Some states may be faster than others at setting up Pre-existing Condition Insurance Plan (PCIP) programs – health insurance plans for people with health problems – but, for brokers and consumers, the key question is how long the funding for the programs will last.
Congress included a fixed $5 billion funding amount for PCIP in the Affordable Care Act (ACA). PCIP program managers are supposed to use the money to help people who cannot qualify for conventional, medically underwritten medical insurance get coverage between now and 2014, when ACA calls for a national ban on health insurance medical underwriting to take effect and for insurance exchanges to sell subsidized, guaranteed-issue coverage.
Congressional Budget Office Director Douglas Elmendorf predicts the PCIP system will have enough funding to serve 200,000 people – just 3.6% of the 5.6 million uninsured, uninsurable Americans.
“The limited funding means the [Obama] administration will have to make hard choices to stretch the dollars as far as possible,” says Paul Ginsburg, president of the Center for Studying Health System Change, Washington.
Traditionally uninsurable people who have energetic, well-informed agents or brokers could get the limited amount of coverage that is available: In some states, at least, consumers are just starting to learn about the program, and early application volume may be light.
Montana, for example, began accepting PCIP applications July 1, on schedule, and is getting $16 million in PCIP funding – enough to cover 600 to 700 people, if Elmendorf’s subsidy requirement predictions are correct. Monica Lindeen, Montana’s insurance commissioner, reported July 15 that the program had received just 49 applications.
When Congress drafted ACA, it promised the federal government would pay for PCIP. California Gov. Arnold Schwarzenegger (R), refers to that commitment in a PCIP proposal cover letter. “The application I will submit is shaped by your assurances that 100% of the costs will be provided by the federal government,” Schwarzenegger writes.
But, in some states, officials may feel pressure to make up for PCIP funding shortfalls, PCIP watchers say.
States have been using single-state risk pools to provide subsidized coverage for uninsurable residents for decades. Connecticut, for example, has had a risk pool in place since 1976. The 33 states that had pools in place in 2008 provided $875 million in subsidies for pools with $105 million in premium revenue and 200,358 insureds, according to the Henry J. Kaiser Family Foundation, Menlo Park, Calif.
The new federally funded PCIP programs will be open to Americans with health problems who cannot qualify to buy individually underwritten coverage and have been uninsured for at least 6 months.
The District of Columbia and 28 states will run their own PCIP programs, and 21 states will use the U.S. Department of Health and Human Services’ (HHS) National Transitional High Risk Pool. At press time, Connecticut was undecided. OCIIO officials say they expect every state with a PCIP program to begin accepting applications by the end of August.
Richard Popper, insurance programs director at the new federal Office of Consumer Information and Insurance Oversight (OCIIO), the HHS agency overseeing the national pool, ran the Maryland risk pool from 2002 until he moved to the OCIIO. National pool coverage will start to take effect Aug. 1.
The deductible for in-network PCIP care is $2,500 per year, and the limit on in-network out-of-pocket spending is $5,950 per year. The PCIP plans will cover care for pre-existing conditions immediately, and rates will be comparable to standard commercial rates.
In Texas, a state using the national pool, monthly premiums for nonsmokers range from $323 for the youngest enrollees to $688 for the oldest. Rates for Colorado’s homegrown PCIP pool range from $122 to $481.
Although some states have been faster PCIP implementers than others, the only statutory date involved is the June 23 effective date for the statute itself, according to Richard Cauchi, health program director at the National Conference of State Legislatures, Denver.
Given the ambitious schedule HHS established, PCIP implementation “has worked more systematically than might have been guessed,” Cauchi says. “Usually, a federal program takes years to get up and running.”
Michelle Rice, a regional director at the National Hemophilia Foundation, New York, and a board member at Indiana’s state risk pool program, says the first concrete answers about how well PCIP implementation is going will come when enrollees in plans that take effect Aug. 1 see their doctors. “Once you get in the plan, are you going to have providers that are willing to accept that plan?” she asks.
Cauchi sees HHS officials working hard to communicate with state officials about PCIP, and Rice sees officials working hard to promote the program.
“I do know there was a mad rush for people to enroll,” Rice says. “I don’t know that there’s enough money.”
For insurance agents and brokers, compensation is a concern. Risk pools tend to pay one-time application fees of $25 to $100, if they pay producers at all.
MRMIB asks in its PCIP vendor solicitation how vendors plan to pay producers for application assistance and how the vendors will conduct marketing and outreach efforts.
For brokers, the idea that the PCIP program may encourage people to buy coverage when, and only when, they have a high risk of incurring claims, is another concern.
James Sugden, a Denver benefits broker, writes about the PCIP “moral hazard” issue in his Health Insurance Exchange blog.