Per person cost of federal high-risk medical plan doubles
By Sarah Kliff,
Medical costs for enrollees in the health-care law’s high-risk insurance pools are expected to more than double initial predictions, the Obama administration said Thursday in a report on the new program.
The health-care law set aside $5 billion for a Pre-Existing Condition Insurance Plan, meant to provide health insurance to those who had been declined coverage by private carriers. Since its launch last summer, nearly 50,000 Americans have enrolled in the program.
The PCIP program will phase out in 2014, when insurers will be required to accept all applicants regardless of their health-care status.
Those who have enrolled in the program are projected to have significantly higher medical costs than the government initially expected. Each participant is expected to average $28,994 in medical costs in 2012, according to the report, more than double what government-contracted actuaries predicted in November 2010. Then, the analysts expected that the program would cost $13,026 per enrollee.
The costs also are significantly higher than those of similar high-risk pools that many states have operated for decades. States spent an average of $12,471 on enrollees in 2008, according to the National Association of State Comprehensive Health Insurance Plans.
The Obama administration has spent $600 million of its $5 billion budget for the program over the past 18 months. More than three-quarters of all spending has gone to covering cancer, heart disease, “aftercare” such as chemotherapy and degenerative joint diseases like osteoarthritis.
Enrollees in the plan tend to use health-care services at much higher rates than the general population, the report said. They have more than eight times as many hospital admissions as government workers in a traditional Federal Employee Health Benefits plan, and more than three times as many emergency room visits.
The Obama administration says that the high cost of PCIP patients shows that the high-risk pools are serving the exact population it hoped to target: Americans with significant health-care needs who previously could not afford coverage. It’s also a result of how the federal government structured the high-risk pools.
“We certainly have seen higher costs than what you have seen in some of the state-run programs,” said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight (CCIIO). “There are design features that are different in the federal program than in state-run programs.”
Larsen cited the federal requirement that an individual must be uninsured for at least six months to become eligible for the plan. Such enrollees may have “pent up medical demands,” he said, that had gone untreated until the individuals enrolled in the new, federal coverage.
“Once you’re enrolled you can begin chemotherapy the first day of your coverage,” said Richard Popper, deputy director of insurance programs at CCIIO. “We had individuals who enrolled and in their very first week went into surgery.”
Enrollees in the high-risk pools also tend to be older, with 67 percent of participants over the age of 45. Fewer than one in five enrollees are under 34.