Tag Archive: Interim High Risk Pool

Feds freeze enrollments in interim high risk pool

(Reuters) – The Obama administration on Friday said it would stop enrolling new beneficiaries in a special $5 billion insurance program for people with pre-existing medical conditions, because of rising costs and limited funding.

The news comes a day after a top U.S. healthcare official told lawmakers on Capitol Hill that the administration is grappling with financial difficulties but determined to keep the Pre-Existing Condition Insurance Plan (PCIP) operating in 23 states and the District of Columbia through 2013.

via Special insurance program for the sick suspends enrollment | Reuters

The PCIP goes into run off mode as federal officials freeze new enrollments hoping to keep it solvent through the rest of the year until medical underwriting in the individual market ends January 1, 2014.   In 2010, this blog noted the challenge of maintaining solvency of the PCIP, citing a paper by the National Institute for Health Care Reform.  Notably, the Institute predicted the $5 billion the Patient Protection and Affordable Care Act allocated for the PCIP might only cover 200,000 people a year — just half of the number currently enrolled according to the Reuters item.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

California officials worried for solvency of interim high risk pool

The California HealthCare Foundation’s CaliforniaHealthline reports today on an about face by California’s Pre-Existing Condition Insurance Plan (PCIP) that could be a warning of things to come for other state high risk pools.

California’s PCIP was among the first state pools to open for business under a provision of the Patient Protection and Affordable Care Act (PPACA) that created interim high risk pools to provide temporary coverage at standard market rates until insurers and managed care plans must accept all applicants starting Jan. 1, 2014.  The PPACA allocated $5 billion to subsidize the pools since by definition they are an adverse risk selection mechanism and aren’t likely to cover claims costs solely with insureds’ premium dollars.

After getting off to a slow start in 2010, federal and state officials grew concerned that too few people were signing up for coverage.  So this summer, the Obama administration opened the tap wider on the $5 billion interim high risk pool subsidies, reducing premiums effective July 1 in two dozen states where the federal government runs the pools.  California’s PCIP soon followed, reducing premiums by as much as 20 percent to attract more enrollments.  The tactic worked, but perhaps too well.  Previously believing there were too few enrollees, California’s Managed Risk Medical Insurance Board (MRMIB), which oversees the PCIP, is now apprehensive too many will come aboard and sink the ship.

CaliforniaHealthline’s David Gorn explains:

 The threshold for the number of Californians who might participate in PCIP was estimated at about 23,000 people. Since a few more than 5,000 people signed up in that first year — and new enrollees came on board at a rate of roughly 500 a month — it seemed that the program was financially stable and able to take on more participants.

But after the first year, state officials got their first real claims data to test that estimate, and the amount required by recipients was much higher than expected. That 23,000-person threshold estimate was reduced to 6,800 Californians.

That means (given current enrollment of 5,290 including last month’s bump of 726 new subscribers), there’s now only room for a little more than 1,500 new enrollees (which is about two months’ worth of enrollees, given October’s bump of 726 new subscribers).

Unless the federal government pumps more money into the program.

In other words, more people are enrolling, but bringing with them high medical utilization costs that challenge the ability of the MRMIB to keep the PCIP solvent until 2014 when it will no longer be needed.  Other states may soon experience a similar conundrum:  fulfilling the PPACA’s mandate to have the interim high risk pools serve markets of last resort that must accept applicants without medical underwriting while having enough money to pay for their care.  And manage to do so for nearly four years.

A little more than one year ago, this blog discussed how the interim risk pools could become a catastrophic coverage pool for those requiring very high cost care and threaten to rapidly draw down the $5 billion appropriated for them in the PPACA.  This may well be happening now.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Low enrollment spurs Obama administration to cut PCIP premiums July 1

Concerned with low enrollment in Pre-Existing Insurance Plans (PCIPs), the Obama administration is reducing premiums effective July 1 in two dozen states where the federal government runs PCIPs.

PCIPs were authorized by the Patient Protection and Affordable Care Act’s Interim High Risk Pool provision designed to temporarily cover individuals with pre-existing medical conditions until insurers and health plans must accept all applicants starting Jan. 1, 2014.

The remaining states that run their own PCIPs may also reduce rates, according to this Los Angeles Times story, which reports premiums could fall by as much as 40 percent based on more nuanced actuarial analysis.

While applicants will still have to demonstrate that they have been medically uninsured for at least six months, a requirement they provide evidence they have been denied coverage has been scrapped.  Now a letter from a health care professional stating the applicant has a medical condition will suffice, according to The Times.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

PCIP unlikely to reduce ranks of medically uninsured

The Interim High Risk Pool created by the enactment of the Patient Protection and Affordable Care Act’s (PPACA) one year ago has not changed the underlying dynamics of the individual health insurance market and consequently appears to be having a negligible impact on reducing the ranks of the medically insured.

The pool, formalized as the Pre-Existing Conditions Insurance Program (PCIP), was created to provide temporary coverage for those with pre-existing conditions who don’t meet minimum medical underwriting standards of insurers and managed care plans.  It goes away on January 1, 2014, when the PPACA outlaws medical underwriting and requires payers to accept all applicants regardless of medical history.

