Econintersect: The PPACA (Patient Protection and Affordable Care Act – Obamacare) has a provision called PCIP (Pre-Existing Condition Insurance Plan) which is intended to provide a process for those with pre-existing conditions to obtain health insurance coverage. The program is a temporary stop-gap to bridge to the full implementation of mandated insurance coverage in 2014. This is a federal program and is complementary to high-risk insurance pool plans implemented by the individual states. More than half of the PCIP plans are administered by the individual states, the remaining by the federal government. The premium costs vary widely among the states from a low around $250 a month to premiums over $1,000. See table below.
There are three major problems with PCIP programs, according to a research report by Jean Hall and Janice Moore of the University of Kansas:
- The premiums are simply not affordable for many uninsured.
- Pre-existing conditions mean many of the enrollees are sick and need expensive treatments.
- The requirement of being uninsured for six months before enrollment means that many have missed treatments that could have made care less expensive overall.
The number of enrollees in the state high risk pools remains much higher (227,000) than for PCIP (78,000). Risk concentration in the lower enrollment number is probably the most important reason that loss ratios are dramatically higher for PCIP than for state high-risk pools – only the very sick are joining.
Wisconsin is the only state the research report listed (21 states) where the monthly care costs per patient for PCIP ($646) is lower than for the state pool ($722). The states with the highest per patient costs per month under PCIP are Alaska ($7,457; 3.5x state pool), Texas ($3,738; 3.7x state pool) and Kansas ($3,476; 2.5x state pool).
Click on either of two parts of table below for larger image.
The difference between the premiums paid and the cost of services rendered is to be covered by a federal appropriation of $5 billion. The report says that few states are on track to use their share by 2014 when PCIP will be replaced by mandatory coverage for everyone.
- Realizing Health Reform’s Potential (Jean P. Hall and Janice M. Moore, The Commonwealth Fund, September 2012)
- Why is the Federal Risk Pool Program So Costly? (Allison Bell, Life health Pro, 14 Septemebr 2012)