Health Insurance and You!

Recently, there has been good news and bad news about the federally-run preexisting condition health insurance plans (PCIPs), which were created through 2010’s health overhaul to provide insurance to people who have been denied coverage by private insurers. PCIPs are temporary and will be phased out when health reform is fully implemented in 2014. From then on, insurers will no longer be allowed to deny coverage based on a preexisting health condition.

Since last summer, when the plans were launched, almost 50,000 people have enrolled, according to an article by Sarah Kliff of the Washington Post. A report released late last week by the Obama administration describes the progress made so far. States had the option of creating their own high-risk pools, which 27 have done, many in concert with existing state programs. The remaining 23 states and the District of Columbia have opted into the federal program. For patients with existing health conditions, PCIP premiums tend to be lower than those in the individual market, although plan members usually have costs beyond their premiums. Plan membership is growing quickly, with about 8,000 new applications per month nationwide during the last few months of 2011.

That’s the good news.

But on the flip side, the same report found that per-patient costs were much higher than expected. When PCIPs were first proposed in 2010, analysts expected a yearly cost of $13,026 per person. Last week’s report, however, increased that estimate to $28,994 per person. The discrepancy was even more dramatic in some states. In California, for example, writes Kamal Menghrajani in a blog post for KQED, the program was estimated to cost about $12,000 per person, but ended up with an annual per-person cost of more than $37,000.

In an article for The Hill, Julian Pecquet  explains that most of the costs so far have stemmed from coverage for cancer treatment (27% of costs), heart disease (18.6%), post-surgical care (18%), and degenerative joint diseases (14.4%). PCIP enrollees also tend to skew older than the average population, with two-thirds of plan members over age 45. Interestingly, though women are less likely to lack coverage than men, most of the program’s enrollees are women.

On one hand, the high costs show that PCIPs are reaching and serving the types of patients they were created for: people with unmet medical needs who can’t get coverage anywhere else. But skeptics say that the costs may stem from how the program is structured. For example, to be eligible to enroll, people need to be uninsured for at least six months. During those six months, Ms. Kliff writes, many patients put off or skip needed treatment and medications due to cost. As a result, once they’re enrolled in a PCIP, they have a pent-up need for treatment, and may even have suffered health consequences by waiting.

Readers, have you considered signing up for a PCIP? Do you have any ideas for how this program can cut its costs while continuing to fill its purpose?