Pennsylvania and 16 other states are handing over their special insurance programs for people with pre-existing health conditions to the federal government Monday.
Consumers enrolled in the so-called high-risk pool, PA Fair Care, have received letters telling them the transfer is automatic but that they may see “changes to benefits, treatment plans, deductibles and access to provider networks.”
PA Fair Care, which began in 2010, is temporary by design. It’s a federally-funded program that offers insurance to people who otherwise wouldn’t be able to get it.
Under the federal health law, these pools were intended to serve as a bridge until 2014, at which point insurers will no longer be able to deny people with pre-existing conditions health coverage or charge them more. People will also be able to get insurance from new state-based marketplaces, known as exchanges.
The plans offered through high-risk pools are less expensive than what’s offered to individuals and small groups on the private market because the government picks up part of the tab. To be eligible, a person must be uninsured for at least six months.
Funds Running Low
The federal government set aside $5 billion for the high-risk pools, with the intent of fully funding them until 2014. Pennsylvania’s contract was for $160 million, according to the state insurance department. But the road has been bumpy. The pools, which partially subsidize insurance premiums for people often in need of costly medical care, turned out to be more expensive than expected.
In February, the U.S. Department of Health and Human Services notified states that the pools couldn’t accept new enrollees, effectively shutting out any additional enrollees as of March 1.
Almost 7,000 people were enrolled in Pennsylvania’s plan at that time, surpassing the original estimate of 5,600 enrollees in 2013. State Insurance Commissioner Michael Consedine wasn’t pleased with the policy change and urged HHS Secretary Kathleen Sebelius to reconsider the decision.
“Suspending enrollment in March creates a 10-month gap in the availability of health insurance coverage for individuals who would have been served by PA Fair Care — where are these individuals supposed to go to access coverage?” Consedine wrote. “In order to minimize coverage disruptions and allow time to prepare for a successful transition to exchange products, we request that you revert to the previously discussed timetable.”
A ‘Regrettable’ Decision
In April, PA Fair Care hit another snag. HHS notified states of another contract change, one that in some cases would mean states had to absorb some of the costs of the program.
HHS’ new contract offer, effective June 1, would set “a ceiling amount on costs that would be reimbursed through the end of the program,” the agency wrote in a letter to states. States not wanting to accept the new terms could turn the pools over to HHS to run. The choice put Pennsylvania in a bind, according to Consedine.
“In essence, you are asking the Commonwealth of Pennyslvania to either end the program or potentially fund at the state level a current federal program. We respectfully disagree with your two options,” he wrote in a May 10 letter to HHS. “The abrupt ultimatum allows no time for the Commonwealth to budget funds even if it could bear such costs for the continuation of this program.”
Ultimately, Pennsylvania decided to make the switch, effective July 1. Notification letters went out to enrollees, and Highmark, the state’s administrator of the pool, has been working to move enrollees over to the federal pool. State Rep. Matthew Baker, a Republican, wasn’t happy about the change but said Pennsylvania had no choice, given the state’s own budget challenges.
“It’s regrettable,” Baker said. “But it was unnecessary. If the federal government had kept their promise and pledge to the Department of Insurance and the Commonwealth of Pennsylvania, then we wouldn’t be in this mess.”
Michael Keough, chairman of the National Association of State Comprehensive Health Insurance Plans , a trade group that represents 21 of the state-run pools (not including Pennsylvania), worries about what the transition will mean for enrollees. He said a woman from the Philadelphia area recently contacted him with concerns about her deductible changing and about the lack of clarity from doctors about whether they would accept the new federal PCIP plan.
“This adds this interim step for a population of people who by definition need to have health insurance because they’ve got serious conditions that warrant it,” Keough said. “So I think it’s an unfortunate complication.”
Baker agrees. “Pennsylvania had a very successful program and obviously it was the preference here in Pennsylvania to not subject Pennsylvanians to possible disruptive impact of having to transition them to a new plan which arguably may require them to change doctors or hospitals,” he said.
In an emailed statement, a spokesperson for CMS said the takeover now will help patients in January: “The Pre-existing Condition Insurance Plan has been serving tens of thousands of Americans for several years and continues to provide important coverage to people with few alternatives. These actions will help ensure the program’s smooth transition to 2014, when the new market reforms will be implemented and insurance companies will no longer be able to deny coverage because of pre-existing conditions.”
The 16 other states making the transition are: Arkansas, California, Colorado, Iowa, Illinois, Kansas, Michigan, Missouri, New Hampshire, New York, North Carolina, Ohio, Oregon, South Dakota, Utah and Washington.
New Jersey is among states that will continue to operate its own pool. With 1,500 people in the program, it hasn’t been as big or as costly as the one in Pennsylvania. New Jersey is one of a handful of states that already prohibits insurers from denying coverage for people due to a health condition.