- Associated Press - Friday, November 5, 2010

WASHINGTON (AP) - The Obama administration said Friday it will cut premiums and upgrade coverage in a new health plan for people with medical problems, because enrollment has been disappointingly low.

Government economists had projected that people turned down by private insurers would flock to the new Pre-Existing Condition Insurance Plan, with 375,000 expected to sign up this year. But as of this week, a little more than 8,000 had enrolled, officials said.

Part of the problem is sticker shock. Premiums vary by state, and can range from $400 to $600 per month or more for people in their 40s and 50s.

Health and Human Services officials said Friday the program will cut premiums by about 20 percent next year, as well as offer a choice among different plans, including one tailored for children only. Prescription drug coverage will also get better.

But there’s a catch: Lower-cost plans may not be available immediately in every state.

They will be offered in 23 states and Washington, D.C., where the federal government directly administers the program. The remaining 27 states, which opted to run their own plans, will make their decisions independently.

The plan for the medically uninsurable was launched this summer, a centerpiece of the early benefits of President Barack Obama’s health care overhaul. It offers uninsured people with medical problems guaranteed coverage at rates similar to what the healthy pay when they buy coverage directly from an insurance company.

To qualify, you must have had a problem getting insurance because of a medical condition, and must have been uninsured for at least six months. Only U.S. citizens and legal residents can get help.

The program is intended as a temporary lifeline. It will last until 2014, when the new health law requires insurers to accept all applicants regardless of medical history. Insurers will also be prohibited from charging higher premiums to those in poor health. And many people will be eligible for new tax credits to help pay premiums.

HHS officials say the changes are an effort to improve the program based on the lessons they’ve learned so far.

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Online:

Pre-Existing Condition Insurance Plan: http://www.pcip.gov