The federal government is now taking applications from Texans who have been denied insurance because of pre-existing conditions, offering premiums for as little as half the cost of similar coverage offered by the state.
The new federal health plan, called the Pre-Existing Condition Insurance Plan, doesn't require a one-year wait for full coverage to begin, as the state plan does.
As many as 716,000 Texans may be eligible, second only to California's 847,000, according to a report by the Government Accountability Office. Nationwide, as many as 4 million are eligible, the GAO estimates.
PCIP is part of the sweeping healthcare legislation enacted in March. It has $5 billion in funding for four years, of which Texas will receive $493 million.
The Texas Health Insurance Risk Pool will continue, but its premiums are set by state law at twice the rate of the commercial individual insurance market. The state's pool covers almost 27,000 individuals, according to Executive Director Steve Browning.
PCIP premiums in Texas range from $323 to $688 a month, based on age, with a $2,500 deductible, according to www.pciplan.com. Oklahoma's PCIP costs $185 to $678 with a $2,000 deductible, while Arkansas' costs $156 to $624 with a $1,000 deductible, according to the U.S. Health and Human Services Department.
"This is a providing a new option for people who have been locked out of the market today," said Stacey Pogue, senior policy analyst at the Center for Public Policy Priorities in Austin.
The Texas Health Insurance Pool rates are scheduled to rise in August. They vary by age, gender, city and tobacco use. In some cases, the state plan is cheaper than the national plan, but not usually.
In Area 3, which includes Tarrant County, a 60-year-old man who smokes would pay $1,314 a month for the state plan with a $2,500 deductible. The new federal plan costs $688 with the same deductible.
But a nonsmoking child 18 or younger pays $302 in the state pool, compared with $323 in the PCIP.
"The federal plan will be cheaper for those on the upper end of the age limits for each premium category," Pogue said.
In 2014, under the new law, insurers by law may no longer reject high-risk individuals or charge them higher premiums. At that time, people in high-risk pools move into the commercial market.
(Insurers must insure children 18 and younger starting Sept. 23, but may charge more until 2014.)
The Government Employee Health Association will operate the PCIP as a preferred provider organization, with a stable of network doctors and facilities. The association has the second-largest health and dental coverage plan available to federal employees.
"We have a very strong network in Texas," association spokeswoman Karen Schuler said. "And benefits under the plan are covered whether inside or outside of network. Like any PPO, there is a cost savings to go in-network."
There's a significant exclusion in PCIP: Individuals must have been uninsured for at least six months. That effectively excludes people now in the Texas pool.
One of those people is Teresa Burch of Mansfield, a diabetic. She pays $680 a month for coverage with a $5,000 deductible, said her husband, Kenneth Burch.
"And we just got word the premium's going up another $100 soon," he said. "Somebody dropped the ball somewhere on not allowing people in the state pools to go to the new pool. I don't see the point in having two of them."
At 63, his wife still has two years before she qualifies for Medicare, he said.
Browning said the PCIP is "focused on providing health coverage to uninsured Americans" and has limited funding.
"If the federal pool were not restricted to those who are currently uninsured, many of the available slots would be taken by people, including current state risk pool enrollees, who already have health coverage," he said.
Premium relief is on its way for lower-income enrollees in the state plan starting in January, Pogue said.
"If they are under 300 percent of the poverty level, they will get 30 percent off their premium," she said. "If they are under 200 percent, they will get 50 percent off their premium."
Money for subsidies must come from penalties now paid by insurers when claims are paid late. Browning said the pool has been collecting its share of the penalties for subsidies starting in January and should know how much money will be available sometime this fall.
Pogue cautioned against dropping existing coverage, even if it costs more, to meet the PCIP's requirement of being uninsured for six months.
"I think there'll be some people making that calculation," she said. "But they have to remember that the funding won't cover everyone, so the new federal pool may not be open when they need it."
For more information on PCIP, go to www.pcip.gov or call the federal risk pool call center at 866-717-5826.
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