The best thing that came out of the current health reform legislation is PCIP which has been a godsend to some of our uninsurables. What we have been doing is placing these people with a low cost discount carrier until the 6 month waiting period elapses and they can sign up with PCIP. It is working really well for everyone.
However, it seems the medical costs (not the admin costs) for the members in these plans is costing more than double what the Obama administration estimated. Check out this report on the PCIP medical expenses.
I guarantee that right now United Health, Aetna, Humana, and Blue Cross are all laughing at this. They knew what was going to happen. Everyone blames the greedy insurance companies for the spiraling medical costs, but now it seems maybe its the actual members?
The PCIP law set aside $5 billion to provide insurance coverage to those that have been declined by private individual carriers or more plainly, the undesirable uninsurables.
By 2014, the PCIP plan will be phased out as all plans will become guarantee issue. (If you recall the central tenant for this is a mandate or tax to ensure compliance, otherwise there will be a looming moral hazard disaster.)
The exact numbers include an estimate of $13,026 per member and an actual expense to be $28,994! Or more, than double. Whoever these actuaries are that performed this estimate should come forward and point out their other estimates so we can identify other weaknesses in the health reform legislation.
Another funny piece of data, is that the estimate was correct in the respect that similar state-run high risk pools only spent $12,471 per member. The difference? Well the federal government is one piece of the puzzle. The other piece is that the state run risk pools had much higher premiums which prevented a good deal of the moral hazard. The plan designs are also different but I am not sure that is related. However pent up medical demand is a reasonable excuse as well.
Most of the PCIP expenses are coming from cancer, heart disease, and chronic conditions. However these people are having eight times as many hospital admissions as normal government workers, and the worst part, three times as many ER visits.
The Obama administration has spent $600 million of its $5 billion budget for the program over the past 18 months. Enrollees in the high-risk pools also tend to be older, with 67 percent of participants over the age of 45. Fewer than one in five enrollees are under 34.
While the administration has tried to put a positive spin on these numbers by saying things like, “oh yeah dude, that means we are serving the right people, bro,” or “hey are you gonna eat that?” in reality it is putting the whole reform bill into new light.
These figures present a challenge for federal high-risk pools over whether the program can take on many new enrollees and stick within its budget constraints. Congress appropriated only $5 billion for the program, to last through 2014. Some states have blown through their budgets faster than expected and have begun capping enrollment. Wait till PCIP goes away and private health care companies need to administer these people.
Not too mention that many people will only get health insurance when they are riding in the back of an ambulance. In fact, part of our new marketing plan should be to buy ad space in ambulances and hospitals so as agents we can capitalize on the moral hazards. And you thought lawyers were ambulance chasers? Wait to you see what insurance agents do!
Continue Reading