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Few Swimmers Take Plunge Into High-Risk Pool – Feds Throw Life Preserver

The Pre-Existing Condition Insurance Program (PCIP), which passed as part of the Patient Protection and Affordable Care Act (PPACA), is now one year old and suffering from lagging enrollment. The program, which provided $5 billion in federal spending for existing and new high-risk insurance programs, was meant to help aid high-risk, uninsured individuals who were denied coverage in the insurance market (or would have had unaffordable coverage due to rate ups and surcharges) in getting coverage through 2014. In 2014, when guaranteed issue requirements go into effect, the program would sunset.

Federal officials said that 375,000 individuals would be helped by the program, but thus far just 18,000 are enrolled in the various state (or federally run in certain states) programs nationwide. HHS blames the low enrollment on trouble getting the word out, the need to be uninsured for six months, and this particular program being obscured by other high-profile elements of the act.

We agree with the rationale in part. Such new insurance vehicles tend to take time to get noticed. But part of the issue is related to the cost of premiums. Even those with major insurance costs are not likely able to afford the costs in the program and the value proposition is simply not there. In essence the sickest of the sick — what might be termed highest adverse selection — has set into the program.

Take, for example, some of the statistics available from the program. Various types of benefits are offered, from comprehensive coverage to an HSA vehicle with a maximum out of pocket after deductible of about $6,000. But because of the high-risk of enrollees, even subsidized premiums are very high – as high as $600 to $800 per month for some ages. That is because reported annual costs for the average enrollee are $20,000 per year. Thus, even those denied with high costs of care still are rolling the dice — paying out of pocket (or not paying at all to certain providers) because premiums are too high or the cost-benefit of having coverage is simply not there. (In an effort to save face, as of July 1st premiums will be reduced by 40 percent and the six-month waiting period will be waived.)

We view the major gap between what was intended and the actual results of the program thus far as a bit of foreshadowing for some of the perverse outcomes that could result when guaranteed issue becomes the law of the land in 2014. Next week we’ll tell you why we think the experience with PCIP program provides a glimpse into the future once guaranteed issue goes into effect…

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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