Uninsured and not 65 yet? Here's how health-care reform would help

There's never a good time to be uninsured, but losing your coverage after age 55 can be a real disaster because by that age, a lot of people have developed some kind of pre-existing condition that makes them terrible risks in the eyes of health insurance companies.

Case in point: Rick Cristo, 63, of Scottsdale, Ariz. Here's what he wrote recently in a comment on one of our blogs:

I have been on Cobra for 16 months and my coverage expires in October. I have tried to qualify for a private policy but have been turned down because I had Prostate Cancer in January 2008 and had it removed surgically and have had no signs of cancer since. I am 63 years old my wife is 53 years old and we can't get health insurance; do I have any options?

Cristo lost his job as a mortgage broker during the housing market collapse and neither he nor his wife has been able to land a job with health coverage since. He'd be happy to keep his COBRA plan, even though it costs more than $900 a month, because it's comprehensive and took good care of him during his prostate cancer treatment. But he can't. The existing COBRA law says his coverage runs out after 18 months, no exceptions.

Susan Braig, 60, of Altadena, Calif., on the other hand, would love to get rid of her health insurance, but can't. She bought her "affordable" Blue Cross plan seven years ago, and when she developed breast cancer two years later, she discovered that buried in the fine print was a gaping loophole that left her without coverage for tens of thousands of dollars worth of outpatient chemotherapy and radiation treatments. Her insurance premium recently went up from $207 to $240—18 percent yet—and, she says, "covers almost nothing," including follow-up monitoring tests and drugs to prevent recurrence. But she can't switch to a new policy because she has a pre-existing condition, and as a self-employed grant writer can't get job-based coverage.

Our story banks are overflowing with people caught in the pre-Medicare black hole of insurance coverage, such as Barry, Ken, Steve, Dave, Peggy, another Barry, Vivian (above), and another Ken.

The reform bills being proposed in the House and Senate would make things much, much easier for all of these folks. Here's how:

• Instead of shopping on their own for coverage they either can't get or can't afford, they would go to a central health insurance exchange and choose from among a variety of policies offered by private insurers, as well as a non-profit health plan run by the government. In states where a few private insurers now dominate the market, competition from the public plan would hold down premiums.

• Pre-existing conditions would become a non-issue. It would be illegal for health insurers to decline customers, exclude coverage of certain conditions, or charge people higher premiums on the basis of their health history.

• Premiums for the oldest customers could not be more than twice as high as the lowest premium charged the youngest members. In many states today, the variation is considerably greater than that.

• Households with an annual income of less than 400 percent the poverty level—$43,320 for Susan Braig's one-person household and $58,280 for the Cristos' two-person one—would receive a subsidy to help pay premiums of policies bought through the exchange. The subsidy, scaled according to income, would go directly to whichever plan they chose, whether public or private.

• To get listed on the exchange, plans would have to cover the full range of health care—doctors, hospitals, outpatient treatments, mental health care, rehab, prescription drugs, medical equipment, the works. Susan Braig's loophole-ridden plan would never make the cut.

Unfortunately, the legislation says that the Exchange won't start operating until 2013. Until then, people will have to muddle through as they are now—with one exception. One version of the House bill would change the COBRA law starting immediately. People like Rick Cristo would be able to stay on COBRA indefinitely, until they either got a new job with coverage or turned 65 and went on Medicare. But consumers like Susan Braig, who don't have COBRA, would just have to wait it out.

—Nancy Metcalf, senior program editor

For more on health-care reform and to find out how we'd fix the broken system, take a look at our Guide to Health-Care Reform.