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Details Behind PCIP’s Potential Enrollment Cap

A few weeks ago, we reported a potential cap on PCIP enrollment. We recently spoke with a representative from MRMIB and learned the details behind the enrollment cap scare.

The Pre-Existing Condition Plan (PCIP)  is a high-risk pool for individuals who have been uninsured for 6 or more months and struggle to obtain health coverage because of a pre-existing condition. States had the option to create their own plan or join the federal plan. Last year, California passed legislation to create its own. Premiums were originally set at 100% of the commercial market. In October, they were reduced by an average of 18%. The plan is run by the Managed Risk Medical Insurance Board (MRMIB), who also runs the Healthy Families Program and the Major Risk Medical Insurance Program (MRMIP). Enrollment in PCIP began in October 2010.

When actuaries originally estimated monthly claims data, they based their calculations on data from individuals in commercial plans and MRMIP (the state’s original high-risk pool). Estimates showed that claims for these individuals averaged $1,000 per month per subscriber. Since the state was allocated $761M of the federal $5B allocation, they determined PCIP would have capacity for 23,000 individuals.

In February, the state had enrolled 1,352 individuals and monthly claims were averaging $1,100. Just last month, the state had enrolled 5,290 individuals and monthly claims were averaging $3,000. If claims continue to average this high, MRMIB would only have capacity to enroll 6,900 individuals.

Since MRMIB is contracting with the federal government to run a statewide PCIP, they do not have the authority to cap enrollment, nor may they use state dollars towards the pool. If growth continues at the current rate, the state will need another $0.5B to run the pool, in addition to the current allocation of $761M (for a total of $1.2B). This would mean California would receive over 20% of the federal PCIP dollars.

MRMIB will hear back from the federal government in the next few days regarding the future of California’s PCIP. We predict California will be able to receive more funding as many of the federally run pools are under-enrolled. In addition, MRMIB plans to investigate claims data to see if select enrollees are driving up averages with a small number of costly, one-time procedures. If these costly claims are consistent with caring for high-risk individuals, it would have major implications for full implementation of federal reform in 2014.