Pre-Existing Condition Insurance Plan A Lifesaver For Some, A Missed Opportunity For Many

05/25/2011 11:52 am ET | Updated Jul 25, 2011

David Howard had been without health insurance for months when he heard early last year that a component of the new health care reform law would almost immediately provide affordable coverage to uninsured people who have pre-existing conditions.

He followed the end stages of health care reform closely, and when the Pre-Existing Condition Insurance Plan launched last summer, Howard signed up as quickly as he could.

"Thank god I did, because in February of this year I came down with meningococcal meningitis," Howard, 59, told HuffPost. "I've never had a serious illness like this before and it came on with a vengeance. I was in the hospital for over a month, including a week in the [intensive care unit] and then special nursing care after that. The total bill from San Francisco General Hospital was $362,500."

The PCIP shielded Howard from that monster bill, yet he's one of just 18,313 Americans who have enrolled in the plan. The program's not on track to reach the hundreds of thousands the Obama administration projected it would by 2014, much less the millions of people who are uninsured because of pre-existing conditions like diabetes or hypertension.

One of the biggest obstacles to wider enrollment is the program's condition that applicants be uninsured for at least six months, a requirement designed to prevent the program from "crowding out" private insurance companies.

"Although crowd-out provisions are common, when you're talking about the sickest Americans, we shouldn't force them into an absurd choice to either keep their expensive insurance or leave their insurance for six months and hope their ailments don't bankrupt them," health care policy consultant Benjamin Geyerhahn said.

Another obstacle, Geyerhahn said, is that insurance brokers can't make money by getting people to sign up for the PCIP. "In light of the fact that brokers earn nothing by selling this insurance, we shouldn't be surprised that few people have purchased it."

Alfreda Smith, a 53-year-old computer programmer who works on contract in Houston, Texas, told HuffPost she would sign up for the PCIP if she could afford six months without an insurance policy to pay for her diabetes medicine. She said she pays $586 a month for a policy with deductibles of $5,000 for doctor visits and $500 for drugs -- and the monthly premiums go up $50 every year. The standard PCIP plan in Texas for someone Smith's age is a better deal: It costs $400 a month and has a $5,950 cap on annual out-of-pocket expenses.

"I think it's horrendous. It's ridiculous," said Smith of the six-month waiting period. "I have to wait until 2014."

In 2014, it will be illegal for insurance companies to discriminate against the sick, and the PCIP will be phased out in favor of new competitive insurance marketplaces called "exchanges." Until then, the 25 million uninsured people who have pre-existing conditions will be on their own.

To be eligible for the PCIP, applicants have to provide a rejection letter from an insurance company, which is easy to do. One couple in Arizona, in fact, canceled their increasingly unaffordable private insurance, applied for new plans and have been holding on to their rejection letters since January. They're crossing their fingers they can avoid any major medical events until July, when they'll finally be eligible for the PCIP.

HuffPost readers: Thinking of doing something like the couple in Arizona? Tell me about it -- email Please include your phone number if you're willing to do an interview.

Howard, for his part, said his costly hospital visit would have devastated him if he hadn't had the insurance.

"Bankruptcy would have been the only option, which would have probably have meant the dissolution of my business too," said Howard, who is the co-owner of an interior design company.

Instead, the California PCIP caps out-of-pocket costs at $2,500. Premiums vary by age and region with the state; Howard pays $624 a month, which he said is similar to what his coverage cost when his company had group insurance. He lost that coverage, he said, when the recession forced his company to let go most of its employees two years ago.

"What has been surprising to me is how many people I talk with don't know this plan is even out there," Howard said. "The application was very simple. Name, address and Social Security number were basically all they asked for. There weren't the pages of medical information that normally would have to be provided because they couldn't turn me down for medical reasons."