Fed cuts health insurance plan for those with pre-existing conditions

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The Obama administration is terminating new enrollment and cutting benefits for existing enrollees in the Pre-existing Condition Insurance Plan (PCIP), a government program that provides health insurance for people with serious health problems.

The suspension is due to financial concerns regarding the program, which was included under the Affordable Care Act (ACA) as a solution for individuals who could not otherwise obtain coverage.

The federal government administers PCIP in 23 states and the District of Columbia, while the remaining 27 states run programs on behalf of the federal government.

While federal enrollment has been halted, the states have until March 2 to curtail enrollment of members.

Pennsylvania, New Jersey, New York and Maryland are among those states that run their own programs. Delaware and Virginia, along with Washington, D.C., rely on the federal program.

In an announcement to the states, Richard Popper, director of insurance programs for the Centers for Medicare and Medicaid Services (CMS), ordered the states that operate PCIP for the federal government to halt the program.

[See map of PCIP operation in states by clicking here]

“We are implementing a nationwide suspension of enrollment until further notice and therefore direct you, as our contractor, to take immediate steps to implement this suspension,” Popper wrote to the states.

Individuals with pre-existing conditions will be able to get under the Affordable Care Act (ACA), according to federal officials. ACA has provisions that prevent health insurers from denying individuals with pre-existing conditions, and federal subsidies are intended to help with anticipated higher premiums.

PCIP was included in the ACA health reform law as a temporary solution until insurers began accepting individuals without regard to pre-existing conditions.

Michael Consedine

Michael Consedine

Pennsylvania Insurance Commissioner Michael Consedine said his agency was not prepared for the announcement.

“Last week, we had conversations with the federal government leading us to believe they would not institute an enrollment cap until late fall, effectively maintaining an affordable option for these individuals until exchange coverage becomes available,” Consedine said. “CMS’s announcement to suspend enrollments the day after that conversation not only took us by surprise, but raised significant concerns over the number of individuals that may be left without a coverage option over the next 10 months.”

Consedine sent a letter expressing concern to Health and Human Services Secretary Kathleen Sebilius, saying curtailing the PCIP program will leave nearly 7,000 in his state with no coverage. Those individuals are enrolled in PA Fair Care.

“Suspending enrollment in March creates a 10-month gap in the availability of health insurance coverage for individuals who would have been served by PA Fair Care – where are these individuals supposed to go to access coverage?” wrote Consedine.

Consedine announced through a PID press release that there has been no reply from HHS to his letter.

Beginning Jan. 1, 2014, when all Americans are required to have some form of health insurance, health insurers will not be allowed to deny coverage based on pre-existing conditions.

In his order to the states, Popper said CMS is also altering benefits “to control program costs,” including increasing deductibles.

[Read Popper memo with deductible specifics here: CMS Memo to States Re PCIP]

“CMS has been committed to monitoring PCIP enrollment and spending closely and making necessary adjustments in the program to ensure responsible management of the $5 billion provided by Congress,” Popper wrote.

He acknowledged that the surprise announcement could have an impact on state budgets.

“We understand that our announcement today is likely to impact your cost projections for the remainder of the program,” Popper wrote, saying in the memo that the weeks-long extension for states to comply “will give you [states] time to consider and analyze these changes more fully.

PCIP enrollees who move to new states can still apply for replacement PCIP coverage.

More than 135,000 people nationwide have been enrolled in PCIP, including many with serious conditions such as cancer and heart failure.

High premiums have kept many from obtaining the coverage.

About $2.4 billion of the $5 billion federal PCIP budget had already been spent on claims through Dec. 31, 2012.

Those who cannot obtain health coverage through private insurance and have been uninsured for at least six months have been eligible for PCIP, with premiums intended to be close to those in the private individual market.

[Read Consedine letter to HHS here: PA Letter to HHS Re PCIP]

 

5 Responses

  1. Jeff Says:

    Well that figures…

    In the mean time PCIP has all but destroyed the States high risk health insurance pools. 10 months without a coverage option.

    ACA is full of stuff that could create similar problems. Why are we going forward?

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