Monday, July 11, 2011

PCIP by the Numbers

The well intentioned but poorly designed PCIP program is in poor health. Pre-existing Condition Insurance Plan (PCIP) is a bridge plan for those who cannot obtain health insurance in traditional markets (including risk pools or HIPAA conversion).

The precept is simple. If you have a medical condition that precludes you from obtaining medically underwritten health insurance and have been uninsured (for any reason) for at least 6 months, welcome to PCIP.

PCIP is guaranteed issue, regardless of your health. Not only will you be issued a policy but it will cover all your pre-existing medical conditions and their treatment.

A virtual health insurance panacea.

But the same folks that gave us Cash for Clunkers and sold 700,000 cars in 6 weeks can just barely get 20,000 folks into a health insurance plan designed just for them and this is after a year of sales pitches.

Even the recent 40% drop in premiums designed to lure in new participants appears to be sluggish.

But how well is PCIP working from a financial perspective?

I decided to ask that same of the folks at Google by entering a query for "PCIP loss reports". The first one that came up as a PDF from the state of Washington.

Here are some excerpts:

Total member months through April were 1085

"the receivable for unbilled HHS reimbursements is $4.2 M. This
amount represents an offset of liabilities, including IBNR, which will be invoiced and funded by HHS before the end of the program"

"As of April 2011 YTD, total operating expenses are $340 K and HHS Reimbursement is $6.6 M."

"For April 2011 YTD, administrative expenses are $95 K or 17.2% favorable to budget (cash basis)."

"As of May 2011, membership is at 50.1% of projected year-end enrollment. Actual YTD claims PMPM is $3,574 as compared to $5,180 budgeted claims PMPM. As illustrated in the program summary, the current 2011 allotment of funds is projected
to deplete in August of 2011."

"As of April 2011, projections indicated that PCIP-WA will use up 75% of the original federally allotted funds by August 2012."

(If you go further in to the report you find that premiums are not supporting the program. Without the heavy subsidy by HHS the program would have failed long ago.)

2011 YTD premiums are $803,278 vs YTD claims of $3,408,946 medical plus $558,981 Rx.

HHS (taxpayer) reimbursements of $3,379,891 are needed to keep the program afloat for 263 participants.

For Sept 2010 through Dec 2010 they received $251,511 in premiums vs $1,005,816 in claims.

The program is not even a year old and already running a deficit if not for the taxpayer subsidy and these numbers are on fewer than 300 people who are getting a bargain.

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