The Center for Consumer Information and Insurance Oversight (CCIIO) has run out of the cash needed to pay claims from one Patient Protection and Affordable Care Act (PPACA) benefits program and is struggling to ration the cash it has to pay claims for another PPACA benefits program.
Stanley Czerwinski, a director at the U.S. Government Accountability Office (GAO), talks about management of the two programs — the Early Retiree Reinsurance Program (ERRP) and the Pre-existing Condition Insurance Plan (PCIP) program — in a report prepared for Sen. Orrin Hatch, R-Utah.
In a separate report, John Dicken, another GAO director, has told Sen. Charles Grassley, R-Iowa, that state PPACA exchange builders have been worried about lack of detailed, final information about a federal “data services hub” that is supposed to help states determine whether consumers are eligible for public health programs, or for help with paying for commercial health coverage.
PCIP and ERRP
Starting in 2014, PPACA is supposed to require insurers to issue individual health coverage without taking personal health information into account.
PPACA will prohibit insurers from using health factors other than age when pricing individual coverage, and insurers will be able to charge the oldest insureds who are not yet eligible for Medicare only three times as much as they charge the youngest adult insureds.
To provide temporary help before the PPACA individual health insurance requirements took effect, PPACA drafters created the ERRP system, to encourage employers to keep health plans for retirees ages 55 to 64 in place. Congress provided $5 billion in funding for early retiree health plan subsidies. ERRP managers were supposed to use $300 million of the allocation for administrative expenses and $4.7 billion for employer plan reimbursement claims.
Congress also provided $5 billion in funding for PCIP (pronounced “P-sip”).
PCIP was supposed to provide health coverage for uninsured people with serious health problems who could not qualify to buy private health coverage. PCIP enrollees are supposed to pay premiums comparable to what healthy people in their states pay for individual commercial coverage.
PCIP managers can use up to $500 million of their budget allocation for administrative expenses.
What happened to ERRP and PCIP
Although ERRP funding was supposed to last until the end of 2013, program managers at CCIIO had to suspend enrollment in the program by May 2011 because expenses were running so high, Czerwinski said.
ERRP managers ran out of the $4.7 billion in funding for ERRP claims in September 2012, and, at that time, they had 5,699 open claims for reimbursement.
The employers that submitted the reimbursement claims have asked for a total of $2.5 billion in payments, Czerwinski said.
CCIIO is trying to pay some of the claims using money recovered from employers that received too much money when CCIIO paid earlier ERRP claims.
CCIIO has paid about $54 million in backlogged ERRP claims using recovery money and hopes to collect another $21 million through claim recoveries, Czerwinski said.
Meanwhile, Czerwinski said, PCIP has proved to have lower enrollment levels than originally expected but higher average claims per enrollee.
Before PCIP started up, Medicare actuaries predicted that the program would have 375,000 enrollees by the end of 2010.
Actual enrollment was only about 49,000 at the end of 2011, and it increased to about 103,000 at the end of December 2012, Czerwinski said.