Following the Obama administration’s announcement about the suspension of enrollment in a high-risk health insurance program known as the Pre-Existing Condition Insurance Plan, a flurry of commentary began on what the move means for the Affordable Care Act.
Some observers said that the program’s underwhelming enrollment numbers and high costs foreshadow inevitable problems with the ACA’s health insurance exchanges, while others drew a clear division between a program intended to insure only those with pre-existing health conditions and state marketplaces designed to spread risk by insuring both those who are sick and those in good health.
Two months after the halted enrollment, the debate continues.
Closing the Pools
The high-risk pools were designed to help sick U.S. residents gain coverage ahead of January 2014, when the ACA’s ban on denying individuals coverage because of pre-existing conditions will take effect.
In early February, the administration announced several cost-saving reforms intended to prevent the $5 billion program from running out of money. However, on Feb. 15, HHS officials announced that enrollment in the high-risk pools would end because of rising costs and limited funding.
Enrollment in pools operated by the federal government in 23 states and the District of Columbia ended immediately, while 27 state-run pools were required to suspend new enrollment after March 2, according to HHS.
According to federal officials, enrollment was stopped to “help ensure that funds are available through 2013 to continuously cover people currently enrolled in PCIP.” HHS added, “The program has a limited amount of funding from Congress.”
At the time of the announcement, about $2.36 billion in funding remained for the rest of 2013 — enough to continue covering only the 100,000 current enrollees, federal officials said.
Despite the high costs, enrollment in the pools was below expectations. Federal officials initially expected 375,000 individuals with pre-existing conditions to take part in the program.
Gary Cohen, director of HHS’ Center for Consumer Information and Insurance Oversight, told the Washington Post, “[W]e wanted to balance our desire to maximize the number of people who can gain from this program while making sure people who are in the program have coverage.” He noted that enrollment levels have been about 4,000 per month, suggesting that tens of thousands more could have sought coverage in 2013.
PCIP Experience Foretells Other Complications, Some Argue
In Forbes, Grace-Marie Turner — president of the not-for-profit Galen Institute — details why PCIP’s problems are indicative of impending problems in the ACA’s state insurance exchanges, which are set to launch in 2014.
For instance, “many of the triggers for exploding costs are the same” between PCIP and the exchanges, she notes, including that health insurance starting in 2014 “must cover many more benefits than the policies most people have been purchasing.”
According to Turner, the exchanges will “provide huge subsidies … to help people buy the expensive health insurance the law mandates,” but “many healthy people will find that the premiums, copayments and deductibles they are facing will make this insurance very unattractive.” If healthy people avoid the exchanges, the marketplaces would serve mostly sick individuals, and costs would soar, just as they did in the high-risk pools, she suggests.
Further, Turner notes that if the exchanges “experience even a fraction of the excessive costs that the high-risk pools have seen, Congress will have no choice but to cut eligibility, provider payments or subsidies.” She continues, “The best thing that Congress can do right now is to delay the start of the [e]xchanges as more information becomes available.”
High-Risk Pools Don’t Spell Doom for Exchanges, Others Say
Others argue that the PCIP and the exchanges are too different to have the same growing pains.
Sara Collins — vice president for affordable health insurance at the Commonwealth Fund — told me that the PCIP and the exchanges are “entirely different approaches to providing insurance,” noting that the exchanges likely will not see the same strife as the high-risk pools because of the presence of healthier individuals on the rolls.
But what about Turner’s claim that many healthy people might choose to eschew the exchanges?
Collins is confident that federal subsidies to offset the cost of health plans in the exchanges will entice individuals who otherwise might be reluctant to purchase insurance. Collins said, “The primary reason people don’t buy insurance is that premium costs are too high.” In the exchanges, she said, 90% of uninsured individuals younger than 65 years will be eligible for subsidies.
Considering younger, healthier individuals who are uninsured, 94% of people ages 19 to 29 will be eligible for the exchange subsidies. Their presence in the exchanges should ensure that the risk is balanced and costs are manageable, ACA supporters say.
Debate Continues While Lawmakers Take Action
In an unexpected move, GOP House members are fast-tracking a new bill (HR 1549) that would boost funding for PCIP and keep it running until the end of the year. HR 1549 would shift about $4 billion from the ACA’s Public Health and Prevention Fund to extend enrollment for the high-risk pools. The measure also would eliminate the ACA requirement that individuals must be uninsured for at least six months before they can be eligible for coverage in PCIP.
The bill — which the House Energy and Commerce Committee approved last week — marks the first time Republicans have attempted to amend the ACA instead of dismantle it.
President Obama on Tuesday issued a Statement of Administration Policy, warning that he would veto the bill if it reaches his desk.
Meanwhile, Rep. Frank Pallone (D-N.J.) and several other Democrats have countered the Republican proposal with a bill (HB 1578) that would provide funding to re-open enrollment in the high-risk pools by raising cigarette taxes.
Whatever the fate of the bills, Collins argues that the best place to offer affordable health coverage and keep costs low is the exchanges. In her testimony to the House Energy and Commerce Committee’s Subcommittee on Health this month, she said that lawmakers can best address PCIP’s “shortcomings in enrollment and costs by allowing its enrollees to transition to the new state insurance marketplaces and the expanded Medicaid program” under the ACA.
Unfortunately, observers will have to wait a few years to find out if these provisions work as intended or if they are, as Turner describes, a “prescription for disaster.”