N.C. tries a public health plan

Little-known state program helps those with serious ailments afford insurance

Staff writerSeptember 21, 2009 

— When Cary Hicks lost his group health insurance earlier this year, he was floored by how much an individual policy could cost him because he is a diabetic.

"I was looking for anything," said Hicks, who runs a small construction company. "I didn't have insurance. I couldn't afford any."

That's when Hicks discovered a new public health insurance program created by the legislature. He now pays $550 a month in premiums -- not cheap, but one-third of what a similar policy would have cost him in the private market.

As Congress debates how to overhaul the nation's health-care system, North Carolina has dipped its toe into the public-option debate. Those who can't find affordable health insurance from private companies because they have cancer, heart disease or other ailments now have the option of buying insurance from a high-risk pool set up by the state.

The program, called Inclusive Health, is little known. It has enrolled 2,050, only half of the number expected. But an estimated 1.4 million North Carolinians don't have health insurance.

Inclusive Health is aimed largely at helping middle-class people who wake up one morning and find themselves without health insurance. Enrollees have either been turned down by private insurance companies, have lost their jobs or don't have access to Medicare or Medicaid.

Hicks, 54, of Garner, said he had never given much thought to health insurance before this year. He was covered under his wife's policy until January, when her employer, Corporate Press, a 40-year-old Raleigh printing company, went out of business. His construction company, which mainly builds fences, was too small to afford health insurance.

Bad luck sometimes comes in bunches. Hicks, who had not been hospitalized in 12 years, got an infected elbow in March, and the infection spread to his bloodstream. It put him the hospital for a week -- a $12,000 out-of-pocket expense.

After a taste of being uninsured, Hicks went shopping for a health insurance policy. But because he is a severe diabetic, and therefore viewed as a high risk, the cost was prohibitive. Hicks said the state's biggest insurer, Blue Cross and Blue Shield of North Carolina, which has 86 percent of individual health insurance policies in the state, offered a policy with a $1,648 monthly premium. Hicks said that was unaffordable at a time when his household had gone from two incomes to one.

"We've got to eat, and we've got a house payment," Hicks said. "It was just too much to handle."

He saw a brief item in The News & Observer about the start of a new state health insurance program. Within a month, he had enrolled in Inclusive Health. His premium is $550 per month, and it covers his three daily shots of insulin, his blood pressure medicine and other medical costs.

A new plan

North Carolina became the 35th state to create a high-risk health insurance plan in 2007, after a decade of debate in the legislature. It began offering insurance policies in January.

The measure had the backing of health groups, physicians, hospitals and insurance agents.

Adam Searing, a health-care consumer expert, said North Carolina's high-risk pool is relatively industry friendly compared with those in other states. It includes a restriction that the risk pool charge premiums 175 percent of what private insurers charge, so as not to compete with private markets. And it provides no subsidies for the poor.

While it helps middle-class people without insurance, it is of little use to the poor who cannot afford the average monthly premium of $550.

Although people with a wide range of incomes participate in the high-risk pool, the largest group tends to be middle-class people making $40,000 to $60,000 a year.

"I don't think we ever tried to sell it as panacea for our health-care problems," said Searing, director of the N.C. Justice Center's Health Access Coalition. "It is limited to a set of people with serious health conditions who can also afford fairly substantial health premiums."

Michael Keough, the program's executive director, said the newness of the plan, and the lack of a marketing budget, has limited its growth. The program has held enrollment sessions around the state to generate interest.

"We know there is a sizeable number of people who are paying more for their health insurance coverage," Keough said. "We can cut their health insurance rates by 50 percent to two-thirds. But they either don't know about us or they are just too nervous about us to make a change. It's a new idea. It's state-funded. People have to be reassured."

Although started by the government, the high-risk pool is a public/private mix. It is a nonprofit agency run out of an office park near Crabtree Valley Mall in Raleigh. It is overseen by a board appointed by the governor, the state Senate and the state House, and includes representatives from insurance companies, the N.C. Medical Society, the N.C. Hospital Association, insurance agents and consumer representatives.

The $30 million budget comes from premiums paid by those insured, fees paid by insurance companies to the state Department of Insurance, and money from the state Health and Wellness Fund from North Carolina's settlement with tobacco companies.

It's unclear how any federal overhaul of the health-care system would affect the future of Inclusive Health or other state-run high-risk insurance pools.

A last resort

Among the first to sign up for Inclusive Health when it started in January was Donna Islam, a stay-at-home mother of seven who lives in Weddington, outside Charlotte.

She found herself without insurance when her husband, a contractor, lost his job. The family purchased COBRA, the temporary insurance for those laid off. When that ran out, she found private insurance at a cost of $650 per month for the rest of the family -- except for her youngest child, Devin.

Devin, now 4, had contracted a rare form of cancer involving the optic nerve. The cheapest policy she could find for him was offered by Blue Cross Blue Shield of North Carolina for $975 per month. But a Blue Cross employee told her about Inclusive Health.

Devin, whose cancer is in remission, qualified for an Inclusive Health policy with a premium of $250 per month. Islam said the policy was the family's last resort for insuring their child.

"Devin would have fallen through the cracks," Islam said. "Blue Cross was the lowest we received, and that wasn't an option. I was feeling very helpless."

rob.christensen@newsobserver.com or 919-829-4532

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