On the Third Hand: PCIP

But, still: It was a nice idea.

Some beloved readers here oppose any kind of government intervention in health finance, on principle, and I respect that view and recognize that this view will eventually prove to be the correct view. In the long run, we’re all dead, and water always flows downhill.

But, in the short run, even a lot of people who think of themselves as preferring free-market solutions want to force a little bit of water flow uphill as long as possible. They accept the idea that the government might play some role in helping the aged and the infirm and in regulating commercial health insurance.

For those people the questions are not so much whether it’s ethical for the government to get involved in health finance, or destructive for the government to get involved in health finance, but how much the government can get involved without making matters worse.

It doesn’t seem as if the PCIP program did any noticeable damage to any commercial health insurance markets that private health insurers wanted to be. The few times I talked to a broker who knew much about the program, that was because the broker was trying hard to get consumers with health problems into the program, even in the face of opaque PCIP program bureaucracy and PCIP managers lack of interest in paying the small broker fees they’d promised to pay.

Some state insurance regulators seem to be mad at private long-term care insurers because those insurers have been applying for big rate increases on their products and pulling out of markets.

But those insurers generally seem to take many months to get the rate increases through, and at least a couple of months after big changes are approved to implement the changes.

Quick-witted producers and prospects will get the message that they ought to jump quickly if they want coverage, or what coverage at the old rates.

In this case: CMS seems to have pulled the rug out from any consumers who were hoping PCIP could tide them over between now and Jan. 1, 2014, when the new PPACA restrictions on use of personal health information in issuing and pricing coverage are supposed to take effect.

Why can CMS say, “Hey, here’s a program you could apply for!” one day, and, “Poof! No you can’t,” the next?

Claude Thau, a well-known long-term care insurance (LTCI) actuary, has argued that the real reason the government should stay out of insurance as much as possible is that keeping the insurance providers and the insurance regulators separate provides much-needed checks and balances.

The regulators watch insurers like hawks partly because the regulators don’t really understand the insurers’ perspective all that well and don’t have much sympathy for the insurers.

Which might be hard on the insurers but is good, in many cases, for the insurers.

In the case of PCIP, the regulator is the insurer, and it seems that it’s been even worse as a regulator than it has been as an insurer.

On the third hand: It looks as if sequestration will be stopping giant chunks of the government on a dime in a few weeks. At that point, maybe the sudden death of the PCIP program will seem like just another one of the zillions of government program sudden deaths.

See also:

• Feds close PCIP in 23 states
• CMS posts exchange producer registration drafts
• HHS: States can license navigators