Republican members of the House Energy and Commerce Committee health subcommittee are asking whether the Pre-existing Condition Insurance Plan (PCIP) program is working properly.
The subcommitte today brought Steve Larsen, the director of the Center for Consumer Information and Insurance Oversight (CCIIO), to a hearing on reports that the PCIP program has suffered from unexpectedly low enrollment and a very high ratio of claims to premium revenue.
Congress created the PCIP federal risk pool program with Section 1101 of the Patient Protection and Affordable Care Act (PPACA). Congress provided $5 billion to help states set up temporary, subsidized insurance programs designed for uninsured residents who are unable to qualify for conventional health coverage under the current rules.
The PCIP programs are supposed to tide people with health problems over until 2014, when PPACA is supposed to required health insurers to sell coverage on a guaranteed-issue, mostly community-rated basis, without taking health status into account when pricing coverage. If PPACA takes effect as written, low-inome and moderate-income people will be able to used tax credits to reduce the amount they must spend to buy coverage.
For now, the PCIPs are supposed to offer rich benefits and rates that are comparable to what healthy people in a state would pay for coverage.
Today, 27 states are administering their own PCIP programs, and 23 and the District of Columbia are letting the U.S. Department of Health and Human Services – the parent of the CCIIO – provide PCIP coverage for their residents.
House Republicans’ Concerns
The chief actuary at the Centers for Medicare and Medicaid Services (CMS) estimated in April 2010 that 375,000 individuals would enroll in PCIP programs by the end of 2010, but, today, the PCIP programs appear to have only about 12,000 enrollees, according to Republican staffers at the House Energy and Commerce health subcommittee.
“Despite recent calls for an update of the figures on the lack of enrollment in the program on a monthly basis, HHS will only provide quarterly updates on the number of enrollees,” the staffers say.
Members of Congress knew when they created the PCIP system that claim costs would be high.
The Republican staffers say the costs for the patients who are enrolled in the programs may be even higher than lawmakers had expected.
The New Hampshire plan already has paid about $8,000 in claims for its 80 enrollees, and Alaska is estimating that, in 2013, its PCIP will have 132 enrollees with an average claims cost of about $57,000 per enrollee, the staffers say.
Larsen noted in his testimony that risk pool programs have a history of having strong bipartisan support, and that many view the programs as mostly market-based approach to providing health coverage for people who cannot qualify for conventional health coverage.
Despite concerns about current enrollment levels, the PCIP programs are already helping thousands of Americans who were locked out of accessible private insurance coverage before the passage of PPACA get coverage, Larsen said.
“For example, the PCIP program has provided invaluable help to people like Jerry Garner,” Larsen said, according to a written version of his testimony.
Larsen cited the example of a Michigan real estate agent who lost his health coverage after undergoing a kidney transplant.
“Because of his pre-existing condition, he was unable to obtain new insurance to cover the
$2,000 monthly drug bills for the immunosuppressive medications that transplant patients must take to prevent rejection of a new organ,” Larsen said. “Mr. Garner signed up for Michigan’s PCIP program and is now paying lower premiums than he did under his previous insurance and is receiving more comprehensive coverage.”
PCIP enrollment increased 50% between November 2010 and February 2011, and the CCIIO is “actively working with states, consumer groups, patient advocates, voluntary health organizations, health care providers, social workers, other federal agencies, and the insurance industry to promote the program,” Larsen said.
Congress caused challenges for PCIP program managers by requiring states to have the programs running within 90 days of enactment of PPACA, Larsen said.
CCIIO officials are keeping close tabs on state PCIP expenditures, to make sure states do not exhaust PCIP allocations prematurely, Larsen said.
Early warning provisions are supposed to kick in when a state has reached 75% of its projected enrollment or expenditures are on track to exceed the state’s allotment.
The program rules are flexible, and the programs and premiums are different in each state, Larsen said.
Regulators recently tried to make the program more affordable by reducing federal PCIP premiums by about 20% and adding two new plan choices,
Some states also are reducing premiums, Larsen said.
Larsen talked in his written testimony about CCIIO officials meeting with eligible individuals, doctors, hopsitals, consumer groups and chapters of advocacy groups to promote the PCIP programs.
In the written testimony, Larsen did not mention talking to insurance company groups or insurance producer groups.