Improving Affordability of Coverage for People with Preexisting Conditions

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The Pre-Existing Condition Insurance Plan (PCIP) is a temporary national program created through the Affordable Care Act. Modeled after existing high-risk pool plans, the PCIP program provides coverage for uninsured individuals with pre-existing conditions, many of whom have been unable to obtain other insurance. The Affordable Care Act allocated $5 billion for the operation of the PCIP, starting in July 2010 and running through December 31, 2013, at which time enrollees will transition to coverage through the exchanges. States had the option to administer the PCIP for their citizens or to allow the federal government to administer the program. Currently, 27 states operate their own PCIP programs, while the PCIP in the remaining 23 states and the District of Columbia is federally administered.

Initially, enrollment in the PCIP was predicted to far outstrip available funding and many states imposed enrollment limits and anticipated waiting lists for coverage. In reality, early enrollment in the pools has been somewhat low, reaching 8,011 people as of November 1. It's probable that many potential enrollees cannot afford the coverage. Even with premiums statutorily capped at standard market rates for the area in which the PCIP is operating, monthly rates—especially for older individuals—can exceed $1,000. In addition, the most common annual deductible level for the PCIP programs in 2010 is $2,500. Unlike coverage that will be available through the exchanges, premium and cost-sharing subsidies are not available for lower-income PCIP applicants.

The Affordable Care Act dictated a very tight, 90-day timeline for PCIP implementation, causing many states with existing high-risk pools to simply use one or more of their state plans as a template for their PCIP offering. Only 10 state PCIP programs offered more than one plan option. Similarly, the federally administered plan had to be developed quickly, without complete knowledge of how many states would opt for federal administration.

Now with some enrollment experience under their belts and a better understanding of the applicant pool, PCIP program administrators have the option to make adjustments to their coverage for 2011. Indeed, numerous states are submitting requests to the Department of Health and Human Services for changes in their PCIP premiums or plan options for the coming year. A notable set of early programmatic changes was recently announced for the federally administered plan. Starting in 2011, applicants and enrollees will have three plan options from which to choose, two of which have separate, lower deductibles for prescription coverage. This change acknowledges that many enrollees need maintenance medications to manage their chronic conditions. The plan deductibles now also range from $1,250 to 2,500 and premiums have been reduced. In addition, new child-only premium rates have been developed to decrease the cost for covering children who have pre-existing conditions.

The willingness of federal and state administrators to make adjustments to their plans in response to consumer need and program experience bodes well for future development of the exchanges. Given the enormous changes that are taking place in a relatively short period of time, such adjustments should be expected and will be integral in assuring that plans fill the spectrum of needs among people who may currently be uninsured.

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