Among the raft of guidelines announced on Thursday in response to the mounting implementation problems confronting President Obama's health care law, the Department of Health and Human Services said it was extending for one extra month a transitional program that temporarily covers Americans with pre-existing conditions.
The program, known as the Pre-Existing Condition Insurance Plan, or PCIP, was a temporary measure within Obamacare meant to be a bridge to provide coverage to those with pre-existing conditions between the law’s 2010 passage and Jan. 1, 2014, when all plans will be required to offer coverage to those with pre-existing conditions.
Now that it’s in the news again, it’s worth questioning whether the problems encountered by PCIP could be predictive of broader problems facing Obamacare’s insurance exchanges.
What’s interesting about PCIP is that it ended up attracting much fewer Americans than expected while also costing more than expected. The reason was that those who did enroll ended up being those with extremely high medical costs — even by the standards of a program for those with pre-existing conditions.
By March 2013, HHS suspended enrollment in the program because it couldn't afford to cover any new applicants.
As the New York Times reported in May, “The administration had predicted that up to 400,000 people would enroll in the program, created by the 2010 health care law. In fact, about 135,000 have enrolled, but the cost of their claims has far exceeded White House estimates, exhausting most of the $5 billion provided by Congress.”
The same story explained that HHS announced it “was cutting payments to doctors and hospitals after finding that cost overruns are threatening to use up the money available.”
In a Thursday conference call, an HHS spokeswoman said that the program currently covers 85,798 Americans and has spent $4.74 billion of its $5 billion allocation. As a result, she said, HHS still has some money left over to extend the program through the end of January, to give more time to the individuals to purchase plans given the botched rollout of Obamacare’s insurance exchanges.
HHS has not released a demographic breakdown of those who it says have selected an insurance plan on one of the exchanges and it won’t be until after the open enrollment period ends on March 31, 2014, that there will be a full understanding of what the risk pools look like.
But given the dismal enrollment numbers to date, it’s worth asking whether the exchanges could end up encountering similar problems to PCIP — only on a much bigger scale.