Filed Under:Health Insurance, Individual Health

Researcher compares PCIP, exchange plans

Health policy watchers could get ideas about how the new health insurance exchanges will work, or not work, by thinking about how exchange users might compare with the users of the Pre-Existing Condition Insurance Plan (PCIP) program.

Jean Hall, a health policy researcher at the University of Kansas, makes that case in a commentary published by the Commonwealth Fund.

The PCIP experience suggests that previously uninsured consumers who have just gotten health insurance may have a pent-up demand for high-cost care, but costs "should decline over time," Hall wrote.

"The elimination of coverage exclusions on the basis of preexisting conditions and the availability of affordable, continuous coverage should help, as should spreading costs across the marketplaces’ broader risk pool," Hall said.

The exchanges and PCIP
Drafters of the Patient Protection and Affordable Care Act (PPACA) added the health insurance exchange provisions in an effort to give individuals and small groups an easier way to buy high-quality health coverage.

Starting Oct. 1, PPACA exchange programs for individuals are supposed to help users shop for coverage from a menu that offers a number of high-quality plans that come with standardized benefit packages.

If the exchanges start up on schedule and work as expected, users will be able to buy the coverage on a guaranteed-issue basis. Health insurers will have only a limited ability to use age and other personal health information to set rates. The exchanges will help low-income users sign up for Medicaid and other government health programs, and they will help moderate-income users use new tax subsidies to buy private health coverage.

The drafters of PPACA included the PCIP provision in an effort to provide immediate relief for uninsured people with health problems.

PCIP offers comprehensive health coverage to people with health problems for a price similar to the price of ordinary individual commercial health coverage.

Eligibility is not based on income, and PCIP programs cannot charge higher rates for enrollees with more expensive health problems.

To avoid crowding out existing commercial health coverage and government-provided coverage, including existing state-funded risk pools, PPACA drafters required that PCIP enrollees have gone without any form of health coverage, including state risk pool coverage, for at least 6 months.

The PCIP experience
PPACA lets states choose whether to set up their own exchanges or let the U.S. Department of Health and Human Services (HHS) handle the job, and it took the same approach to letting states decide whether or not to run their own PCIP programs.

"Generally, states that administer their own PCIPs have had higher enrollment overall and as a percentage of their uninsured populations, especially early on," Hall said. "This may be because state policymakers were better able to target enrollment strategies."

PCIP costs have been higher than expected in all states, but higher in some than in others, Hall said.

In some states, Hall said, the PCIP program is set up in such a way that a hospital can pay the PCIP premiums for an individual for a relatively short time, while the hospital is caring for the patient, then stop paying the premiums after discharging the patient.

In the PPACA exchange system, "premium subsidies will help individuals maintain coverage and access ongoing care," Hall said.

Pent-up demand for care has also pushed up PCIP costs, especially first, and having continuous access to PPACA coverage should go a long way toward helping to hold down costs for newly insured PPACA enrollees once those enrollees have had coverage for a while, Hall said.

Hall cited cancer as another possible driver of exchange plan costs.

Today, she said, cancer accounts for as many as 42 percent of PCIP claims in some states. 

"As more people obtain coverage and are able to access free preventive care, certain cancers should be caught earlier, when they may be less expensive to treat," Hall said. "Nevertheless, cancer rates and costs may initially be higher among [exchange] enrollees."

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