In an effort to extend greater benefits to less healthy people, Blue Cross and Blue Shield of Maryland is quietly introducing a novel, high-cost policy for high-risk subscribers.
The new "substandard" policies, planned to cost 30 percent more than Blue Cross' regular policies, are aimed at people unable to qualify for the company's most popular individual coverage because of current or past health problems.
"What we're doing here is experimenting," said Linda S. Benedict, vice president in charge of Blue Cross' individual market division. "We're trying to start out in a small way and see what happens."
Such coverage has long been available for life insurance and automobile insurance for years, but a number of health-insurance executives contacted yesterday said they were unaware of a policy in their industry that resembles the new Blue Cross program.
Typically, people who are considered at high risk for health problems are simply rejected by health insurers as potentially too costly. That person, in turn, is left to seek health insurance under "open enrollment" plans that promise to accept any subscriber but put severe limits on coverage and are often quite expensive.
Blue Cross, the largest health insurer in Maryland, said the new plan also would screen people who apply for the new policies, using a process called medical underwriting.
By paying the higher premiums, many people who previously had no choice but to accept the company's bare-bones "open enrollment" coverage -- such as people who are severely overweight -- would be eligible for a more complete policy.
Ms. Benedict said the design of the new plans would mirror the coverage provided under Blue Cross' standard comprehensive major medical program.
People who apply for the company's standard individual coverage and are rejected because of health problems would be advised that they are able to apply for the new policies.
But, Ms. Benedict added, because the program was still in its infancy, guidelines to determine who would be accepted and who would be rejected would not be fully decided for probably six months.
The Maryland Insurance Division, which approved the new plans last week, has asked that Blue Cross present information next year demonstrating whether the rates accurately reflected the cost of the program.
Because the benefits of the new plans mirror coverage that has already been approved by regulators, Blue Cross needed approval only for the rates to be charged for the new plans.
Under the terms of the new policies, subscribers who passed the relaxed underwriting standards would choose between two types of coverage.
One policy would require that subscribers pay the first $750 in medical costs each year and 20 percent of costs above that amount to a maximum of $2,500 a year.
The second policy would carry a $1,500 deductible and a maximum annual annual co-payment of $3,000.
The company's open-enrollment policy pays only a set amount for physician fees, far less than the 80 percent coverage offered under the new coverage.
Blue Cross said that an individual policy with a $750 deductible would cost roughly $88 a month for a person in his 30s under the new program. For family coverage, the cost would be about $230 a month.
Blue Cross does not offer an identical plan for those considered "standard" health risks, but the company set the price of the new policies at 130 percent of the premiums that would be charged if comparable coverage was offered.