So far, few have signed up for the plan.  As prior to the PCIP, younger people who would be eligible for PCIP enrollment pay lower rates for coverage but tend to go without.  Older folks in their 50s and early 60s who want coverage are finding PCIP rates out of reach. An added deterrent, other observers note, is the requirement that applicants for coverage be continually uninsured for at least six months.

“The PCIP is a great health plan and the out-of-pocket maximum is low,” Barry Cogdill, president of Business Choice Insurance Services in San Diego, told SignOn San Diego.  Nevertheless, he added, PCIP premiums are too expensive for many.  “That’s why health care reform happened,” Cogdill explained.  “The individual market has been the Achilles’ heel of the health insurance market. You end up with a lot of uninsured people.”

It appears many in this circumstance who aren’t covered by group or government plans will remain so.  Whether they will be able to find affordable coverage when state health benefit exchanges designed to aggregate purchasing power of individuals and small employers open for business in January 2014 remains to be seen.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

More media coverage of weak initial interest in PCIPs

The Washington Post is the latest news outlet in the past few months to report on low initial enrollments in state Pre-existing Condition Insurance Plans (PCIP) established earlier this year under the Patient Protection and Affordable Care Act (PPACA).  During the fall, tepid interest in the PCIPs — referred to in the PPACA as the Interim High Risk Pool designed to provide coverage regardless of pre-existing medical conditions until health insurers must accept all applicants in 2014 — were also the subject of stories by the Associated Press and The New York Times.

The purpose of the PCIP is to help pare down the number of medically uninsured who can’t get coverage under current health insurance medical underwriting guidelines.  The Post reports state PCIPs are proving to have narrow appeal, attracting those needing very costly care and raising the question of whether the $5 billion appropriated by the PPACA to subsidize PCIPs will be enough before 2014 despite low early enrollments.

What’s likely suppressing enrollments are provisions in the PPACA that require PCIP premiums be set at standard market rates based on age.  For the oldest members of the pool, premiums are limited to four times those charged the youngest members of the pool.  That means those most likely to be served by PCIPs — those with pre-existing conditions in their fifties and early sixties — are finding the premiums out of reach, just as are individuals in that age range who are healthy, acceptable risks for individual health plans and insurers.

As federal officials stress it’s too early to draw conclusions, it remains to be seen whether the PCIPs will make any appreciable reduction in the number of medically uninsured Americans.  Early indications are not promising.  They suggest PCIPs will serve a narrow demographic of very sick but relatively affluent people aged 50-65 who are too young to enroll in Medicare and who need coverage for costly conditions as a hedge against medical bankruptcy.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

High severity losses could deplete PPACA’s Interim High Risk Pool

A month ago, the Associated Press reported state Pre-existing Condition Insurance Plans (PCIP) set up this year under the Patient Protection and Affordable Care Act’s (PPACA) are not attracting the flood of applicants some some feared would quickly deplete the $5 billion the PPACA for appropriated for them.  The PPACA’s appropriation for the Interim High Risk Pool is to provide coverage for people in the individual health insurance market with pre-existing medical conditions who because of the conditions can’t get coverage in the standard market until insurers must accept all applicants starting Jan. 1, 2014.

The New York Times last week did its own story on the lackluster enrollments in the mostly state-run PCIPs.  While sign ups may be slow for a variety of reasons — the bad economy probably chief among them — the PCIPs seem to show the biggest initial appeal to those who have costly conditions requiring expensive treatment such as the cancer patient profiled in the Times story.

If early trends continue, the PCIPs could end up becoming more of a catastrophic coverage pool for those requiring very high cost care, known as high severity losses in insurance terminology.  Such high severity losses could threaten to rapidly draw down the $5 billion allocated for them in the PPACA just as easily as too many people turning to PCIPs to get individual health coverage.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Interim high risk plans off to slow start — except Pennsylvania’s

The Associated Press (via Yahoo! News) reports the Patient Protection and Affordable Care Act’s (PPACA) Interim High Risk Pool designed to cover people in the individual health insurance market with pre-existing medical conditions isn’t getting much interest.  In several large states including California, there have been less than 500 applicants for Pre-Existing Condition Insurance Plans (PCIP) since coverage became available around July 1.  Under the PPACA, the coverage is intended to serve as a stopgap until insurers and health plans must accept all applicants starting Jan. 1, 2014.

Sabrina Corlette, a Georgetown University research professor, told the AP the premiums are being set too high with the exception of Pennsylvania.  That state charges a flat $283.20 (plus additional co-pays and coinsurance) monthly premium for its PA Fair Care PCIP regardless of the age of the applicant.  Keystone State officials opted to use this form of rating — known as community-based rating contemplated under U.S. Health and Human Service Department regulations governing PCIPs — versus age-based rating employed by most other state PCIPs.  “While other states have reported their high-risk plan applications are trickling in, Pennsylvania’s response to PA Fair Care has been brisk,” the Pennsylvania Department of Insurance announced in a September 30 news release.  The news release notes the program is initially capped at 3,500 enrollees with enrollment on a first-come, first-served basis.

