Starting today, Americans who have been uninsured for more than six months and denied coverage on the individual market will be able enlist in a temporary high-risk pool program the government is calling, Pre-existing Condition Insurance Plan (PCIP). Each PCIP will be run by the state or the federal government and will have to keep their premiums at “standard rates,” limit on out-of-pocket medical costs to $5,950 a year for an individual, and maintain an actuarial value of at least 65%. Plans will also be prohibited from varying premiums on the basis of age by a factor greater than 4 to 1.
State and federal governments will have just $5 billion to spend on the program and many expect that the limited resources and the high cost of covering very sick applicants could lead to steep premiums or force states to limit eligibility. Iowa, for instance — which will receive $35 million of the $5 billion federal pot — predicts that it will only have enough dollars to cover 975 sick residents and the federal government says that premiums will vary nationwide:
Prices will vary by state and type of coverage from a low of $140 a month to as much as $900, said Richard Popper, deputy director of a new insurance office at the federal Health and Human Services department. Officials provided details of the plan, which starts enrolling people Thursday.
The price range is so wide because premiums will be keyed to standard individual health insurance rates in each state, which can differ dramatically because of medical costs and the scope of coverage. Independent experts estimate premiums will average around $400 to $600 a month. Younger people will pay less. “There are going to be meaningful premiums that are going to be required to stay in this plan … in the hundreds of dollars,” said Popper, with the Office of Consumer Information and Insurance Oversight.
The pools are an interim measure that will go away after the exchanges become operational in 2014, but if Democrats want to live up to the name of the health care law, they will have to figure out a way to appropriate more funds for the program. The Congressional Budget Office has concluded that the $5 billion will last for approximately two years and many states are worried what happens once that money runs out.
Nobody is protesting louder than the GOP. Last week, 28 Senate Republicans wrote to Health and Human Services Secretary Kathleen Sebelius arguing that the CBO findings are proof that the pools “will fail to provide the assistance promised by supporters of the new law” and this week the office of Rep. Dave Camp (R-MI) put out an entire release complaining about the lack of funds.
Their point is certainly well taken, but given their opposition to spending money on health reform and commitment to repealing the entire law, it’s hard to take seriously. After spending the last year and a half claiming that the government was spending too much money to reform health care and that it should put all of it back, the GOP is now accusing Democrats of not pumping enough money into the system. Should the Democrats move to add more money into into high risk pools, however, the Republicans will probably revert to their original criticism.