Last summer, Colorado unveiled its new high risk pool health insurance program, created with federal funds under the guidelines of the PPACA. GettingUSCovered operates alongside CoverColorado, the high risk pool that has been serving Colorado for two decades. From an applicant’s perspective, the primary difference between the two programs is that GettingUSCovered is for people who have been uninsured for at least six months, while CoverColorado is for applicants who have had health insurance in the past six months. Although both programs are subsidized, neither is intended to provide low income health insurance. Both require a letter of decline from a private health insurance carrier, or a letter stating that the applicant has been offered coverage but with an exclusion for a pre-existing condition. CoverColorado will also accept an applicant who has been offered a new policy in the private market with a premium that is higher than the CoverColorado premium for the same deductible level (this option is not available on the GettingUSCovered program).
Colorado chose to administer its own federally-funded high risk pool, but 23 states and the District of Columbia opted to have the federal government administer their high risk pools. The Department of Health and Human Services has announced new guidelines designed to make the federally administered pre-existing condition insurance plans (PCIP) easier to access and more affordable. Most of the states that have a federally administered PCIP will be seeing a reduction in premiums for those policies, some by as much as 40%. This will help to bring the PCIP premiums more in line with premiums in the private market in those states.
In addition to the premium reductions, federally administered PCIPs will no longer require an applicant to first apply for coverage from a private carrier and wait for a decline letter. As of July 1, applicants will instead be able to submit “a letter from a doctor, physician assistant, or nurse practitioner dated within the past 12 months stating that they have or, at any time in the past, had a medical condition, disability, or illness.” This will no doubt make the application process easier for people who know that they wouldn’t qualify for coverage in the private market, as they will not have to go through the added step of applying for insurance just to get a decline letter. But it could confuse things a bit for people who might qualify for coverage in the individual market, despite having a pre-existing condition. Should they still try to obtain private health insurance, or should they go directly to the PCIP? If the premiums are roughly the same, there seems to be little incentive to try first in the private market, since the PCIPs are guaranteed issue for people who meet the other eligibility requirements (must be legally residing in the US and have been without health insurance for at least six months).
The healthcare.gov website notice about the PCIP changes makes it sound like any medical condition, disability, or illness that the person has – or has ever had – would qualify an applicant for coverage under the federally-administered PCIPs. If this is the case, we can assume that eligibility for the PCIPs will expand to include healthier people than it has in the past when applicants were required to submit a letter of decline from a health insurance carrier in order to qualify for coverage. Most pre-existing conditions do not result in a decline when people apply for individual coverage. The more serious ones (or ones that could potentially become serious) do, but carriers are often able to offer coverage with an exclusion on the specific condition or a premium that is higher than the standard rate. Some of those people don’t end up needing much in the way of medical care, as their conditions are not serious. If we assume that all of them would now be eligible for federally-administered PCIPs (if they live in one of the states that has opted for federal administration of its PCIP), the PCIPs would now be open to lots of people who might not have significant claims expenses in the next few years.
One of the concerns surrounding the PCIPs was that funding would run out before 2014. But HHS obviously isn’t trying to limit enrollment – quite the opposite in fact. Reducing premiums and easing eligibility standards means that more people will likely enroll in the program. Perhaps the idea is the get more people enrolled who are not seriously ill and may not have high claims between now and 2014; their premiums might be able to offset some of the medical expenses for people who are seriously ill. Whatever the strategy is, it appears that HHS is not concerned about running out of money for the high risk pools.
The 27 states (including Colorado) that administer their own PCIPs have been notified by HHS that they can modify their programs in a similar manner. As of this morning, the GettingUSCovered website still has the same eligibility guidelines that it has always had: a letter from a private carrier stating that the applicant has been declined, or approved with an exclusion on a pre-existing condition. Both CoverColorado and GettingUSCovered have also always allowed applicants to apply without a decline letter if they have one of the medical conditions on this list, and can provide a letter from a doctor with the diagnosis. But it appears that the new HHS guidelines are much less restrictive, as they don’t seem to be limiting what pre-existing conditions will qualify an applicant for coverage. The new HHS guidelines don’t apply in Colorado because GettingUSCovered is not federally administered – but we’ll keep an eye on this to see if Colorado opts to follow HHS’s lead.