High-Risk Pool is Open

On July 1, the US Department of Health and Human Services (HHS) announced the establishment of a new Pre-existing Condition Insurance Plan (PCIP) that will offer coverage to uninsured Americans who have been unable to obtain health coverage because of a pre-existing health condition. The PCIP, created under the Patient Protection and Affordable Care Act (HR 3590) that was enacted in March, will be administered either by a individual states or by HHS. Although completion of the PCIP rollout has been delayed in some states, high-risk pool insurance is expected to be available nationwide within months. PCIP is a transitional program that lasts until 2014, when insurers will be required to cover adults with pre-existing conditions and when other aspects of reform, such as insurance exchanges, are initiated. To be eligible for the PCIP, US citizens and individuals residing in the United States legally who have been unable to get health coverage because of a health condition need to be uninsured for ≥6 months. Premiums are expected to range from $140 to $900 per month depending on which state’s program an individual enrolls in. “For too long, Americans with pre-existing conditions have been locked out of our health insurance market,” said Kathleen Sebelius, HHS secretary. “This program will provide people the help they need as the nation transitions to a more competitive and fair market place in 2014.” The PCIP will cover a broad range of health benefits, including primary and specialty care, hospital care, and prescription drugs. The PCIP does not base eligibility on income and does not charge a higher premium because of a medical condition. Participants will pay a premium that is not more than the standard individual health insurance premium in their state for insurance that covers major medical and prescription drug expenses with some cost sharing. HR 3590 provides $5 billion in federal funding to support PCIPs in every state. To give states flexibility in providing PCIPs, HHS provided states with the option of running the PCIPs themselves or having HHS run the plan. Twenty-one states have elected to have HHS administer the plans, and 29 states and the District of Columbia have chosen to run their own programs (see list on page ??). Starting July 1, the national PCIP was made available to applicants in the 21 states where HHS is operating the program. Some states running their own PCIP programs began making them available concurrently with the HHS-run programs, even though all were supposed to initiate PCIP by the end of June. HHS says the remainder of states choosing to operate their own PCIPs are now expected to begin enrollment by the end of the summer. “Health coverage for Americans with pre-existing conditions has historically been unobtainable or failed to cover the very conditions for which they need medical care,” said Jay Angoff, director of the Office of Consumer Information and Insurance Oversight (OCIIO), which is overseeing the program. “The PCIP is designed to address these challenges by offering comprehensive coverage at a reasonable cost. We modeled the program on the highly successful Children’s Health Insurance Program, also known as CHIP, so states would have maximum flexibility to meet the needs of their citizens.” Just as in the CHIP, the new PCIP program provides states flexibility in how they run their program as long as basic requirements are met. Federal law establishes general eligibility, but state programs can vary on cost, benefits, and determination of pre-existing conditions. Funding for states is based on the same allocation formula as CHIP, and it will be reallocated if unspent by the states. Unlike CHIP, there is no state matching requirement and the federal government will cover the entire cost of the PCIP. Like other aspects of healthcare reform, the PCIP program has not been implemented without criticism from lawmakers who have supported providing assistance to individuals who have difficulty obtaining health insurance but opposed other aspects of HR 3590. In June, Senator Mike Enzi (R-Wyo), ranking member of the Senate Health, Education, Labor and Pensions Committee, led a group of Senate Republicans in sending a letter to Ms. Sebelius requesting an explanation for HHS missing the deadline for establishing the PCIP in all states. The letter also expressed concerns about PCIP funding and requested a response to recent Congressional Budget Office (CBO) analysis stating that provisions in the new law will leave almost half a million people with pre-existing conditions without coverage. “The $5 billion meant to protect those with pre-existing conditions will run out long before 2013,” Sen. Enzi said, “and up to $10 billion in additional funding will be needed for the millions of Americans that need this coverage. The letter cited CBO estimates released on June 21 stating that the high risk pool provisions in the new law will provide coverage to only 200,000 individuals and that the price of insuring eligible individuals through the new high-risk pools will include an additional $5 million to $10 billion. “Given the importance of the high risk pool program and the reliance on this program of millions of Americans with pre-existing conditions and life-threatening diseases, it is crucial that this program be fixed and fully funded,” Sen Enzi continued. “I am disturbed by the Administration’s failure to fund this program and my colleagues and I want answers about when this assistance will be provided and how much it will take to actually provide the coverage promised.” During the early stages of the reform debate culminating with enactment of HR 3590, health insurers advocated individual market reforms including creation of an insurance program for individuals with pre-existing conditions who have difficulty obtaining coverage. As part of a comprehensive proposal to achieve universal coverage, affordability, quality improvement, and market reform, the board of directors of America’s Health Insurance Plans (AHIP) expressed support as far back as December 2008 for combining guaranteed-issue coverage with no pre-existing condition exclusions with an enforceable individual mandate. The proposal was the culmination of 3 years of policy development by AHIP’s board of directors and incorporated ideas raised by Americans during a nationwide listening tour as part of AHIP’s Campaign for an American Solution. In rolling out the new insurance program for individuals with pre-existing conditions, HHS officials framed the program as a temporary measure being taken in the context of broader reforms. “The PCIP is an important next step in the overall implementation of the Affordable Care Act,” said Richard Popper, director of insurance programs at OCIIO. “We have been working closely with the states and other stakeholders to make sure this program reaches uninsured Americans struggling to find coverage due to a pre-existing condition.” Mr. Popper noted that some of the uninsured individuals who struggle with pre-existing medical conditions may also have economic challenges limiting their ability to take advantage of PCIP. “There are a significant number of people out there with pre-existing conditions who are uninsured, but a significant number of those people…have limited income” he said. “And some of them, while they may need this plan, the premiums may not be something they can afford. We have that to think about as well. But for those who can afford it, this is going to be a great, great plan.”—Charles Boersig