Thursday, April 19, 2012

Questions: We Got Questions About PCIP, the federally-subsidized Pre-Existing Conditions Insurance Program

More than two years after healthcare reform legislation created PCIP and its $5 billion appropriation, enrollment has been far below expectations, and HHS has not released emerging cost information. So the first Q has to be this: "Why isn't HHS telling the public anything about PCIP?

PCIP is undoubtedly a godsend for the people who have enrolled. It’s just that very few have actually enrolled. And financial results aren’t available (at least no one can find the financial results - for example DecisionHealth can't find them)

The lack of information from HHS just raises more Q’s: Why did PCIP require a $5 billion appropriation (in addition to individuals’ own premiums)? Does the $5 billion meet a real need? Does the $5 billion create a political mirage i.e., to persuade the public that a need of this magnitude actually exists? Was there some other reason?

According to a GAO report in July 2011, “initial projections of total enrollment varied from 200,000 to 375,000.”

According to NCSL (The National Conference of State Legislatures), the PCIP enrollment was fewer than 50,000 individuals as of the end of 2011 – after almost two years, far below the projected enrollment.

What has HHS done as the result of the low early enrollment results?

(1) it reduced premiums in the 23 federally run PCIP states
(2) it increased enrollment outreach
(3) it began to require regular reporting of expense and enrollment data, and annual completion of independently audited financial reports.

The first two responses suggest HHS still thinks PCIP will help hundreds of thousands of people, even though there just don’t seem to be that many people interested.

More Qs: Are the HHS responses overreactions? Are they even necessary? (In fact as InsureBlog reported here and here, HHS has already ended one of the outreach efforts, a broker incentive arrangement).

These first two HHS responses also remind us of a previous HHS attempt to portray the Early Retirement Reimbursement Program as helping a huge number of small, private employers when, in fact, it mainly helped a small number of unions and heavily unionized major employers (recall that unions, perhaps coincidentally, are important Democrat campaign contributors):

Is the third HHS response simply an admission of poor management from the start? Or, if not, did HHS fail to include these elementary controls in the first place because PCIP funding was ONLY FIVE BILLION??? Surely HHS would not treat $5 billion of our dollars as whisky spillage . . . ?

And so we're back to the first Q – if regular reporting of expense and enrollment data from the states to HHS is now taking place – where is it?

Note however from the NCSL report: in the 23 states that ran their own high risk pool before PCIP the average cost for 2010 was just under $11,000 per covered person. It’s not clear whether a “high risk” person will have similar costs to a “pre-existing conditions” person. Maybe, maybe not. But what if PCIP will in fact cost $11,000 per year per person? That means the cost of 50,000 PCIP individuals would be $1.1 billion for 2012 and 2013, or less than 25% of the $5 billion appropriated – and that’s before counting the premiums that enrolled individuals pay.

At this time it appears that neither the PCIP enrollment nor its estimated cost come anywhere near the appropriated amount. So we must also ask: Is PCIP just another overfunded federal solution in search of a problem?
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