Government program lowers insurance premiums and relaxes eligibility standards for Americans with pre-existing health conditions
In hopes of attracting more enrollees, the U.S. government is lowering premiums and easing eligibility requirements for its Pre-Existing Condition Insurance Plan (PCIP).
The changes will be beneficial for people with disabilities who must wait 24 months to receive Medicare after being determined disabled by the Social Security Administration. These people frequently are unable to obtain private insurance during this waiting period, either because they’re denied coverage or because the cost is too high.
PCIPs so far have provided coverage to about 18,000 Americans with pre-existing conditions. “It’s encouraging to see people who need health insurance the most getting it,” said U.S. Department of Health and Human Services Secretary Kathleen Sebelius. “But we know that’s not enough.” An estimated 25 million uninsured Americans have pre-existing conditions. HHS had anticipated hundred of thousands of PCIP enrollees.
Consumer advocates say the changes are a good start but don’t go far enough. They contend that the requirement that a person with a pre-existing condition go without insurance for six months in order to be eligible — a requirement left in place by the new rules — still presents too high a barrier for many with serious health problems.
Lower premiums in 18 states
Under the changes announced Tuesday, PCIP premiums will drop as much as 40 percent in 18 of the 23 states and the District of Columbia where the federally administered plan operates. (The remaining states operate their own PCIP programs using federal funds provided by the Affordable Care Act.)
The premium decreases in these 18 states will help bring PCIP premiums closer to the rates in each state’s individual insurance market. For example, officials said that these cost reductions would save a policyholder in Virginia some $1,200 a year.
In the six states where PCIP premiums were already about the same as state premiums, costs will remain the same.
As for the remaining 27 states that run their own PCIP programs, the Department of Heath and Human Services (HHS) has sent letters informing officials of the opportunity to reduce their current premiums.
Denial not required
Starting July 1, 2011, people applying for a PCIP no longer must have been denied coverage by an insurance company in order to be eligible. However, they still must provide a letter from a doctor, physician assistant or nurse practitioner, dated within the past year, verifying the pre-existing medical condition, disability or illness.
Applicants also must continue to meet other eligibility criteria, such as being U.S. citizens or legal residents, and must have been without health coverage for six months.
Consumer advocates say the six-month waiting period, which was left in place in order to keep private insurers from being “crowded out” of the market, is still the greatest barrier to widespread enrollment in the PCIP.
Advocates say this requirement means some consumers must either keep a too-expensive insurance plan or go without insurance for six months hoping they can meet their medical bills and won’t have a catastrophic illness or injury during that time.
Brokers will be paid
In an attempt to overcome another reason for the PCIP’s low enrollment, this fall HHS will begin paying agents and brokers for successfully connecting eligible people with the program. Currently, insurance brokers receive no compensation for enrolling people in the PCIP.
According to HHS, several states that administer their own PCIPs have begun offering these payments, with notable success. PCIP enrollment jumped 129 percent between November 2010 and March 2011, and with the new premium reductions and other changes, officials expect it to rise even faster.
About the PCIP
Congress created the temporary PCIP program as part of the Affordable Care Act to help uninsured adults with pre-existing medical conditions get coverage prior to 2014. (Private insurers were required to cover children with pre-existing conditions shortly after the health care law was passed.)
After 2014, insurers will be prohibited from denying coverage to any adult with a pre-existing condition. New competitive marketplaces called Health Insurance Exchanges will be created, and millions of Americans will receive tax credits to help make coverage more affordable.
As part of its effort to increase PCIP enrollment, the government has launched a public information campaign to get the word out about changes to the program. HHS also works with insurers to notify people about the PCIP when their application for health insurance is denied.
“The PCIP changes lives, and in many cases, literally saves lives,” Sebelius said in announcing the reforms. “These changes will decrease costs and help insure more Americans.”
For more information
A government website provides information on PCIP eligibility, benefits, rates and how to apply (click on “Find Your State,” then select your state from the map or from the drop-down menu). Also available online is a chart showing premium reductions in the states with federally administered PCIP programs.
The PCIP Call Center is open from 8 a.m. to 11 p.m. Eastern time. Call toll-free (866) 717-5826 (TTY: 866-561-1604).