House Republican leaders offer solution to depleted pre-existing condition fund

House Speaker John Boehner, Majority Leader Eric Cantor, and other top House Republican leaders wrote President Obama on Tuesday to ask him to support their efforts to shore up the fund created in ObamaCare to help those with pre-existing conditions obtain health insurance.

There was bi-partisan agreement that helping people with pre-existing conditions to get access to care should be a top priority of health reform.  But the solution in the health overhaul law is clearly failing because it is running out of money.

Last month, the Obama administration announced it was suspending enrollment in the Pre-Existing Condition Insurance Plan (PCIP), a $5 billion program created in the health care law to help uninsured Americans obtain coverage through January 2014.

It is clear that other solutions are needed.  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. The pool was designed as a temporary measure until the permanent ObamaCare subsidies are scheduled to begin in January.

When the law was being debated, House Republican leaders originally called for allocating $25 billion over 10 years (instead of ObamaCare’s $5 billion over three-and-a-half years) and would have given states far greater latitude in setting the rules for the high-risk pools.

In a letter to the president, Speaker John Boehner, Majority Leader Eric Cantor, Republican Whip Kevin McCarthy, Conference Chairman Cathy McMorris Rodgers, Energy and Commerce Committee Chairman Fred Upton, Health Subcommittee Chairman Joe Pitts, and Health Subcommittee Vice Chair Michael C. Burgess, M.D., all urged the president to support their efforts to use other funds in the Affordable Care Act to maintain coverage for new enrollees in the pre-existing condition pools.

“Republicans have historically supported high-risk pools and reinsurance programs,” they wrote. “The high-risk pools created in the ACA to provide coverage for uninsured people with pre-existing conditions is running out of money.  The federal government is stopping new enrollments in federal plans after this week to stretch what remains of the $5 billion allocation through December. The allocation was supposed to last until January of 2014 when enrollees would be transferred to new health-insurance exchanges,” the Republican leaders wrote.

“[W]hile we still believe that our alternative would have provided better care and access for our most vulnerable Americans, it is time to temporarily set aside those differences and provide the resources necessary to assist those who need it most.”

The members recommended the president use funds from other programs in the health care law to allow the high risk pool to accept new enrollees.

The Obama administration’s decision to stop enrollment in the ACA’s high-risk insurance pools forecasts problems to come with the health law.

  • Costs increase for enrollees:  On Jan. 1, people enrolled in federally-administered high-risk plans saw their maximum out-of-pocket spending limit increase from $4,000 to $6,250. Enrollees also now are required to order medicines to treat chronic illnesses by mail order after their second prescription refill.
  • Program costs much higher than projected:  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 per enrollee. Some have annual claims of $225,000 per person, according to the federal government.
  • Payment cuts to providers:  Last August, the federal plan reduced its payment rates to providers, particularly to hospitals treating a high number of high-risk pool enrollees. It also reduced the number of pharmacies that dispense specialty drugs in the program.About 130,000 people are enrolled in the federal or state high-risk plans enabled by the ACA, which is much lower than the 300,000 that had been projected to enroll. The federal government runs the plans in 23 states and District of Columbia, while individual states run the remaining plans using federal allotments.

The high-risk pool structure in the ACA was flawed from the beginning, as its track record is demonstrating.  People with pre-existing conditions clearly need an alternate plan to make sure their coverage for continues and that they continue to have access to the care they need.

“Our goal has been and remains full repeal of the health care law, which is driving up health care costs and making it harder for small businesses to create jobs,” the Republican leaders wrote.  “You obviously oppose repeal.  But our disagreement on the broader issue of the law should not preclude us from working together to take this specific action on behalf of Americans in need of help.  Please let us know if you would support this idea.  We stand ready and willing to work with you.”

States would be better served with block grants to provide stable funding for their existing high-risk pools or to provide money to set up new ones in states that don’t have risk pools now. In the meantime, 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 need to be postponed because the exchanges aren’t ready.