A temporary program created by the 2010 health care reform law has provided health insurance to fewer people than expected. Yet at the same time, in one big state, the program has turned out to be much costlier than expected.
The Pre-Existing Condition Insurance Plan launched last year to cover people shunned by health insurers because of conditions like heart disease or diabetes. In the new law, Congress gave the Department of Health and Human Services $5 billion to disperse among the states. California got $761 million, and earlier this year the state figured it would have enough money to insure 23,000 people until 2014, when the program is being phased out in favor of health insurance exchanges.
But California's PCIP has turned out to cost three times as much per enrollee than previously estimated. The state's Managed Risk Medical Insurance Board, which administers the plan, initially figured it would have to pay $1,000 a month in claims per enrollee. New data show claims cost $3,100 per member each month, meaning that the government will have to cap California's enrollment at 6,800 unless more funds are made available. As of October, 5,290 people are signed up in the state.
But an HHS spokeswoman suggested in a statement that freeing up more cash for California won't be a problem.
"The Pre-Existing Condition Insurance Plan is making a difference in thousands of lives in California, ensuring that sick and uninsurable Californians get the health care that they need," the spokeswoman said. "Each State received an allotment from the fixed total funding prior to the start of the program. We are in the process of reviewing state projections for2012 and will adjust as needed."
There's probably enough money available. The Government Accountability Office reported earlier this year that as of April, just 2 percent of program funds had been used.
To be eligible for the PCIP, a person must have a pre-existing condition and must have been uninsured for at least six months. The latter requirement has been widely blamed for the initiative's low participation rate nationwide. Just 37,000 had signed up as of September, according to HHS. Officials had estimated that as many as 375,000 would sign up in 2010 alone.
California's Managed Risk Medical Insurance Board has estimated that with another $500 million, it could avoid capping enrollment and provide insurance to some 11,247 Californians through 2014. With an additional 500 million, California's allotment would be $1.25 billion -- a quarter of the total funds Congress appropriated for the program nationwide. The most recent state-by-state numbers released by HHS show California has just 10 percent of total enrollment.
Cliff Allenby, chair of the state board said the program's initial cost estimates were based on data from the state high-risk pool that predated the PCIP, according to California Health Line. Thirty-five states had high-risk pools before the PCIP launched last year; the state pools are costlier for consumers and may exclude coverage of certain conditions. Expanding those pools was the centerpiece of the Republican alternative to the health care reform signed into law by President Obama last year.
Allenby told California Health Line it would be up to HHS to allocate more funds for the California PCIP. "It's their program. It's their decision."