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Study: Diabetics Face Grim Options When Job-Based Coverage Ends

February 2, 2005—What happens when you are a diabetic and lose coverage because of a change in employment status? Although a number of incremental approaches have been adopted in recent years to extend coverage to the newly uninsured, they reach relatively few diabetics, a study by the Georgetown University Health Policy Institute suggests.

Previewing findings from the 14-month study in remarks to the AARP board of directors Tuesday, Georgetown researcher Karen Pollitz described efforts by the research project to line up coverage for diabetics who called an American Diabetes Association help line. The study tracked some 850 cases in 50 states, and of the 600 or so resolved, only about one in five diabetics found coverage outside the workplace.

Pollitz, a representative of the American Diabetes Association, and a study participant will detail the study findings at a Feb. 8 briefing at the Kaiser Family Foundation in Washington, D.C.

About 390 of the diabetics studied tried to find coverage in the individual market. Encountering very high premiums and exclusions for preexisting conditions including diabetes, only 15 bought individual policies. "The individual market turned out to be a very tough place for people with diabetes to find coverage," she said.

Under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), employees leaving a job may qualify for continued access to the employer's group health coverage. But their premium costs skyrocket; while they have access to group rates, they no longer receive an employer contribution for those premiums. Of 377 people in the study who were about to lose their job-based coverage, only 31 enrolled in COBRA plans.

Under the Health Insurance Accountability and Portability Act of 1996, people leaving or changing jobs have to be offered access to individual coverage, but there is no limit on the premiums the insurer involved can charge. Eighty-seven people in the study were eligible for coverage because of the law, but only 11 signed up because of the high cost of the premiums.

Only seven people in the study got coverage through state "high-risk pools," which are designed to offer benefits to the otherwise uninsurable. But even those pools charge premiums that often are unaffordable or have coverage that excludes preexisting conditions such as diabetes. Policies sold in the pools typically make buyers wait a year before covering care relating to diabetes—and a huge part of the care required by diabetics is related to diabetes since it is a "head-to-toe" disease, Pollitz said.

The costs involved in treating diabetes can be great, which explains not only why patients need coverage but why insurers aim to avoid providing it. Even basic preventive care is expensive, costing about $200 a month for items such as test strips to measure glucose levels.

But costs skyrocket if the disease isn't kept in check through good preventive care. Pollitz said that one in every 10 dollars spent on health care in the U.S. is spent on diabetes, and one in five is spent on diabetics—the latter statistic reflecting the many complications that arise providing treatment for people with the disease.

How would uninsured diabetics fare under other emerging forms of coverage? Pollitz said Association Health Plans would exempt participating health plans from mandates giving diabetics access to care. Health Savings Accounts would give people assets to pay for care—if they don't get sick, Pollitz noted dryly. HSAs and their associated high-deductible plans give holders an incentive not to spend on care, but doing without is not cost-effective if one has diabetes, Pollitz said.

Asked about government initiatives to bring down the costs of coverage through reinsurance, Pollitz said they may be tantamount to giving the insurer a subsidy and saying "would you mind lowering your price?" The trick, she said, is to make sure the reinsurance payments to the insurer get passed along in the form of lower premiums.

Not surprisingly, Pollitz, an aide to HHS Secretary Donna Shalala during the Clinton administration, supports universal coverage with benefits that are "affordable, adequate, and available." Asked by AARP's receptive board whether national health care could get back on the national agenda, Pollitz said it could, perhaps through a grassroots movement. What's needed is to put a human face on the national health issue, she said, adding "this is about people and people are truly suffering."

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