An early ObamaCare health insurance program that has been operating for nearly three years is foreshadowing big problems to come with the larger health overhaul law.
The law allocated $5 billion for a program to help uninsured people with pre-existing conditions get insurance. It was designed to provide temporary bridge coverage until the health law takes full effect in 2014.
But this temporary Pre-Existing Condition Insurance Plan is running out of money, and the Obama administration has closed enrollment to any new applicants, saying it needs the money that is left to cover the medical costs of the 100,000 people already enrolled through the end of the year.
And the costs are significant: The average cost per enrollee in 2012 was $32,108 a year. But the costs varied widely by state, from a low of $4,276 per enrollee to a high of $171,909. Some patients have annual claims as high as $225,000 per person.
The Administration had already tried cost-cutting measures: It raised the maximum a patient would have to pay out of pocket from $4,000 to $6,250 a year, cut what it pays providers, and limited the number of pharmacies that can dispense specialty drugs through the program. It didn’t work.
The problems with this program are predictors of the costs that are likely to come when the full law takes effect on January 1, 2014.
Up to 20 million people are expected to enroll in the new ObamaCare Exchanges, scheduled to open this fall. But many of the triggers for exploding costs are the same:
- ObamaCare health insurance must cover many more benefits than the policies most people have been purchasing, and even Health Secretary Kathleen Sebelius has admitted that this will mean higher costs.
- Higher costs will mean that more people will decide to forgo coverage, especially the young and healthy people that the individual mandate was supposed to drive into the insurance pools. They can pay a $95 fine instead of spending several thousand dollars on health insurance.
- And people have an added incentive to forgo health insurance because the law says they can wait until they are sick to buy coverage and still pay the same rates as though they had been covered all along.
This will mean that most of the people enrolled in the ObamaCare subsidized insurance pools through the Health Insurance Exchanges will be older, sicker and more expensive – just as happened with the temporary high-risk pool program.
This is a prescription for disaster. The ObamaCare Exchanges provide huge subsidies — $1 trillion over 10 years – to help people buy the expensive health insurance the law mandates. But many healthy people will find that the premiums, co-payments, and deductibles they are facing will make this insurance very unattractive.
If the ObamaCare Exchanges experience even a fraction of the excessive costs that the high-risk pools have seen, Congress will have no choice but to cut eligibility, provider payments, or subsidies.
The best thing that Congress can do right now is to delay the start of the Exchanges as more information becomes available about the costs, complications, and the administration’s experience with the Pre-Existing Condition Insurance Plan.
In the meantime, House Speaker John Boehner, Majority Leader Eric Cantor, and other top House Republican leaders wrote President Obama last month, asking him to support their efforts to shore up the fund.
“Republicans have historically supported high-risk pools and reinsurance programs. In fact, the House Republican alternative to PPACA provided $25 billion to aid Americans suffering from pre-existing conditions,” they wrote. They urged the president to support their efforts to move funds from other parts of the program into the pre-existing condition fund so it can continue to accept new enrollees.
An estimated 4,000 people are enrolling in the program every month. That means that an estimated 40,000 people needing coverage will be turned away before the end of the year. “With your support, we could help these Americans get the care they need,” the leaders wrote.
House leaders have offered a solid proposal that is likely to gain bi-partisan support and protects those who most need insurance should implementation of the law be postponed because the exchanges aren’t ready. There has been no word from the White House in response to their letter.