WASHINGTON -- Trying to spur enrollment in a key new benefit of the 2010 health law, the Obama administration said Tuesday that it's slashing premiums for new high-risk insurance plans and no longer requiring applicants to submit a rejection letter from private insurers.
Since the plans were introduced in most states last summer, enrollment has fallen far short of expectations; only about 18,000 people have signed up. The Congressional Budget Office had estimated that as many as 4 million uninsured Americans would be eligible and that 200,000 would be enrolled by 2013. The government set aside $5 billion to fund the plans.
Twenty-seven states run their own plans; the federal government operates them in 23 states and the District of Columbia. The changes, which occur July 1, affect only federally run plans.
States that will see a 40 percent drop in premiums are Alabama, Arizona, Delaware, Florida, Kentucky and Virginia. In other states, premium reductions range from 2.1 percent in Mississippi to 38.3 percent in Minnesota.
In Florida, where 770 people have enrolled, a person 55 and over who subscribes to the so-called standard plan will see his or her monthly premium for the standard plan fall by $150 to $376.
The plans are intended to serve as a bridge to help people with medical conditions until insurance market overhauls required by the law are implemented in 2014. At that time, insurers will no longer be able to deny coverage or charge higher rates for people with pre-existing conditions, a major benefit of the law.
To be eligible for the plans, applicants have to be uninsured for at least six months and have a pre-existing condition.
In the states where the plans are run by the federal government, applicants will no longer have to prove they were denied coverage by an insurance company. Instead, they can provide a doctor's letter stating that they have a medical condition. At least a dozen state-run plans don't ask for a denial letter from an insurer.
The premiums will drop as much as 40 percent in 17 states, plus the District of Columbia, where the federally administered plans operates, the administration estimates. These decreases will help bring premiums closer to the rates in each state's individual insurance market. In the six states where high-risk plan premiums already were similar to what healthy people pay for individual plans, premiums will remain the same.
To further generate interest in the plans, HHS this fall will begin paying insurance agents and brokers for signing up people for them.
"These changes will decrease costs and help insure more Americans," Health and Human Services Secretary Kathleen Sebelius said.