Rates drop for high risk insurance plan

August 2, 2011

By Anandi van Diepen

Uninsured California residents who can’t get private coverage because of pre-existing health conditions are about to get a break: premiums for state-sponsored coverage financed by the federal government will be coming down by about 18 percent.

State officials said Tuesday they hope the lower rates will make the program more accessible to the people who need it, especially since so far only about 3,500 Californians have enrolled for coverage and the state has the ability to provide it to about 24,000 people.

The subsidized plan is one of the first elements of the federal health reform to kick in. The program is intended to help people find coverage until 2014, when insurance companies will be required by law to sell coverage to everyone, regardless of their medical condition, and to stop charging different rates to different people based on their health.

Known as the Pre-Existing Condition Insurance Plan, the program is funded by the federal government but run by the state. California is one of 27 states nationwide that opt to administer the program at the state rather than the federal level.

The PCIP, however, currently is serving only a fraction of those it was created to serve. The Managed Risk Medical Insurance Board, which administers PCIP, estimated from the program’s outset that the federal money for the program would accommodate 24,300 eligible Californians.

“The estimate was a very early attempt,” said Jeanie Esajian, who directs external and legislative affairs for the Managed Risk Board. “It’s probably not that useful anymore to look at that, because it was done so long ago, with not a lot of basis, with what we knew at that time.”

Even so, the program currently serves only 14 percent of its stated capacity, and the reasons for the low enrollment vary. Esajian said the cost of premiums is a deterrent for low-income applicants.

The program’s eligibility criteria—including a requirement to have been without insurance for six months—also rule out some in the overall pool of uninsurable people.

Consumer advocates, on the other hand, claim that the state lacks an effective outreach program, especially among communities of color and non-English speakers. .

As of mid-July, 3,418 qualified Californians with pre-existing conditions had enrolled in the state’s PCIP program, taking up only 14 percent of the 24,300 slots at first thought to be available with federal funding. Overall, the Managed Risk Board estimated in 2006 that between 165,000 and 396,000 Californians may be uninsurable due to pre-existing conditions.

Among the conditions that frequently prevent people from obtaining health insurance are asthma, cancer, diabetes and heart disease. Insurance companies may label less severe conditions as pre-existing, however, thus preventing applicants from obtaining medical insurance. There are no uniform guidelines to define a pre-existing condition.

Bryan McCarthy, a 27-year-old student at Sacramento City College, is among those who have already benefitted from the program. At age 21 he jumped off a horse and sustained severe ankle damage. When he was too old to stay on his mother’s health plan, McCarthy was uninsured and could not get treatment.

“When it finally came available, we jumped on it,” he said. “The biggest thing is I was able to get the surgery I needed.” He had four surgeries.

To enroll in the Pre-Existing Condition Insurance Plan, an applicant must be a U.S. citizen or legal resident; have lacked health insurance for at least the past six months; and have been denied insurance due to a pre-existing condition within the past 12 months.

“We had a pretty big grouping of applications submitted prior to the opening date.,” Esajian said. “Since then, it has grown steadily.”

However, the program is operating nowhere near capacity. The barriers to entry exclude many would-be applicants, and some health advocates say that the state could reach out more effectively to California’s uninsured.

“We think there is some more growing to do,” said Anthony Wright, executive director of Health Access, a consumer advocacy group. “California should be very active in letting people know about this option.”

According to the most recent national data, California has signed up the second highest statewide total of PCIP enrollees, below Pennsylvania.

In addition to PCIP, the Managed Risk Board also administers the Healthy Families and Access for Infants and Mothers programs.

But unlike AIM and Healthy Families, “PCIP is not a low-income type plan,” Esajian said. The state charges a premium and, Esajian added, “Cost may be a barrier to some people.”

Although federal directives reduced those premiums at the beginning of 2011 for an estimated 10 percent of the eligible pool, PCIP premiums may be insurmountable for some.

Premiums are determined by age and residency. For example, a 45-year-old enrollee from Monterey County would currently be charged a $369 monthly premium. A similarly aged resident of San Bernardino County would pay $335 a month.

The highest ratepayers—elderly people in the state’s northern counties—got a 35 percent reduction of $351 a month in January, according to figures from the Managed Risk Board. The premium changes reduced rates for PCIP’s subscribers between 15 and 18 years old, as well as those over 60.

The latest reductions will take those rates down another 18 percent. For a 40-year-old resident of Los Angeles, for example, that would mean a reduction from $339 per month to $269.

Linda Leu, a policy analyst at Health Access, said that her organization at first eagerly anticipated implementation of the new health care law.

“It was very disappointing when we began to see the numbers trickling in the way that they did,” she said.

In addition to cost, Leu cites lack of outreach as another reason why she thinks enrollment has lagged. “There wasn’t in our eyes a very comprehensive effort to get people enrolled. As a result you have your couple of thousand instead of tens of thousands,” she said.

“We have concerns over whether there is information available in various communities that either are not connected to the Internet or whether there’s information available in culturally and linguistically appropriate ways,” Leu said. Current enrollment records from the Managed Risk Board indicate that Californians of African American, Asian American and Latin American descent are underrepresented.

Esajian acknowledged that the majority of the program’s enrollees are white and said the state is about to launch a broad-based outreach campaign. The program will involve an outside communications firm, education of the public through legislative districts, media interviews with current subscriber and information offered through disease-oriented organizations.

“We expect that to have an effect on enrollment,” she said.

Sources at both the Managed Risk Board as well as at Health Access said they believe that PCIP will steadily increase its enrollment over the course of the program.

“I think it will continually go up as people find out about it, all the way
to 2014. It has room for growth,” Wright said.

For more information on the program and how to apply, go here.

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