Through all the propaganda and partisan sound bites healthcare reform has received in the last two years, one thing is certain: the Patient Protection and Affordable Care Act will radically transform the U.S. healthcare system. The most significant change under the Act which requires that most people obtain health insurance will not become law until 2014. Other purported benefits of the reform are not new. For example, although the Act prohibits insurance companies from dropping coverage just because you get sick, federal law has barred insurers from rescinding policies, except in the case of fraud or intentional misrepresentation, since 1996. Other areas of reform are already taking affect in the form of transitional programs. These reforms seek to address what many perceived to be the injustices of the American healthcare system until the Affordable Care Act goes into full effect.
A recent report from the House Energy and Commerce Committee found that between 2007 and 2009, over 651,000 people were denied coverage because of a pre-existing condition. Starting in 2014, discrimination based on a pre-existing condition by an insurer will be prohibited in every state, and individuals will have access to affordable private health insurance choices through an Exchange, a competitive marketplace for health plans. In the interim, the U.S. Department of Health and Human Services has established the Pre-Existing Condition Insurance Plan (PCIP) to provide optional coverage during the transition.
Under the Affordable Care Act, the PCIP provides a new health coverage option for U.S. citizens and legal residents who have been uninsured for at least six months and unable to get health insurance due to a pre-existing condition. The Plan covers a broad range of health benefits, including prescription drugs, hospital services, and primary and specialty care. It is not based on income and does not charge higher premiums because of a pre-existing medical condition. Therefore, premiums under the Plan will not be more than the standard individual health insurance premium that covers major medical care and prescriptions in the participant’s state.
The Act has provided $5 billion in federal funding to support the plans in every state. Under the program, states have the option of running the PCIP themselves or having the Department of Health and Human Services run it for them. Twenty-nine states, including California, have elected to take the money, and run the PCIP on their own. The remaining twenty-one states have elected to have the DHHS administer the plans.
Although the program is in its infancy, the Pre-Existing Condition Insurance Plan is not yet living up to expectations. In addition to the questionable vitality of the entire Affordable Care Act now that the Republican Party has regained control of the House of Representatives, other impediments to the Plan’s success exist. Enrollment lags in many parts of the country. The funds California is expected to receive under the Act quadruples the state’s capacity to provide insurance to those previously denied coverage. However, the state has received fewer than 450 applications for the program with funds for about 20,000 people. Texas has enrolled about 200. Wisconsin has received fewer than 300 applications with room for about 8,000 people in the program. One barrier may be requiring people to be uninsured for at least six months and to provide proof that they've been turned down by an insurer.
Another barrier may be sticker-shock. Although federal law establishes general eligibility guidelines, state programs vary on cost, benefits, and determination of pre-existing conditions. For example, California’s state-run program has a $575 premium for a 50-year-old enrollee, with a $1,500 deductible. Pennsylvania, which set a premium of $283 for all ages, has had no problem getting applicants. Even in states where the DHHS provides coverage, the premium for a 50-year-old enrollee may range between $320 and $570, depending on state of residence. Further, the DHHS plan does not provide coverage for prescription drugs until people have met a $2,500 annual deductible.
The Pre-Existing Condition Insurance Plan is not a panacea. And like the rest of the Affordable Care Act, the Plan’s future is even less certain now that the Democrats have lost control of the House. But the Plan now provides an important, short-term healthcare option for vital health care services to people who previously did not qualify for health coverage. It appears too early to tell whether those in need of coverage will ultimately receive the coverage the program intends to provide.
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