Since premiums in the individual market for those without pre-existing conditions have gone up around 20 percent this year, it’s not surprising that age-based rates in state PCIPs for those who do have pre-existing medical conditions are substantially higher than Pennsylvania’s.  “I think there’s some sticker shock going on,” Corlette told the AP.

Likely heightening that shock is people’s constrained finances in the current troubled economy.  Other observers blame tepid initial enrollments in state PCIPs on the PPACA’s requirement high risk pool applicants be medically uninsured for at least six months.  That’s more likely to describe people in their 20s and 30s who tend to have fewer pre-existing conditions than the middle-aged.  Self-employed individuals in their 40s and 50s with pre-existing medical conditions aren’t as likely to go bare for such a long period and are more inclined to seek coverage than so-called “young invincibles.”

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Interim High Risk Pool could speed depopulation of individual market

By the time individuals become eligible to buy coverage through the Patient Protection and Affordability Act’s (H.R. 3590) American Health Benefit Exchanges on Jan. 1, 2014, the individual market risk pool could undergo a major depopulation particularly among individuals with pre-existing conditions.

According to a Kaiser Family Foundation survey released this week of people with individual coverage aged 18-64 conducted between March 19 and April 2, annual premium increases are averaging about 20 percent.  Given that individual rates are already high and remain headed upward in a weak economy, such increases are unsustainable and will likely be seen in retrospect as the tipping point of market failure in the individual health insurance market. Individuals can only trade down so much before premiums for a higher deductible, less generous plan also become unaffordable.  Sixty five percent of the Kaiser Family Foundation survey respondents reported they worry their premiums will rise out of reach as do 81 percent of those with medical conditions.

If premium rates for the Act’s Interim High Risk Pool provide even modest relief, it could spark a migration of those with preexisting conditions out of the individual market into the Interim High Risk Pool.  The pool took effect this month and is intended to provide coverage for those with preexisting medical conditions who have been uninsured for at least six months until insurers must accept all applicants in 2014.  It remains to be seen exactly what members of the pool will be charged for coverage.  While the Act requires the pool to set premiums at a “standard rate for a standard population,” those premiums may also end up being unaffordable as I’ve previously speculated.

Nevertheless, individuals with medical conditions may soon be knocking on the pool’s door as this item from the New York Times Prescriptions blog illustrates.  In the blog post, Deborah Chollet, a senior fellow at Mathematica Policy Research, suggests a self employed individual with cancer who fears he’ll no longer be able to afford rising premiums may wish to consider the pool as an alternative to dropping his coverage.  But under the Act, he’ll have to go medically uninsured for six months in order to qualify for coverage.

There’s another aspect that bears watching.  If the premiums charged in the Interim High Risk Pool are significantly lower than those charged by health plans and insurers in the individual market or lag their recently sharp premium hikes, it could produce a so-called “crowd out” effect in which individuals drop coverage for six months in order to qualify for coverage in the Interim High Risk Pool.  Many — probably most people over age 45 — would meet the Act’s expansive definition of a pre-existing condition.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Interim High Risk Pool could run out of money before 2014

The Patient Protection and Affordable Care Act’s Interim High Risk Pool — aimed at making medical coverage available at standard market rates for those with preexisting medical conditions until insurers and health plans are required to accept all applicants regardless of preexisting conditions in 2014 — will likely run out of money before then.

That’s the conclusion of a recently issued paper by the National Institute for Health Care Reform.  The paper warns that while 5.6 million to 7 million Americans may qualify for the pool, the $5 billion the Act allocated may be enough to cover only 200,000 people a year. “Policy makers will need to tailor eligibility rules, benefits and premiums to stretch the dollars as far as possible,” the paper recommends.

There are multiple factors that could affect demand for the $5 billion set aside to subsidize Interim High Risk Pool coverage as well as cover administrative costs of operating the pool.  Individual market premium rates are trending upward so even the standard rates required to be charged those in the pool (insurers charge nonstandard, surcharged premium rates to individuals with certain controlled preexisting conditions) could as this blog previously noted end up roughly equal to current nonstandard rates.  In a struggling economy, those higher premiums would reduce the incentive for people to sign up for coverage.

The other unknown is how the states ultimately implement the Interim High Risk Pool and how the 35 states that have high risk pools in place coordinate (or don’t) their pool rules with those of the new, temporary federal program.  Some states have already indicated they will be opting out of the federal program, which means the feds will designate a nonprofit organization in those states to administer the Interim High Risk Pool there.

In those states as well as states that have indicated they intend to integrate their high risk pools with the federal program, there could be disparities between the new pool and existing state high risk pools that could create incentives for individuals to go uninsured (individuals must be uninsured for at least six months to qualify for coverage via the Interim High Risk Pool) in order to obtain more generous, lower cost coverage than their state high risk pools offer.  That would accelerate the drawdown of the $5 billion set aside for the program.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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