We’re talking about the Obamacare PCIP (Pre-existing Condition Insurance Plan) that was set up to provide people with pre-existing health conditions insurance coverage until Obamacare plans started January 2014. Key points of this type of plan are (were):
- Applicants have to have a significant pre-existing condition
- Coverage could start the 1st of the month if a complete application was received by the 15th of the previous month
- Applicant could not have had recent major medical coverage
- There was not waiting period for pre-existing conditions
In other words, for those who knew how to “work the system”, if you qualify for coverage, there’s no need to actually apply for coverage until expenses are on the immediate horizon.
And they HAVE worked the system, or the government actuaries designing the plans are flunkies…
ObamaCare funded the PCIP with $5 billion to cover patients with pre-existing conditions from 2010 to 2014. Less than a third of the people HHS projected would enroll in the plan actually signed up for the coverage.
Yet despite the low enrollment, the plan is broke. In fact, it started running out of money at the beginning of this year, which means it busted its budget a full year ahead of projections.
In a 2012 report, HHS conceded that it had miscalculated (though not until page 11 of its 15-page report): “On average, the PCIP program has experienced claims costs 2.5 times higher than anticipated.”
This is worth repeating/summarizing. The actual enrollment of the PCIP plan(s) was 1/3 of what was expected, however the claims were 2 1/2 time LARGER than expected.
Investors Business Daily sums up the possibility of future cost overuns…
If the Democrats in Congress and the White House miscalculated how much it would cost to fund hundreds of thousands of ObamaCare applicants with pre-existing medical problems, imagine how badly it’s low-balling the cost of subsidizing millions of other uninsured Americans, who’ll be eligible for a generous array of “free” preventive-care services?
Imagine how badly they’re underestimating the cost of expanding Medicaid?
The higher-than-expected costs from PCIP “could be an indication that other cost projections for ObamaCare are also underestimated,” the Heritage Foundation recently understated on its blog.
IBD foresees rationing. One things for sure, it will NOT be the Government’s fault, it will be the insurance companies fault.
It’s not clear to me the PCIP plan is a harbinger of potential Obamacare cost overruns. Here are the reason:
- In general, PCIP particpants are people with serious medical conditions facing significant expenditures in the immediate future.
- Only people with significant medical issue are signing up for PCIP
- Obamacare participants will include these PCIP particpants but will also include a signifcant additional of health people
- Obamacare cover is “mandatory” where PCIP was voluntary and attractive to people with serous medical conditions.
Even with the above caveats, the IBD concerns are probably closer to reality than whatever projections are coming out of the government.