the University of California-San Francisco concluded that poor quality of care is already endemic in many nursing homes, especially the largest for-profit chains where staffing levels have been cut the deepest to save money.

Local Resources for nursing homes and senior care

• Aging & Disability Services – Seattle/King County: www.agingkingcounty.org
• Aging & Disability Services Administration – Washington State: www.aasa.dshs.wa.gov
• Commission on Accreditation of Nursing Home Facilities: www.carf.org
• Eldercare Locator: www.eldercare.gov/Eldercare.NET/Public/Home.aspx
• Long-term Care Information: www.longtermcare.gov
• Medicare’s Nursing Home Compare service.
• Medicare: Alternatives to Nursing Home Care

Parkinson maintains that so far, homes in his association are keeping up their level of service with less money by eliminating managers, freezing wages, and cutting capital improvements like painting walls and replacing carpets—anything to avoid laying off caregiver staff.

Bill Mulligan, a managing director at Ziegler Capital Management, which provides low-cost financing for nursing home developments, argues that given the decreasing supply and rising demand, nursing homes are still a good investment.

“The demographics are going to level off the number [of homes], maybe even increase it at some point,” he says. But Steinfeldt, who also works with developers, has little confidence in their profitability: “Why would you go into a business that can’t cover its costs?”

If major shortages of nursing home space do surface, they’ll likely show up in urban and high-poverty areas first. Widespread waiting lists have already been reported in Tallahassee in Florida, Rapid City in South Dakota, and San Francisco. Homes also have been closing in poor neighborhoods—a study published last year in the Archives of Internal Medicine showed that nursing homes shut down there more often than elsewhere (the hardest hit cities were New Orleans, Oklahoma City, San Francisco, and Dallas).

And Medicaid patients may have an increasingly hard time finding nursing homes that will take them–Kramer says when homes replace their old buildings, they often cut the number of beds to make space for more private rooms and sophisticated medical facilities that can attract the higher paying Medicare and private-pay clients.

“Every adult is going to face this nursing home crisis in some way, whether it’s through their own care or the care of loved ones,” says McFadden. “Ignoring it is not going to make it better.”

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

(Kaiser Health News in an editorially-independent program of the foundation.)

Majority Of Americans Think Ideology Will Affect High Court’s Ruling On Health Law 

By Mary Agnes Carey
KHN Staff Writer

With the Supreme Court just two months away from hearing a historic legal challenge to the 2010 health law, nearly 60 percent of the public expects the justices to depend more on personal ideology than a legal analysis of the individual mandate, according to the Kaiser Family Foundation’s January health tracking poll.

Just 28 percent of those surveyed believe the justices will base their decision on the mandate without regard to politics and ideology, according to the survey.

The poll also asked about general views of the Supreme Court and found three quarters of the public believe that justices sometimes let their ideological views influence their decisions.

Seventeen percent of those surveyed say justices usually decide cases based on legal analysis.

The court will hear oral arguments in March in a case brought by 26 states and others.

As the Republican presidential nomination fight continues, the poll also found that most Republicans are not swayed by charges from GOP contenders that former Massachusetts Gov. Mitt Romney holds health policy views similar to those of President Barack Obama.

Romney’s opponents have repeatedly criticized him for signing a 2006 Massachusetts law that is similar in some aspects to the federal health law.

But the poll found that 49 percent of Republicans say the two men’s views are different, while three in 10 say they are similar. Twenty-two percent had no opinion.

However, when asked specifically for their opinions about the 2006 Massachusetts health law, 69 percent of likely GOP primary voters responded that they didn’t know enough to say whether they viewed the law favorably or unfavorably.

Furthermore, 64 percent of these voters said they don’t know enough to judge whether the Massachusetts law is similar to or different from the 2010 federal health law.

The poll also found that the individual mandate, a requirement that most Americans purchase health insurance by 2014 or pay a fine, remains unpopular, with 67 percent of Americans having an unfavorable view of the provision and 30 percent supporting it.

