Wednesday, February 27, 2013

First Health Plan Throws In The Towel!

Which plan is giving up? Anthem BC/BS...CIGNA...Rocky Mt Health Plans? Nope, its the Federal Gov't  Pre-Existing Coverage Insurance Plan (PCIP). I guess to be fair the proper language here is the plan has "suspended acceptance of new applications until further notice" effective February 16, 2013. Since about half of these plans were directed by states, some state plans are still accepting enrollment. Colorado is not one of them.

PCIP was established under The Affordable Care Act (ACA) and began enrollment in August 2010 to provide coverage for people that had been turned down for health insurance because of significant pre-existing conditions. Initial estimates from the Gov't expected this plan to reach 375,000 people. Actual enrollment has amounted to just over 100,000 people, 2227 were from Colorado.

This is not " Free Obamacare:" People are responsible to pay premiums for the coverage. In addition to the premiums paid, 5 billion dollars was set aside by the Gov't for claims and plan administration to fund the plan until January 1, 2014. After that the major provisions of The ACA will be in effect and all these folks could be covered by a guarantee issue plan in the insurance exchange. So the plan was designed to go away. Maybe not quite this soon though.

What went wrong? People were REAL sick. A review of the 2012 annual report provides the data to back that up. The average cost per enrollee was $32,108 per year and varied by state, from a  low of $4,276 per enrolled member to a high of $171,909 per enrollee. Not chump change for sure. In one year, 4.4 percent of the PCIP enrollees accounted for over 50 percent of the claims paid from the plan.

The report also went on to say that under the federally administered programs, the Gov't tried to reduce claims exposure by finding a new network provider that accepted a lower reimbursement schedule. They also changed the coverage for specialty drugs to allow only those pharmacies and providers that were most cost effective. Lastly, they reduced the plans offered from three plans to one and increased the consumer out of pocket costs from $4,000 to $6,250 annually.

At the end of the day the PCIP was a victim of its own success. It is unlikely that enrollment will be opened up again. The plan needs to remain solvent to provide benefits to all those currently enrolled through the end of this year. The Gov't should breathe a sigh of relief that it never came close to the 375,000 people it expected. Had enrollment been greater, the plan may not have survived past the first year.

Keep in mind ALL plans will be guarantee issue and cover pre-existing conditions just like the PCIP starting January 1,2014. When you factor in the addition of HEALTHY people along side of the sick people in the insurance pool we should expect a better result. Nobody wants the short history of the PCIP plan to be repeated in the future.



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