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The passage of Obamacare was supposed to mean everyone with pre-existing conditions would be finally be allowed to obtain health insurance. But people attempting to enroll in Obamacare’s Pre-Existing Condition Insurance Plan (PCIP) are now greeted with a message telling them enrollment in the program has been suspended.
PCIP quit accepting new applications for enrollment last month. Despite low enrollment the plan was in danger of blowing through the $5 billion Congress granted the program if it continued to accept new applicants.
One of the major points supporters of Obamacare used to sell the program was the idea there were hordes of Americans who were uninsured only because insurance companies refused to provide them coverage due to pre-existing conditions. According to HealthCare.gov, which touts the benefits of Obamacare,
The number of people who both have a pre-existing condition and are uninsured ranges from 9 to 25 million.
In an attempt to remedy this, the Patient Protection and Affordable Care Act (otherwise known as Obamacare) requires that, beginning in 2014, insurance companies may not deny coverage to those with pre-existing conditions. In the interim the law established PCIP to provide health insurance to people who had been denied health insurance coverage due to pre-existing conditions.
In April 2010, prior to the launch of PCIP, the CMS Office of the Actuary (OACT) estimated that roughly 375,000 people would gain coverage through the PCIP program in 2010, and that the initial $5 billion in federal funding for this program would be exhausted by 2012. [link added - ed.]
Instead of having 375,000 people enroll in just the first year of the plan, less than a third of that number of people actually signed up for the coverage in two-and-a-half years. And, contrary to original predictions, rather than receiving a flood of enrollments at the outset of the program, enrollments trickled over the course of 2-1/2 years. Even with such low enrollment the plan is still running out of money because PCIP spent far more per participant than anticipated.
According to the PCIP Annual Report,
In 2012, the average annual claims cost per enrollee was $32,108. Costs varied widely across the states from a low of $4,276 per enrollee to a high of $171,909, with a median of $30,953. Not only do claims cost vary across states they also vary across enrollees. In fact, the relatively high average claims per member in the PCIP program are a result of a small percentage of enrollees with average annual claims of $225,000 per person. A recent analysis of claims incurred over a one-year period showed that 4.4 percent of PCIP enrollees accounted for over 50 percent of claims paid, while approximately two-thirds of enrollees experienced $5,000 or less in claims paid over the same period. Individuals incurring high annual costs tend to present with multiple, complex diagnoses, including cancer, heart disease, and degenerative bone diseases.
Dwight Mazzone, a licensed independent insurance agent in Nevada, says that many people sounded alarms on this program even before Obamacare became law.
“It was never actuarially sound,” he says.
According to Mazzone, during meetings with members of the insurance industry while the bill was being written, lawmakers “were warned about” PCIP but they “just wanted to have something out there” rather than correct problems with the program.
The PCIP Annual Report claims that many of those who were among the highest-cost participants had serious conditions requiring immediate and expensive care. When combined with the steady enrollment over the course of the program instead of a huge number at the start this would appear to confirm one of the warnings of the insurance companies – that a significant number of those with pre-existing conditions choose not to have insurance until they absolutely have to have treatment.
One other reason for low enrollment may have been the structure of the program itself. It was designed to be an “Orbitz for health insurance,” in the words of Mazzone. Applicants were encouraged to enroll online on their own rather than to use an insurance agent or broker who could help explain the different options to them. And agents and brokers were initially not compensated for assisting applicants and were not allowed to advise them on which options would be best for their particular circumstances.
Through January 2013 just 1,324 Nevadans had enrolled in the program.
Tags: costs, health care law, health insurance, Nevada, obamacare, pre-existing conditions
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