The January poll found that 37 percent of Americans have a favorable view of the health law while 44 percent have an unfavorable view.

In the foundation’s December tracking poll, 41 percent of Americans had a favorable view of the law while 43 percent had an unfavorable view.

The Kaiser poll surveyed 1,206 adults from Jan. 12 to 17. It has a margin of error of +/- 3 percentage points.

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

Questions to ask before you buy long-term care insurance

By Caroline E. Mayer
This story was produced in collaboration with 

In the last years of Martin Privot’s life, his family had to start selling his assets to pay for his nursing home costs. “He needed 24-hour care and couldn’t be left alone,” recalls his daughter Toni Footer. “My biggest fear was we would run [through his money] and wouldn’t be able to provide the care that he needed.”

Privot died in 2008, from post-surgical complications and other ailments, before all his assets were depleted. Yet Footer, 61, says her dad’s experience “reinforced my already strong feelings that long-term-care [insurance] is a necessity.”

The Rockville, Md., resident says she pays about $2,500 every year for such coverage for herself. “It’s expensive — in fact, it’s gone up twice — but it’s worth every penny. It provides a peace of mind that my family won’t have to struggle to find money to pay for my care.”

Coverage fell short

Mary McClelland came to the opposite conclusion after seeing how her mother’s expenses were often deemed exempt from coverage.

Her mother, Ruth Mezick, purchased long-term-care, or LTC, insurance in 1990 at age 78 when she was in fairly good health, paying an annual premium of $2,827 until she died 11 years later. In her mid-80s, her health began to deteriorate, and she spent time in a nursing home, at home with help and in assisted living.

“She was never in one place long enough to qualify. She ended up getting about 10 days’ coverage, worth about $1,000,” says McClelland, who lives in Falls Church, Va. “That was a lesson to me; I decided it doesn’t always pay off.”

The question of whether to get long-term care insurance bedevils consumers and their advisers. Unlike medical insurance, it is intended primarily to cover people who need assistance with so-called activities of daily living — for example, the care of a dementia patient or someone recovering from a broken hip.

Even advocates acknowledge that it isn’t for everyone. Jesse Slome, executive director of the American Association for Long-Term Care Insurance, an industry group, sums it up well: “Long-term care is a universal issue facing all Americans who are getting older. But long-term-care insurance is not a universal solution.”

So how great is the need for such coverage? It depends on how you look at the data. “One in two Americans are likely to need long-term-care services sometime in their lives,” says Amy Pahl, a consulting actuary for Milliman Inc., a leading actuarial and consulting company.

However, Pahl adds, of those who might need long-term care, about a third will not meet the most common deductible period of 90 days because they will either die or recover before then.

To determine if a long-term-care policy makes sense for you, it is important to understand how the coverage works and what’s available.

Don’t Think Medicare Will Cover You

Most standard health insurance plans do not cover long-term care. Nor does Medicare or insurance policies that supplement Medicare.

Medicaid, however, is the largest source of coverage for long-term care. The program pays for more than two-thirds of nursing home residents, according to data from the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.)

But Medicaid comes with significant limitations. The choice of facilities that accept Medicaid is narrow, and the program is restricted to people with extremely limited income and virtually no resources, which forces middle-income consumers to spend down their assets if they want to qualify.

“Medicaid is supposed to be a safety net, but unfortunately it rests just about a half-inch off the floor,” says Tom West, a Northern Virginia financial adviser and long-term-care expert.

Yet Kansas Insurance Commissioner Sandy Praeger cautions that long-term care policies may not be a good investment for some people. “It’s mostly a policy to protect your assets [so you don't have to sell everything to pay for care] in case you get sick. If you don’t have assets to protect, then you shouldn’t be buying it.”

But even those with few assets might consider some protection because it will allow them more flexibility than Medicaid if they need to choose a nursing home.

How The Coverage Works

Typically, a policy pays a fixed daily benefit ($150 is common) for a certain period of time (often three to five years) starting at a specified time (90 days is common) after the beneficiary becomes disabled.

