California: Health Insurance Now Available for Persons with AIDS

California residents can now buy health insurance regardless of health status -- meaning that no one is too sick to qualify -- under a new state program beginning February 1. This program, the State of California Major Risk Medical Insurance Program, subsidizes insurance companies to provide health coverage to persons otherwise uninsurable due to chronic illness.

Major Risk policies are comparable to standard commercial health insurance; they do cover prescription drugs, including off-label use of approved drugs, as well as experimental drugs provided under an FDA-approved "treatment IND. " The cost to the individual is set by law to be about 25 percent more than what a healthy person of the same age would pay for the same coverage -- meaning that the policy can be highly beneficial for persons with costly medical problems.

This program is funded by money from the tobacco tax approved by a voter initiative. Medical high-risk programs are also being developed in some other states.

The Major Risk program in California has some important limitations:

* Currently there is only enough money for 10,000 people. According to one estimate, 25 times that many Californians are now uninsured due to health status. Therefore enrollment may close in a few weeks or months; the best time to get coverage is now.

* Like other health insurance, these policies are expensive, especially for older persons, since rates are based on age. (Besides age, rates are also based on location, on which plan is chosen, and, for families, on number of dependents.)

* To be able to serve more people with limited funds, the Major Risk policies have a payment cap of $50,000 per year, and $500,000 for the life of the program. In most cases this cap will not be a problem for persons with AIDS, since treatment usually does not cost that much.

* As with many commercial policies, there is a deductible, which is $500 per year. After the patient has paid that amount, the insurance covers 80 percent. For an individual, the maximum out of pocket for a year is $2000 for an individual ($3000 for a family); after that, the insurance pays 100 percent, up to the cap mentioned above. The plan covers physicians, hospitals, prescription drugs, and a number of other services including outpatient, emergency care, rehabilitation, and some psychiatric care; it does not cover some services, such as glasses or dental.

* So far three companies have joined the Major Risk program. All of them are "preferred provider" plans, meaning that patients need to use physicians on the list of the company they select, or pay a larger part of the cost out of pocket. Therefore, before joining the Major Risk program, a person should contact local offices of each of the three companies (see below) for a list of physicians in their area. Such checking may be particularly important for persons who live in rural areas, where fewer physicians are located.

* There will be a short delay, probably one to two months, between applying for the policy and receiving coverage, which starts on the first of the month after the application is processed. Therefore persons should not wait until they are hospitalized or otherwise need major care, but should obtain the insurance in advance.

* Another reason for not waiting is that starting July 1, there will be an additional 90-day waiting period for coverage of pre-existing conditions. At this time, however, no such waiting period applies.

* Under current regulations, persons who enroll and then drop out of the plan, such as for nonpayment of premiums, will need to wait a year to get back in. The intent of this requirement is to make the program operate as insurance, with people paying into it when they are healthy, instead of being a subsidy for which people enroll only when they have major medical costs.

* The Major Risk program is only available for persons who live in California. If one moves out of the state, the insurance ceases. Besides non-residents, two other groups are not eligible for Major Risk: those who are eligible for COBRA coverage, and those who are eligible for Medicare both part A and part B.

* This program will continue from year to year without additional legislation. The California legislature may expand the program in the future; it could, of course, possibly decide to discontinue it.

For More Information

Applications for Major Risk Medical Insurance will be accepted starting February 1; coverage should begin on some policies as of March 1. Interested persons can send an application request to MRMIP, 744 P St., Room 1077, Sacramento, CA 95814, or phone 916/324-4695.

The three companies which have now signed up are Blue Cross, Blue Shield, and Pacific Mutual. Persons will need to select one of these when they apply for the program. Theoretically, the coverage is the same from any of the companies, because a state-appointed board decided what expenses would and would not be covered; however, different physicians have enrolled with the different companies as preferred providers. To find out which local physicians are on the preferred provider list for each company, contact each company and ask for a PPO directory for the Major Risk Medical Insurance Program. Phone numbers for the three companies now participating in the program are: Blue Cross, 800/333-0912; Blue Shield, 800/351-2465; and Pacific Mutual, 800/854-3027.

Some persons may also want to check with the state government to see how well the companies have performed in the past. Under the newly elected Commissioner of Insurance, John Garamendi, the California Department of Insurance will now release the number of complaints received about each company. Another way to check is to ask one's physician's office which companies are best at paying on time, etc.

A one-day seminar on California's Major Risk program, for patients, physicians, and medical organizations, will be held Friday, February 22, in Oakland. For more information, call Strategic Health Systems, 714/777-8824.

History and Acknowledgement

Legislation authorizing the Major Risk program was passed over a year ago (Title 10, California Code of Regulations, Chapter 5.5), but at first little happened. Later, when thousands of people had their health insurance suddenly cancelled as companies withdrew coverage, legislators received many complaints from constituents, and the legislation was implemented. A board was appointed to set up the program; it had the authority to sell insurance directly, but chose instead to work with insurance companies who chose to participate, in order to provide coverage more quickly.

A few private citizens worked closely with the board while it was designing the program; their influence led to important improvements, such as coverage for off-label and treatment-IND drugs. One of these citizen-experts, Stan Long of Los Angeles, provided us with much of the background on the program.

The Lobby for Individual Freedom and Equality (LIFE), a gay and AIDS lobby in Sacramento, also helped in drafting the regulations.

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