The Energy and Commerce Health Subcommittee recently convened to question witnesses on the state of health insurance premiums for people with pre-existing conditions. The consensus among witnesses was that the PCIP (Pre-existing Condition Insurance Plan), a federally run plan, was not a successful example of how to cover people with pre-existing conditions.
Hearing Date: April 3, 2013
The Health subcommittee recently met to discuss how pre-existing conditions affect consumer’s health insurance premiums and how the government can help people with pre-existing conditions obtain affordable insurance. In Rep. Joe Pitts’ (R-Penn.) opening statement he recounted the history of the government’s PCIP (Pre-existing Condition Insurance Plan) from it’s inception to it’s current state. Republicans had requested a fund of $25 billion for PCIP during healthcare reform negotiations, but Obamacare ended up allotting only $5 billion for PCIP. Currently, CMS has suspended enrollment into PCIP due to underfunding and CMS is trying to stretch what is left of it’s budget to keep people insured until the end of 2013, when mandated health coverage begins.
Rep. Michael Burgess (R-TX) argued in his opening statement that state-run PCIP’s were already capable of doing the job well when the federal government mandated pre-existing condition insurance plans.
The first witness, Susan Zurface, on behalf of the Leukemia & Lymphoma Society testified one of the central problems to PCIP is the 6 month wait to enter the program. The delay ends up forcing people (with pre-existing conditions) to look to the private health insurance market, where premiums would be exorbitant due to the pre-existing illness. Another problem with PCIP is the lack of portability across different provider networks. Costs are exceptionally higher when seeking care out of network.
The second witness, Lt. Governor Mary Taylor (OH) testified to the state of Ohio’s own high risk insurance pools and the issues the state was having with the ACA. After years of a high profile dispute with the federal government concerning the state’s high risk insurance pool, Ohio is worried similar problems will arise from the Affordable Care Act. The state government commissioned a report in 2011 to predict the effects of ACA on Ohio and it was projected the average increase in premiums would be between 55 and 85 percent.
The third witness, Sara Collins, VP of The Commonwealth Fund testified that there is a severe disconnect between premiums and medical claims, with as much as 7 times the amount of claims compared to the amount of premiums being paid into the high risk pools.The segmentation of insurance pools (likes ones with only people that have pre-existing conditions) is an inefficient way of dividing up risk. With low enrollment and typically lower incomes, the high risk pools operate at a considerable loss.
The fourth witness, Ron Pollack, Executive Director of Families USA testified that it was determined that almost 1 in 4 Americans have pre-existing conditions that could lead to denial of coverage. Beginning in 2014, the ACA will not allow any insurers to deny coverage. The PCIP was designed as a stopgap measure until the ACA kicked in. The PCIP has stopped taking applications for coverage, but will continue servicing the 100,000 people enrolled.
The fifth witness, Thomas Miller, Resident Fellow at the American Enterprise Institute testified that the pre-existing health insurance plans suffer from serious flaws and they were only introduced into ACA for political points. The key to addressing the issue is helping keep state HRP’s afloat and moving towards a state-led model. Pre-existing risk pools are a “limited, modest problem…that is being used as a political excuse to hijack the rest of the private insurance market.”
In response to questioning, Thomas Miller said:
- There is a fine line between being a compassionate society and the government running everybody’s lives (in reference to the amount of regulations in ACA)
- We should subsidize the people with pre-existing conditions that have the special needs instead of subsidizing the 400% of the federal poverty level
- The amount of people in this country that face real health insurance problems is closer to 4-5 million instead of 65 million
In response to questioning, Ron Pollack said:
- Despite the shortcomings of the current PCIP program, in 8 months time, it will be a thing of the past and ACA will insure that everyone is covered
In response to questioning, Lt. Gov. Taylor said:
- Ohio is concerned about disagreements with federal regulators and how that will ultimately affect consumers and their premium costs
Links to Testimony: