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HHS Says Lower Premiums Will Boost Enrollment in Program to Cover Hard-to-Insure Americans

By John Reichard, CQ HealthBeat Editor

November 5, 2010 -- A program created by the health care law to cover Americans unable to find health insurance because of preexisting medical conditions will have new lower-cost plans in 2011, federal officials announced on Friday.

Enrollment in the program has been surprisingly low. But officials said during a midday telephone briefing that the new choices should help increase it. Known as the "Pre-Existing Condition Insurance Plan" (PCIP), the program is administered at the state level, either by the states themselves or by the federal government. Twenty-three states and the District of Columbia have opted to let the feds do the job.

Richard Popper, Director for the Office of Insurance Programs in HHS's Office of Consumer Information and Insurance Oversight, said in a mid-day press briefing that premiums will drop 20 percent for options offered in the states where the federal government is operating the program. HHS has asked states that are running their own programs whether they intend to make premium and plan design changes but it is unclear how many will do so.

The program now offers a single standard plan that has a single combined medical and pharmacy deductible of $2,500. In 2011, additional options will be available in the federal part of the program.

The standard plan in 2011 will have two separate deductibles: $500 for drugs and $2,000 for medical care. The premium charges for the plan will fall 20 percent, a change HHS said is being made based on actual claims experience. The $500 deductible is an attractive feature for people who take one or more maintenance medications.

A new option called the Extended Plan has a medical deductible of $1,000 for medical care and $250 for drugs. The premium charges for the plan will be slightly higher than those for the 2010 standard plan.

Also on the menu is the health savings account option. It has a single $2,500 deductible and will charge premiums 16 percent lower than the 2010 premium for the standard plan. Payments that count toward the deductible can be made from a health savings account, which provides certain tax breaks.

Another new option is the child-only rate, offered to make coverage more affordable for enrollees up to age 18.

The Obama Administration predicted that hundreds of thousands of people would enroll in the program. But as of Friday, the tally stood at only 8,011. Popper said that enrollment grew 60 percent in the past month, however. And he said the new options would increase enrollment, but didn't project by how much.

The impact may not be dramatic.

One problem is that the cost of the premiums, although lower than for conventional insurance, are a barrier for many, program directors say. And a requirement that applicants be uninsured for the prior six months in order to qualify is a major hurdle for the chronically ill, many of whom who enrolled in high-cost state risk pools or expensive private plans just to get life-saving coverage. The new rules don't let them move directly from the state to federal pools.

Officials sidestepped questions Friday about the six-month requirement, which is viewed as a major impediment to enrollment gains.

Another challenge is getting the word out about the program to people having trouble finding coverage. Popper said those efforts are intensifying. HHS is asking state insurance departments to tell insurers when they deny coverage applications to inform the applicants about the availability of the PCIP program. Humana has agreed to do so, he noted.

The Social Security Administration is notifying people about PCIP who are receiving disability payments and are in the two-year waiting period prior to qualifying for Medicare. AARP has sent notices to its 24 million members about PCIP. And HHS is also working with consumer groups, hospitals, doctors' offices, and groups representing people with chronic diseases to get the word out about the program, Popper said.

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