CHAMPAIGN – After nine months of unemployment, Jenny Putman was happy to land a part-time job last fall at a social service agency.

Unfortunately, the new job doesn't come with health insurance, and now Putman is in a bind: She was turned down for private insurance on her own because she has a pre-existing condition – chronic back pain – and on June 30, the 18 months of temporary COBRA coverage she had through her former employer will run out.

That may leave her with only one option, and it's the one nobody really wants: expensive coverage through the state's high-risk health insurance pool.

Putman, a 61-year-old former Champaign County Board member, says she's heard the premiums for the state high risk pool can run as high as $400 to $500 a month.

But for many people, they're much higher. And Putman has two risk factors that could bump her into the high end of the premium range: She's female and approaching retirement age.

Even the average premium would wipe out her monthly income of $624, though.

The average annual premium under the two high-risk pools operated by the Illinois Comprehensive Health Insurance Program, or ICHIP, runs about $7,500, or $625 a month, according to Illinois Department of Insurance Director Michael McRaith.

"Regrettably, the most common premiums are $12,000 to $16,000 ($1,000 to $1,333 a month) because premiums are set on ages and differences between gender and geography," McRaith said.

Later this year, Illinois and other states will begin offering coverage to the uninsurable at lower premiums through a new national high risk pool. But Putman and many others in her situation won't be eligible for it because it will be limited under federal law to people who have been uninsured for six months.

The new national pool was created under the Patient Protection and Affordable Care Act. It provides $5 billion in federal money for temporary high risk pools in individual states, $196 million of which is expected to come to Illinois. The temporary pool will remain in effect until Jan. 1, 2014, when insurers will no longer be allowed to deny coverage based on pre-existing conditions.

Putman, who works for SmileHealthy, a Champaign County dental program for under-served children and families, dreads the cost of coverage through the ICHIP program – but she fears being uninsured just as much.

A past spinal cord injury has left her with debilitating back pain that is eased only by methadone, a controlled substance that requires a new prescription every month at the doctor's office. The drug itself is relatively cheap, she said, but each doctor's office visit would cost her $113 without insurance.

On one hand, she says, she understands why Urbana-based Health Alliance Medical Plans turned her down when she applied for coverage.

"They've evaluated my situation. They've evaluated my risk, and I'm not worth it," Putman said.

But still. She opens up Health Alliance's latest quarterly newsletter to customers in which the company's CEO Jeff Ingrum promises Health Alliance is a strong organization that "will continue to be here for you."

"Well, no you're not," Putman replies. "You're saying, 'Go take a walk, sister.'"

Why insurers say no

People with pre-existing conditions are rejected by private insurers because state law doesn't allow rates to be based on someone's health status, says Health Alliance spokeswoman Jane Hayes. Companies can only accept or deny someone, and sometimes it costs too much to say yes, she said.

The pre-existing conditions that make prospective Health Alliance customers ineligible are spelled out in enrollment information, and they're the same other insurance companies use, according to Hayes.

"We would love to offer coverage to everyone, but working within the rules in Illinois, this is the only way we can offer coverage and make it affordable," she said.

Illinois is one of 34 states that operate high-risk pools that together provide health coverage to nearly 200,000 people, according to the Kaiser Family Foundation.

ICHIP currently serves about 16,000 people, McRaith said.

And here's what makes the state high-risk pool less attractive than the new national pool: Premiums for the national pool must be priced for the standard (not the high-risk) population, but ICHIP premiums run 25 percent to 50 percent above standard rates, and they can be adjusted twice a year based on an average of the rates of the five largest insurers in Illinois.

"What we know is the current CHIP plans are expensive and cost-prohibitive for too many people, but it is Illinois law, a matter of statute, how those premiums are set," McRaith said.

Putman has flirted with the idea of going uninsured for six months to be eligible for what promises to be cheaper rates in the national high risk pool, but McRaith warns the federal money may not stretch far enough for everyone.

"I can't comment on any individual situation, but the federally-funded pool will have limited enrollment. The reason is we'll have a finite amount of money to enroll from the first day, $196 million, to provide coverage from the first day of enrollment through Jan. 1, 2014, and at no point do we want to risk claims exceeding funding," he said.

That means enrollment will have to be managed conservatively and claims will have to be constantly monitored, McRaith said.

"Because of the necessity to manage the program conservatively, no one should risk going uninsured in order to be eligible for the federal pool," he added.

Stuck in state pool

Jen Tayabji, executive director of the Illinois Disciples Foundation, said she could definitely use a break on health insurance.

When her employer could no longer afford to offer group coverage, she turned to the private market and was rejected either because of her history of bipolar disorder or past kidney infections – or maybe even both, she said.

Tayabji, 29, turned to the ICHIP. But if her employer wasn't helping her foot the cost of the $4,456 annual premium, she said, she'd be uninsured.

"I've been very fortunate," she said. "I would have qualified for CHIP but I wouldn't have been able to afford it."

Claudia Lennhoff, executive director of Champaign County Health Care Consumers, looks for the new national pool to help some people, "though it's not going to alleviate the burden in the current (state) high risk pool."

And even 100 percent of the standard premium rate is going to be too expensive for some people, she points out.

What Lennhoff wonders is why this temporary high risk pool is needed at all. Congress could have outlawed the pre-existing condition exclusion immediately instead of delaying insurance reform for three years, she points out.

"It's a temporary mechanism to pass a flawed design," she said. "All the important provisions in insurance reform should go into effect immediately. Those practices should have been outlawed a long time ago."

McRaith said Illinois could also join the states that have outlawed pre-existing condition exclusions on their own, but that's up to the Legislature.

As things stand now, he adds, "Illinois has one of the least consumer-friendly insurance markets for businesses and families."