High-Risk Insurance Pool Helps ... But What About Cost?

By: Kamal Menghrajani

Thousands of California’s sickest residents are already benefitting from the federal health care law. The Affordable Care Act says that people cannot be denied health insurance for a pre-existing condition. Until the law goes into full effect in 2014, the government has created a bridge program to help--the Pre-Existing Condition Insurance Plan, or PCIP. But this high-risk insurance program is proving to be much more expensive than expected.

California is spending three times more than anticipated to insure the people who have enrolled in this program. Before the program launched in 2010, California projected that the program would cost about $12,000 a year for each member. But a year later the administrators of the program determined it was costing more than $37,000 per patient.

According to a report [PDF] from the White House, the cost of care for PCIP patients across the country is twice as much as originally projected.

As the Washington Post reports:

Those who have enrolled in the program are projected to have significantly higher medical costs than the government initially expected. Each participant is expected to average $28,994 in medical costs in 2012, according to the report, more than double what government-contracted actuaries predicted in November 2010. Then, the analysts expected that the program would cost $13,026 per enrollee.

Looking beyond costs, thousands of people across California are being helped by this plan. Some had been denied coverage because they carry a diagnosis of cancer, heart disease, or kidney failure. Others found that the only insurance they could get was excessively costly, with rates of thousands of dollars per month.

When Gabe Chavez, a 39-year-old father of two from Alameda, was first diagnosed with Type II diabetes, he was only worried about treatment, because he had health insurance.

“All the horrible stories hit your mind. I’m going to die. I’m going to lose a leg.” He knew it would be important to change his lifestyle and felt comforted by his doctor’s support. “You know, it’s treatable,” he told me.

But then Chavez’s company was sold, and the new owners did not provide health insurance. So he went looking for coverage on his own, making innumerable phone calls to insurance providers. “I would say, on a daily basis, I spent two to three hours.”

He went on like this for eight months.

“Everyday, I would call and see if I could get insurance. I even tried to get it from another state. I exhausted every avenue I could find.”

But nobody would provide insurance at a reasonable price. He was paying around $160 to cover his wife and two kids under Blue Cross. To get coverage for himself would have cost an additional $1,200.

Finally, Chavez heard about California's Pre-Existing Condition Insurance Plan and after going for months without insurance, he was able to get coverage for doctor visits and the medications he needed.

Currently, 6,861 Californians are enrolled in the program. By law, they must have been previously uninsured for 6 months or more. This gap in coverage might be the reason why insuring them is so costly.

“Because they haven’t had health care for a while, they have this pent-up demand,” says Jeanie Esajian, a spokesperson for the state governmental group that runs PCIP here.

“They need medical tests, have surgeries they put off, maybe they have a chronic condition they couldn’t quite get under control," Esajian told me.

In a sense, Chavez dodged a bullet. He was able to maintain his health during the time he did not have insurance. He now pays $350 a month for coverage, a rate he says he can afford. For him, though, a psychic burden is eased. He had been worried about all kinds of complications--including a diabetic coma. "I just didn’t want to die," he says. "Health is probably one of the most important things, next to marriage and family. And you want to say healthy for them."