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Life Health > Health Insurance > Health Insurance

Who should cover the desperately ill?

By Allison Bell

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Mary Taylor, the Ohio lieutenant governor and insurance commissioner, accused the U.S. Department of Health and Human Services (HHS) of meddling in destructive ways with the operations of Ohio’s Pre-existing Condition Insurance Plan (PCIP).

Taylor, a Republican who has strongly opposed the Patient Protection and Affordable Care Act (PPACA), said her experiences with HHS PCIP managers were “less than rewarding.”

“Based on the experiences that we had with the federal government overseeing the high-risk pool, we fear that similar problems will arise as PPACA is fully implemented,” Taylor said.

Taylor appeared Wednesday at a hearing, on “Protecting America’s Sick and Chronically Ill,” that was organized by the House Energy & Commerce health subcommittee.

The subcommittee organized the  to examine PCIP’s problems and talk about ways to help Americans with health problems get affordable health coverage.

Except for Susan Zurface, a single lawyer with blood cancer who expects to have trouble getting health coverage to replace needs-based coverage that’s about to expire, all of the witnesses were strongly partisan. No officials from HHS testified. Other than Taylor, no witnesses or lawmakers gave any details  about how PCIP (pronounced “P-sip”) really worked and why it failed.

Republicans concluded from the PCIP failure that the country needs to provide health coverage for sick people with bigger, better-funded, state-run high-risk pools free from the clutches of HHS. Democratic witnesses said the country needs to do a good job of getting, and keeping, sick people into general plans that are as big, diverse and efficient as possible.

PPACA and PCIP
The drafters of the Patient Protection and Affordable Care Act of 2010 (PPACA) created PCIP (pronounced “P-sip”) in an effort to provide temporary relief for people who were not healthy enough to qualify for affordable commercial health coverage in states that allow health insurers to consider personal health information when issuing and pricing coverage.

PPACA is supposed to ban use of personal health information in decisions to issue individual coverage in 2014 and restrict use of personal health information other than age in decisions about coverage prices.

Congress provided $5 billion for PCIP and let states choose between running their own PCIP programs or having HHS run the PCIP programs for their residents. The rates for coverage are supposed to be comparable to rates for ordinary commercial coverage. The program is open only to people with health problems who have been uninsured for at least six months.

Enrollment in the program has been much lower than expected, but the average level of medical claims per enrollee has been much lower than expected. 

HHS officials announced Feb. 15, during a little-publicized conference call with state officials that they were ending the PCIP application review program immediately and wanted states to stop processing state PCIP applications. HHS also increase enrollees’ cost-sharing limits and asked the state PCIP plans to look into doing the same.

Ohio
Ohio ran its own PCIP risk pool program, using a private health insurer as the administrator.

HHS gave the Ohio PCIP program high marks for administrative efficiency and enrollment growth, but HHS officials ended up meddling with the administrator’s efforts to set rates for the 2011-2012 plan year, Taylor said.

The Ohio Department of Insurance originally agreed to let the administrator increase the premiums for a plan with a $2,500 deductible by 3 percent and the premiums for a plan with a $1,500 deductible by 17 percent.

HHS officials insisted that the administrator lower the rate increase for the $1,500-deductible plan and artificially inflate the rate for the $2,500-deductible plan to subsidize the other plan, Taylor said. 

“Forcing a company to artificially restrict rates and artificially inflate others causes serious solvency concerns down the line and puts the company at risk to not be able to  pay their obligated claims,” Taylor said. “State regulators of insurance generally do not allow companies to  subsidize one pool of business with another.”

Reaching a mutually acceptable agreement on rates took time and pushed back 2011-2012 plan year renewal dates, Taylor said.

HHS officials manipulated the program in other ways that indicated that the program would not be sustainable and would be likely to run out of funds before 2014, Taylor said.

In some cases, Taylor said, the Ohio department had the authority to make eligibility determination decisions, but HHS forced the administrator to reject some applicants and remove some residents who had already been admitted to the program.

The Ohio department eventually had to go to court to protect its authority to make eligibility determinations, Taylor said.

PCIP vs. the rest of PPACA
Rep. Joe Pitts, R-Pa., the health subcommittee chairman, and Thomas Miller, a resident fellow from the American Enterprise Institute, said people with health problems would be better off with a program focused on the needs of people with serious health problems than with PPACA.

Rep. Michael Burgess, R-Texas, a physician, said he was prepared to authorize $30 billion for a program like PCIP as an alternative to creating PPACA. Some Texas residents complained about the $30 billion figure, but $30 billion is “but a drop in the bucket of what the Affordable Care Act will cost,” Burgess said.

Republicans on the subcommittee also talked about the idea of shoring up PCIP by shifting money from other PPACA programs, such as preventive services programs and clinical effectiveness research efforts into PCIP.

Miller speculated that the Obama administration and allies in Congress may have underfunded PCIP from the beginning partly because funding them properly would diminished the rationale for giving the government broad power over the health insurance market.

Ron Pollack, executive director of Families USA, said he would like to see Congress help PCIP overcome its problems, but “not by undermining the architecture” of PPACA and hurting the clinical research and preventive care efforts.

Pollack and Sara Collins, a vice president at the Commonwealth Fund, said the problems at PCIP are minor and temporary, and that the best solution is simply to wait for the PPACA underwriting restrictions, health insurance purchase subsidies, and other coverage access expansion provisions to take effect.

“High-risk pools are not a long-term solution for expanding health insurance coverage,” Collins said.

Segmenting health insurance risk pools leads to inefficiency, Collins argued.

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