Demand may outstrip supply as health insurance pools take applications

A new government health insurance program for patients who haven't been able to get traditional coverage opens Thursday, and it could be too popular.

With 3.5 million to 7 million people eligible -- but with funding to serve from 200,000 to 700,000 people a year -- the key is going to be to applying early.

"The money is going to run out or they are going to have to limit the number that are covered," said Alwyn Cassil, director of public affairs for the Center for Studying Health System Change. "In this case, the early bird is really going to get the worm."

Tara Straw, legislative and policy director for Health Care for America NOW, a group which supports health care reform, said money could be at a premium, but she doesn't expect it to run out."They know how much they have. I wouldn't anticipate huge shortfalls," Straw said.

Costing 25% to 50% less than the coverage available from existing high risk pools in some states, the new program is part of the health care overhaul legislation approved by Congress this year.

The overhaul requires all health insurance plans to cover preexisting conditions starting in 2014. As one step in between, Congress provided $5 billion for a new "Preexisting Condition Insurance Plan."

"It's not a cure all. It's a bridge to 2014," said Straw. "It takes people with the most problems and gives them a life preserver."

States and the federal government start accepting applications for the new program on Thursday, with the big initial conditions being that anyone applying must have a preexisting condition and have been uninsured for 6 months.

Roughly 30 states are creating their own programs to handle and administer the pool, including taking applications. Some but not all of them will start taking applications on Thursday. The federal government will hire a contractor to handle programs in the rest of the country. All the applications are to be be available from a yet to be launched government web site,

The federal government expects to start covering claims for its portion in August, but individual states could take somewhat longer.

The immediate worry of health groups is that there could be far more people applying for the program than the program can support.

While coverage will cost more than regular health plans, the rate is 100% of a so-called standard rate, compared to state high risk pools that traditionally cost 125% to 200% above "the standard rate."

Studies by the Congressional Budget Office and the Center for Studying Health System Change both say a lot more people could qualify for the coverage than there is money to pay for. The Center's study was done for the National Institute for Health Care Reform.

That in turn could force choices, either limiting the program to the most serious, to those who apply first, or seeking additional money, but that's only necessary if a lot of people apply -- a factor that's not known yet.

Cassil said the new program is likely to be too expensive for the poor and have the most appeal for middle and upper class individuals.
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