GOP blasts early coverage under health reform

While enrollment in an insurance program for early retirees nears capacity, another for uninsured people with preexisting conditions has faltered.

By Doug Trapp — Posted April 11, 2011

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Republican members of the House Energy and Commerce oversight subcommittee attacked two health system reform law programs designed to provide immediate help to Americans with preexisting conditions who need health coverage and to retirees who want to maintain their access.

The two $5 billion programs were launched last year within three months of the health reform law's enactment. Although the Early Retiree Reinsurance Program has proven so popular that the Centers for Medicare & Medicaid Services announced it will stop accepting applications in May, the Pre-Existing Condition Insurance Plan has achieved only a small fraction of its projected enrollment.

Both are bridge programs designed to help cover people who otherwise probably would not have health insurance until they qualify for Medicare or until the health reform law's major coverage expansions take effect in January 2014.

The Early Retiree Reinsurance Program payments are available to organizations that offer health benefits to early retirees. These include for-profit companies, nonprofits, schools, unions, state and local governments, and others. ERRP covers 80% of the medical expenses of retirees age 55 to 64 who have between $15,000 and $100,000 in documented health spending, according to a March 31 CMS report on the program.

The Pre-Existing Condition Insurance Plan provides coverage to U.S. citizens who have been both uninsured for at least six months and denied health insurance because of a medical condition. Premiums are more expensive than traditional health insurance, with older Americans facing the highest costs, but less expensive than many similar state insurance programs.

Republican members of the oversight panel broadly criticized both programs during an April 1 hearing. Several companies that signed up for ERRP declared profits of $10 billion or more last year, but the program does not require applicant organizations to demonstrate financial need. AT&T, for example, has received $140 million in retiree health support, according to CMS. "Couldn't they have paid for this coverage?" asked Rep. Michael Burgess, MD (R, Texas).

Rep. Marsha Blackburn (R, Tenn.) assailed ERRP as a government bailout and a waste of money. "Do you not see why the American people are frustrated?" she asked the hearing's only witness, Steven B. Larsen, director of the CMS center that runs both ERRP and PCIP. Blackburn dismissed Larsen's characterization of the programs as successes.

Larsen and Democrats on the panel said ERRP and PCIP were implemented to address long-term trends that are leaving more people uninsured. For example, the percentage of large firms offering health coverage to retirees declined from 66% in 1998 to 28% in 2009, according to an employer benefit survey released in September 2010 by the Kaiser Family Foundation.

The early retiree program has been popular. It had spent about $1.8 billion of its $5 billion allotment as of March 17 and had assisted more than 100,000 people and 1,300 organizations with health care expenses, according to CMS. This rapid spending led CMS to announce on March 31 that it will not accept additional ERRP applications after May 5.

Republicans also questioned the need for PCIP in part because about 35 states already operate high-risk insurance pools for people with serious health conditions. However, Larsen said those state high-risk pool premiums are sometimes twice as expensive as the federal program, and many state programs have waiting lists.

Enrollment in PCIP has been slow. The program had signed up only 12,437 people as of Feb. 1. The Congressional Budget Office had estimated that 200,000 people would register for PCIP each year. So far the program has cost about $100 million.

Two possible reasons for the lower-than-expected enrollment are the program's relatively high premiums and difficulties among some potential applicants in obtaining denial letters from health plans, said Jeff Cornett, RN, MSN, director of training, research and advocacy for Hemophilia of Georgia. Premiums for people 55 and older can be several hundred dollars a month, according to estimates generated by the administration's website.

Larsen said his office, the CMS Center for Consumer Information and Insurance Oversight, has worked closely with advocacy groups such as the American Cancer Society to increase awareness of PCIP. The office also has reduced the premiums by 20% in the 23 states where it runs the program. An additional 27 states run their own PCIPs, some of which also have reduced premiums, Larsen said. The agency also started accepting additional types of documentation showing that an applicant cannot acquire traditional health insurance.

Rep. Henry Waxman (D, Calif.) said the subcommittee hearing was not a legitimate attempt at congressional oversight because Republican leaders refused to allow Democrats to call witnesses who had signed up for either of the two programs under attack. "This is just a partisan show," he said.

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Slow start for high-risk pool

Fewer people than expected have signed up for high-risk insurance pools created by the health system reform law since last summer and run by states or the federal government. The Congressional Budget Office estimated enrollment would average 200,000 people a year between 2011 and 2013, but as of Feb. 1, total enrollment was only about 12,500. Twenty-seven states run their own high-risk plans, and most other states and the District of Columbia use the federal plan.

State programs Federal programs
Pennsylvania 2,046 Texas 1,007
Illinois 943 Florida 613
Ohio 726 Georgia 399
California 706 Arizona 270
North Carolina 674 South Carolina 242
Oregon 483 Virginia 204
Colorado 434 Tennessee 171
New York 411 Indiana 131
Wisconsin 307 Nevada 125
New Jersey 216 Louisiana 92
New Mexico 198 Alabama 61
Oklahoma 190 Mississippi 58
Missouri 166 Kentucky 56
Montana 153 Wyoming 49
Arkansas 147 Idaho 42
Maryland 145 Nebraska 39
Washington 139 Delaware 34
Utah 117 Minnesota 29
Kansas 112 Hawaii 23
Michigan 89 West Virginia 15
Rhode Island 85 District of Columbia 10
Iowa 80 North Dakota 5
New Hampshire 78
South Dakota 62
Connecticut 22
Alaska 20
Maine 13

Note: Enrollment began in each state between Aug. 1 and Oct. 25, 2010. Vermont and Massachusetts already had their own preexisting condition health plans.

Source: "State by State Enrollment in the Pre-Existing Condition Insurance Plan, as of Feb. 1, 2011," Dept. of Health and Human Services, February (link)

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