The policy covers nursing home expenses, assisted living charges or less costly in-home-care bills.

Many policies also allow the initial fixed daily benefit to rise 3 or 5 percent annually to keep up with health-care costs. The policyholder agrees to a premium that can increase only if the change is approved by state regulators.

Such increases have occurred frequently in recent years and, as a result, once-flat premiums have risen sharply. So have nursing home costs, which averaged about $214 a day — or more than $78,000 annually — for a semi-private room last year, according to a national survey by the insurer MetLife.

“Long-term care insurance keeps you from being dependent on the government or relatives and it provides liquidity, even for people who have a lot of assets,” says Rockville financial planner Arthur Stein. “You don’t have to rush and sell assets in a down market, like today’s, to cover health costs.”

As people’s needs have changed, long-term care policies have expanded to cover assisted living and home care; some new policies are flexible enough to anticipate technologies that don’t yet exist, such as robotic care.

“The policies have become very innovative,” says Slome. “Today you can go in and design coverage for particular needs and desires; you can even buy long-term-care insurance to enable you to get your care on a cruise line if you want it — and can afford it.”

Today’s policies can also allow couples to share benefits, so a husband and wife can each buy a shorter-term policy, for example three years of benefits. About 70 percent of coverage today is sold to couples, Slome said.

If it turns out that the husband needs more than three years’ coverage, he can tap into his wife’s benefit pool. And in some policies, if the husband completely exhausts the couple’s coverage, the wife may still receive some nominal benefits if she needs care, too.

Local resources:

At the end of 2010, about 7 million Americans had long-term care insurance, according to LIMRA, an association of life insurance and financial service companies. About 422,000 new policies were written in 2010. About 56 percent were sold individually, with the rest sold through employer- or association-sponsored sales.

The 2010 health-care law has a provision creating a voluntary, long-term care insurance program. However, in October, the Obama administration announced it would not implement the provision (called the CLASS Act) because it was financially unsustainable.

According to Slome, the average age of the buyer is 57, with three-quarters of the policies written when purchasers are between 45 and 64.

When buying insurance, the younger the consumer, the lower the annual premiums. Today, according to Slome’s association, a 55-year-old couple in generally good health can expect to pay $2,675 a year for $338,000 of benefits; that figure would grow to $800,000 by the time they reach 80 if the policy contained a 3 percent annual compounded escalation clause.

If they are 65, however, that same policy would cost $4,660 a year and grow to only $527,000 in coverage when they are 80.

For Washington area residents, even that coverage can be less than needed. The Guide to Retirement Living SourceBook, a comprehensive listing of retirement community, nursing home, assisted living and rehab facilities and home-care options in the area, puts the daily local cost per person of nursing home care at $235 to $304, or nearly $86,000 to $110,000 a year. Daily assisted living costs run between $108 and $162. (The SourceBook is owned by The Washington Post Co.)

Steep Rate Increases

One of the key concerns among consumers is the rise of premiums.

“It’s probably the most frequent complaint I hear,” says Praeger, who heads the National Association of Insurance Commissioners’ health and managed care committee. “The problem is, the older policies weren’t priced right to begin with. Companies expected about 8 percent of customers to stop paying their premiums, when, in fact the lapse rate is closer to 2 percent.”

That meant the insurers had to cover more beneficiaries than they expected at a time when the economic downturn has meant less return on their investments.

Praeger acknowledges that rate increase requests have posed a dilemma for insurance commissioners. “If we don’t give them the rate increase they need, the insurance carriers could become financially impaired, and that doesn’t help people,” she says.

In fact, in recent years, a number of companies have stopped selling policies. As a result, she adds, it’s hard to turn the increases down.

The policies can be very complicated, and Praeger advises consumers to consult with their accountant, attorney or other trusted financial adviser before purchasing a policy. “It’s important  to understand what you’re buying, what the benefits are. It’s very complicated so work with someone you know and trust if you want to buy a policy.”

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.