Report: Medical costs in high-risk pools are double the federal predictions

The Department of Health and Human Services on Thursday released an interesting report on the demographics of the 50,000 Americans who have enrolled in the federal Pre-Existing Condition Insurance Plan (PCIP).The data show that enrollees in he safety-net program tend to be older, female and have extremely high health care costs.

As you can see in the chart above, medical bills for those in the federal pools have cost more than twice that of those in similar state-based programs. The costs are much higher than what federal actuaries had predicted going into the program.

The bill shock is likely related to the structure of the federal PCIPs. The premiums have been relatively expensive — as high as $778 per month in some states. In order to be eligible, an applicant has to be uninsured for at least six months. “As a result,” the report says, “PCIP enrollees use a higher volume and intensity of services than those in existing State High Risk Pools.”

Seventy-eight percent of PCIP spending has gone toward covering only four health care conditions — all expensive to treat: cancer, circulatory diseases (such as coronary artery disease), post-surgical care (such as chemotherapy) and degenerative joint diseases.

The study found that the enrollee population tends to be older, which contributes to the rise in health care costs. More than two-thirds of enrollees are over 45 years old; 17 percent are under 34. Enrollees also tend to skew slightly female, even though men have a higher uninsured rate in the general population.

The administration takes all this as evidence that the Pre-Existing Condition Insurance Program is serving the exact population that it was meant for: Americans with significant health care needs who previously could not afford insurance coverage.

At the same time, the figures present a challenge for federal high-risk pools over whether the program can take on many new enrollees and stick within its budget constraints. Congress appropriated only $5 billion for the program, to last through 2014. Some states have blown through their budgets faster than expected and have begun capping enrollment.

The Center for Medicare and Medicaid Services says it will “continue to monitor PCIP enrollment and expenditures closely [so] that PCIP enrollees continue to have health coverage” through 2014.