Understanding the Uninsured

2011-Apr-01 - Christopher H. Hause

The Landscape
The Pre-Existing Condition Insurance Plan (PCIP) was created under the Affordable Care Act in March of 2010. Five billion dollars was allocated among the states to provide insurance plans and coverage for the uninsured population. The funds were earmarked for those who were unable to get coverage elsewhere due to pre-existing conditions.

Widely varying estimates have been made as to the size of the uninsured population (50-90 million) and the expected demand for this new coverage option. Coming out of the gate, it was generally assumed that the $5 billion would be spent quickly and would be insufficient to satisfy the hundreds of thousands of individuals lining up for coverage.

What did we get? - So far, about 13,000 people are covered. In many states the enrollment in the PCIP is still in the low hundreds.

So what have we learned? The primary lesson so far is that we don't know the uninsured population very well. We still don't know who they are (with any credibility) and do not know why they are not attracted to the program. We don't know whether they are put off by the high deductible options offered in many states. We don't know if the lack of plan choices (often only one) was a deterrent. Is the problem with the premium levels? What are they willing or able to pay? What are their pre-existing conditions? Or, more specifically, how have they been getting by without insurance? If we design the right plans, will they come? We or they or both are obviously missing something.

So what we have learned is that we still have the same unanswered questions as before.

The Horizon
To answer these questions we need more data. To get more data we need more enrollees. To get more enrollees we need to get more creative and accommodating. We have a laboratory funded by the Federal Government, or in gambler's terms - house money, at our disposal to help answer these questions and so far it appears we are not using it effectively.

Some ideas:
Benefit Design - States could offer more plan options, specifically lower deductible options similar to the State High Risk Pool plan options. Lower drug copays, coinsurance and out-of-pocket maximums in a wider variety of plans. Plans could include "Curb appeal" benefits such as preventive care and screenings.

Premiums -
Subsidize the premiums at rates below 100% of the Standard Risk Rate. States that have subsidized State High Risk Pool plans should consider offering these plans in the PCIP.

Expectations -
What is the worst that will happen? If new enrollees have catastrophically high costs, enrollment may have to be limited. Can they really be more expensive than the enrollees in the State High Risk Pool who could not stand to go without insurance? Some initial indications are that the new enrollees are very expensive. However, this data is biased since many marketing efforts to date have been directed at hospitals as opposed to the general public. Larger data samples and trend seem to indicate experience will ultimately be more consistent with existing high risk pools.

A key unanswered question is how long will PCIP enrollees stay with the program?

The Whole Picture
With some creative plan design changes that encourage wider enrollment, we may yet get to see the whole picture. However, the window of opportunity is rapidly closing with threats of rescinded funding and the unknown future of the health exchanges.

In 2014, we may have millions of new enrollees entering the insurance market. The time to get to know them is now.