ACA high-risk pool failings offered as cautionary tale

At a congressional hearing, health care policy experts and state representatives detailed access problems for the federal program, now suspended for new enrollees.

By — Posted April 15, 2013

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A program created by the Affordable Care Act to provide a bridge health coverage option for people with preexisting conditions fell far short of expectations on access and enrollment, witnesses testified before the House Energy and Commerce health subcommittee.

About $5 billion had been appropriated to provide special state-based insurance pools under the Pre-Existing Condition Insurance Plan, or PCIP, so that certain chronically ill individuals could have the temporary option of buying insurance until major ACA expansion provisions took effect at the start of 2014. It was designed to cover people whose medical conditions rendered them incapable of obtaining traditional insurance coverage. The program's sign-up process was suspended in February, however, when the Dept. of Health and Human Services announced that it no longer had funds to accept new enrollees.

Those already signed up remain in the special coverage pools. “This suspension will help ensure that funds are available through 2013 to continuously cover people currently enrolled in PCIP,” HHS stated on its website.

The program's funds originally were expected to dry up even earlier, the administration said, as it never was intended to provide ongoing coverage. In 2010, the Centers for Medicare & Medicaid Services' Office of the Actuary estimated that 375,000 people would enroll and that the program would use up its initial funds by 2012. “The actual experience in the program has seen fewer but much more expensive enrollees, underscoring the challenges associated with insuring people with preexisting conditions through high-risk pools,” CMS stated in a January report.

Only 110,000 people have received coverage under the PCIP program, Rep. Joe Pitts (R, Pa.), the health subcommittee's chair, noted in his opening statement.

PCIP has been fraught with problems, Pitts said, including when CMS reduced payments in summer 2012 to health care professionals who were treating a high number of PCIP enrollees. CMS also cut the number of participating pharmacies that provided certain kinds or medications to these individuals. At the beginning of 2013, it increased maximum out-of-pocket costs for enrollees, he added.

With the suspension of new enrollment, Pitts said, many individuals still had pending applications to the PCIP. According to some estimates, 40,000 more people would have enrolled by the end of 2013, he said.

Fight over pay rates

Susan Zurface, an Ohio resident with blood cancer who testified on behalf of the Leukemia and Lymphoma Society, was one of the applicants who found out the program no longer was accepting patients due to lack of funds. That significantly limited her options for obtaining coverage before the end of the year, she said.

Even before its suspension to new enrollees, the program's existing structure was preventing some people from enrolling, Zurface said. PCIP has a requirement that patients must be uninsured for six months before being able to enroll for its benefits. “For cancer patients, and for other patient populations who are seriously ill, living for six months without health insurance coverage can be a death sentence,” she told the House panel.

Ohio officials faced their own difficulties in coordinating with HHS to implement the ACA provision. Mary Taylor, Ohio's lieutenant governor and director of its Dept. of Insurance, detailed instances when the state and HHS scuffled over rate increases for high-risk pool insurance plans and over eligibility determinations. HHS had forced some Ohioans out of the program because their previous coverage had been deemed “creditable,” even though they clearly were eligible for the high-risk pool, she said. HHS' refusal to recognize the state insurance department's authority on these issues led to a lawsuit through which the state's authority eventually was upheld.

As lawmakers seek additional funding to reopen enrollment, “we encourage you to ensure that states are given control and flexibility” to tailor these high-risk pools to the needs of constituents, Taylor said. “States are well prepared to regulate our own insurance … and we can react quicker, in a more thoughtful way.”

Sara Collins, PhD, vice president for affordable health insurance with the Commonwealth Fund, said the program's lack of premium subsidies could explain why enrollment was so low. “Its potential benefits are out of reach for the vast majority of this population,” many of whom have annual incomes under 400% of the federal poverty line, she said. The American Medical Association has supported the concept of high-risk patients receiving subsidies for high-risk pools, as well as other direct, risk-based assistance to make their insurance more affordable.

Additional funds to reopen enrollment for the program through 2013 would be useful, testified Ron Pollack, executive director of the consumer advocacy group Families USA. But starting Jan. 1, 2014, “all of these problems are a thing of the past,” he told the House panel. “People are no longer going to be put in a totally different pool because they have health problems,” as insurers under the ACA no longer will be allowed to deny people coverage based on preexisting health conditions.

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Health spending in high-risk pools

The Pre-Existing Condition Insurance Plan, or PCIP, was authorized by the Affordable Care Act to provide temporary coverage for people with preexisting conditions until more expansive coverage options became available in 2014. The individuals have serious, chronic health problems that require ongoing treatment and have kept them from obtaining traditional insurance. Federal regulators illustrated how PCIP enrollees received care by detailing how their claims for various medical services were distributed in 2012.

Type of service Portion of claims
Pharmaceuticals 43%
Inpatient hospital 26%
Other facility (outpatient, rehab, etc.) 16%
Medical 7%
Outpatient radiology 4%
Procedures 4%

Source: “Covering People with Pre-Existing Conditions: Report on the Implementation and Operation of the Pre-Existing Condition Insurance Plan Program,” Centers for Medicare & Medicaid Services Center for Consumer Information and Insurance Oversight, Jan. 31 (link)

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External links

“Covering People with Pre-Existing Conditions: Report on the Implementation and Operation of the Pre-Existing Condition Insurance Plan Program,” Centers for Medicare & Medicaid Services Center for Consumer Information and Insurance Oversight, Jan. 31 (link)

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