The Obama administration is launching a special coverage program for uninsured Americans with medical problems this week, the most ambitious early investment of President Barack Obama's health care overhaul.
But here's the catch: Premiums will be a stretch for many, even after government subsidies to bring rates close to what healthier groups of people are charged.
And $5 billion that Congress allocated to the program through 2013 could run out well before that.
The Pre-Existing Condition Insurance Plan will begin accepting applications in many states on Thursday, with coverage available as early as Aug. 1, an administration official said Tuesday. Consumers can check availability in their states on a new website, healthcare.gov, starting Thursday. The goal is for all states to be enrolling people by the end of the summer.
The official spoke on condition of anonymity ahead of the administration's announcement later this week.
"I would enroll as soon as you can," said Stephen Finan, policy director for the American Cancer Society Cancer Action Network. "These rates are going to be as affordable as consumers can get these days, particularly for a high-risk individual."
Premiums will vary from state to state. In California, for example, the cost for a 50-year-old is estimated at $575 a month, with a $1,500 annual deductible and 15 percent co-insurance. Premiums in states with lower medical costs could be around $400 a month.
"That's still quite a lot of money, so there will be some folks who struggle to afford that," said Marian Mulkey, health reform director for the California HealthCare Foundation. "But it's going to mean a big jump in access."
The insurance program is a stopgap fix for the most vulnerable until 2014, when core provisions of the new health care law take effect. At that time, insurance companies will be barred from turning away people in poor health, low- and middle-income households will get government assistance with premiums, and most Americans will be required to carry coverage.
To qualify for the temporary program, a person must have a pre-existing medical condition and must have been uninsured for six months or longer. The main beneficiaries are likely to be the self-employed and their families, and those who work for small employers that don't provide coverage. Only U.S. citizens and legal residents qualify.
Millions fit that description, and technical experts who advise Congress and the administration have repeatedly warned that the White House underestimated the cost. The Congressional Budget Office said last week it would take probably another $5 billion to $10 billion to fully meet the demand, about 700,000 people who would potentially sign up by 2013.
Medicare economists earlier estimated the program would sign up 375,000 people this year, but run out of money around the end of 2011.
That would be an embarrassment for Obama, since the program is a centerpiece of his plan for putting the nation on a path to coverage for all.
"There's a political concern of whether expectations are being raised that are unreasonable, and may not be able to be fulfilled," said health economist Gail Wilensky, who ran Medicare for President George H.W. Bush.
Launching the new program in about three months has not been easy. Most states have opted to administer their own plans, but about 20 have asked Washington to run the program directly for them.
To make matters more confusing, most states already operate their own high-risk insurance pools, covering about 200,000 people in total. However, the state plans tend to charge significantly higher premiums than the new federal plan, and many offer skimpier coverage. Consumers will not be able to switch from state to federal coverage Ã¢â‚¬â€ unless they're willing to risk going six months without health insurance.
Worries about unfunded costs prompted many states to shy away from taking on the new program directly, even though Washington has promised to cover the cost.
"Part of the reason those 20 states deferred to the federal government was a concern about the financing," said Richard Cauchi, health program director for the National Conference of State Legislatures. "State budgets are in such tough shape."
It's unclear what the administration and its supporters will do if the money runs out.
"Once you have a significant number of people in each state who gain the benefit of the new coverage, it will be a difficult decision for a member of Congress to say that needed funds will not be provided," said Ron Pollack, executive director of Families USA, a health care advocacy group.
National Conference of State Legislatures