Falling through the cracks with a preexisting condition

Ganka Brown contacted Anthem Blue Cross recently about signing up for health insurance. She acknowledged in her conversation with an Anthem rep that she’d had some minor trouble with a heart valve and once had high blood pressure. But aside from that, she said, she’s in great shape.

The rep told Brown, 64, not even to bother submitting an application. It would be rejected because of the Laguna Beach resident’s preexisting medical conditions.

I thought of Brown as the Obama administration announced this week that it would cut premiums for people with preexisting conditions who seek coverage under federal programs created as part of the healthcare reform law.

The programs are intended to serve as a stopgap until 2014, when insurers will no longer be permitted to turn people away because of illness or a preexisting condition — that is, if the provision survives legal challenges. More on that in a moment.

The Obama administration says it will reduce premiums by as much as 40% in the 23 states where Uncle Sam runs the program. But what about those remaining states, including California, where the program is run locally?

Don’t expect things to dramatically change any time soon.

“The federal government has communicated what it’s doing and the thinking behind it,” said Jeanie Esajian, deputy director of California’s Managed Risk Medical Insurance Board, which oversees the state’s Pre-Existing Condition Insurance Plan. “We’ll look to see if there’s anything we haven’t done that we could try.”

At this point, though, it doesn’t appear there’s much the state can do to make its program more palatable for people like Brown who can’t get coverage from the private sector.

For one thing, there’s the price. Monthly premiums can run as high as $652, or nearly $8,000 a year, which a lot of people simply can’t afford.

Esajian said the state program has already lowered rates to be in line with premiums charged in the individual insurance market.

Then there’s the requirement, as established by the healthcare reform law, that program participants must have been without coverage for at least six months, including enrollment in a job-based plan, COBRA, Medicare or Medi-Cal.

That’s a long time for people with conditions such as diabetes or heart disease to be left twisting in the wind. Many such people would have no choice but to seek some sort of assistance (such as Medi-Cal) long before reaching the six-month threshold for the state program.

Only about 18,000 people nationwide have enrolled in the insurance program since it was introduced in most states last summer. In California, just over 2,700 people with preexisting conditions have signed up for coverage.

When the program was first unveiled, the Congressional Budget Office estimated that as many as 4 million uninsured Americans would be eligible and that at least 375,000 would sign up in 2010. The government allocated $5 billion to fund coverage, with California getting about $750 million of the total.

The relatively low number of people joining the program highlights the challenge of providing health insurance to those who have been fenced off from the rest of the risk pool.

In other words, when healthcare risks aren’t spread among the general population, the sickest among us will inevitably pay more — typically a lot more.

This is the fatal flaw of President Obama’s healthcare reform law. By forgoing a public option such as opening Medicare to all comers, the law relies on “insurance exchanges” to serve as no-questions-asked emporiums for individuals to purchase coverage.

Those exchanges, scheduled to be up and running by 2014, rely on a requirement that almost everyone purchase insurance, which is the only economically viable way of providing coverage to everyone regardless of medical condition.

That requirement is now under assault by conservatives who say Congress lacks the power to impose such a mandate on the American people. If the U.S. Supreme Court upholds that position, it seems unlikely insurers would drop their existing bans on people with preexisting conditions.

And that would place California’s Pre-Existing Condition Insurance Plan and its brethren in other states in a difficult position. Without billions of dollars in additional federal funding after 2014, it’s likely such plans would be ended and their enrollees cast back into the healthcare food chain.

I’m not against the notion of either a mandate or an insurance exchange. Both are steps forward in addressing the problem of the nation’s 50 million uninsured, if not runaway healthcare costs.

But we’ve already created a two-tier system whereby healthy people have access to coverage and sick people often do not. The sick in turn drive up costs for everyone else by seeking expensive emergency treatment rather than cheaper preventive care or routine health maintenance.

It’s no coincidence that the United States spends about twice per person on healthcare than do countries like Britain, Australia, France and Germany, yet we have shorter life spans and higher rates of infant mortality.

As long as we place obstacles in the path of universal coverage, we’ll be saddled with an inefficient, impractical healthcare system. And we’ll keep paying for that in the form of higher premiums and taxes.

Brown said she’d never heard of the Pre-Existing Condition Insurance Plan — no one at Anthem even mentioned it as a possibility. But when I told her about the requirement that she be uninsured for six months, she said this made it a non-starter.

“I guess I’ll just have to be very careful until I can get Medicare next year,” Brown said. “But I don’t like that. I’m not a risk taker.”

When it comes to healthcare, nobody should be. Isn’t that the idea of insurance in the first place?

David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5. Send your tips or feedback to david.lazarus@latimes.com.