There’s good news for Americans who lack healthcare insurance and have pre-existing medical conditions. As of July 1, 2011, the Obama administration reduced the premiums these people pay to purchase high-risk insurance plans that the federal government operates in 17 states and the District of Columbia. Called pre-existing condition insurance plans (PCIPs), this coverage for people with medical conditions that often make then unable to buy insurance on the individual market was created by the Patient Protection and Affordable Care Act (ACA).
Virginia and six other states will slash their premiums by 40 percent; other states and the District of Columbia will see cuts of between 15 and 25 percent; Mississippi will cut its rates by just two percent. The revised rates give greater consideration to state-specific data and closely track the standard rates for individual policies in each state. “Now, the program has been up and running for six to nine months, we’ve had an opportunity to redefine the methodology,” said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the Department of Health and Human Services.
Advocates for consumers and federal officials hope that the reduced premiums will encourage additional people to opt into the plans. Although approximately 375,000 people were expected to sign up for the PCIPs, just 21,454 had enrolled as of April 30, 2011. The biggest roadblocks are seen as high premiums and a legal requirement that enrollees lack healthcare insurance for six months prior to joining the program.
Another provision of the law could have the potential to make the plans even more affordable. Some insurers are already cutting premiums to meet the new “medical loss ratio” requirements. (Medical claims paid are considered losses in insurance jargon.) If difficult economic times continue and people cut back on medical care, other insurers may follow suit. “Plans are getting nervous about how big the rebates they’re going to have to pay are,” said Timothy Jost, a law professor at Washington and Lee University who’s a consumer representative to the National Association of Insurance Commissioners.
Compared to the legal requirement that people be uninsured for six months before signing up for the new plans, high premiums are probably a bigger stumbling block to enrollment, experts say. They can’t really do anything about the six months, because that’s in the law,” says Kansas Insurance Commissioner Sandy Praeger, who heads the health insurance and managed care committee for the National Association of Insurance Commissioners. “But they can bring down the cost, which will help.”
The trend to ever-increasing healthcare premiums has led some organizations to ask for an extreme solution. Recently, the Greater Boston Interfaith Organization (GBIO) and Health Care for All issued a plea to freeze healthcare premiums for one year to sort out a better solution for healthcare companies and individuals alike. The freeze’s supporters argue that the price hikes of health insurance have not evened out, despite the fact that more people are facing economic difficulties. During the year-long freeze, the hope is that consumers will be better educated to find the best deals for their insurance and that companies could find ways to better meet their customers’ needs.
The cost reduction has made a major difference to Kathleen Watson of Lake City, FL, who had been uninsured since 2004 when COBRA coverage under her husband’s previous policy expired. Because she has leukocytosis — a constantly elevated white blood cell count — locating affordable coverage was impossible. Watson found herself in an even more difficult position in 2009 when she was diagnosed with non-Hodgkin lymphoma and developed an antibiotic-resistant bacterial infection while hospitalized with pneumonia.
When the ACA created the new plans for people with pre-existing medical conditions, Watson looked into coverage. Unfortunately, the $605 monthly premium was more than she could afford on what she earns running a medical transport business. When she learned that rates in the three plans were being reduced by 40 percent, Watson checked out the plans again. This time, she signed up for an affordable $363 a month that started July 1. “I’m just happy to have insurance now,” Watson said, noting that she immediately needs a CT scan and a lung biopsy to check out enlarged lymph nodes in her right lung, bladder and colon. “Hopefully it does what it says.”
Discussions about further reductions could be in the works. “It’s possible,” that the medical loss ratio requirements might further depress PCIP premiums, Larsen said. “I wouldn’t care to speculate about that.”