pre-existing condition insurance plans (pcips) under the affordable care act of 2010 jean p. hall...

Pre-existing Condition Insurance Plans (PCIPs)

under the Affordable Care Act of 2010

Jean P. Hall and Janice M. MooreUniversity of Kansas

Commonwealth WebinarOctober 7, 2010

Background on the PCIPs Included in PPACA legislation; to be implemented within 90

days of passage $5 billion total allocation Immediate availability of coverage for uninsured individuals

with pre-existing conditions; interim to Exchanges in 2014 Different from state high-risk pools:

No waiting period for coveragePremiums at standard rateOOP capped at $5,950Eligibility transferrable to other states

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Administration Overall, 27 states chose to administer their PCIPs:

20 out of 35 high-risk pool states 4 out of 5 open enrollment states 3 out of 5 guaranteed issue states 0 of 5 with no existing safety net programs

PCIPs for the other 23 states and the District of Columbia are federally administered

Presented an equity dilemma for states with existing high-risk pools because premiums are generally less for the PCIP coverage, but current state pool members can not switch

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State and federal pools

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Note: FL pool closed to new enrollment since 1991

PCIP potential enrollees Total potential pool as many as 6 million

based on uninsured and having at least one chronic condition

HHS cites various enrollment estimates ranging from 175,000 to 400,000.

PCIPs make individual market coverage available to people with pre-existing conditions

An average state high-risk pool enrollee incurs about $10,000 per year in claims

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Plan variability Other than basic stipulations, HHS gave

states a great deal of latitude in how to design their PCIP coverage—in part to accommodate existing laws/programs and in part due to the tight timeline

Many states with existing high-risk pools simply used one or more of those plans

The result is a great deal of variability in coverage and benefits from state to state

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PCIP premiums PCIP premiums may vary on age (4:1), tobacco use

(1.5:1), geographic area, and deductible Monthly premiums for a non-smoking 50-year-old

range from $240 for a $5000 deductible plan in UT to $1006 for a $1500 deductible plan in AK; flat premiums in PA and NY

For the same federally-administered plan, premiums range from $330 in HI to $556 in FL; $455 on average (uses a 2.1:1 age ratio)

Premiums are capped at market rate but can be lower

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Deductibles, cost-sharing, OOP Fifteen states offer plans with deductibles at or below

$1,000 The most common deductible is $2,500, but as high

as $5,000 Most use 20% co-insurance; 3 states use 30%; 1 uses

25% and 1 uses 15% PPACA ceiling for OOP is $5,950 in 2010, indexed to

HSAs; all federally-administered plans and many state plans use this as their limit

Washington and Maryland have the lowest in-network OOP limit at $1,500

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First dollar (or outside the deductible) coverage

Allows participants to access some services immediately without first meeting their deductible

Most commonly includes preventive care and prescriptions; some office visits with copays

May be especially important for people with multiple chronic conditions because large deductibles can create access barriers

A possible feature for plan enhancement

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Regulatory Impact Will produce savings by reducing mortality,

morbidity and medical expenditure risk while increasing worker productivity through reductions in absenteeism and low productivity due to illness.

Reduce cost-shifting for uncompensated care. Provides an important source of coverage for

some with pre-existing conditions until exchanges are implemented in 2014.

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