Pre-Existing Condition Insurance Plan

The federal Pre-Existing Condition Insurance Plan (PCIP) was created in 2010 to provide access to insurance for individuals previously unable to acquire coverage due to pre-existing conditions. Eligibility is limited to those who have been uninsured for at least 6 months prior to application, thus focusing the program on those who have been locked out of the private insurance market. The Patient Protection and Affordable Care Act (PPACA), enacted in March 2010, required the establishment of the PCIP program. The program will provide coverage through the end of 2013, at which point enrollees will be guaranteed access to plans offered in the private market. States were given the option to run their own PCIP with federal funding or allow the Department of Health and Human Services (HHS) to run the program in their state. Early estimates by the Congressional Budget Office (CBO) suggested that the program could cover an average of 200,000 individuals per year with the $5 billion appropriated in PPACA, but that demand would likely be greater. In July 2011, we reported on various aspects of the implementation of the PCIP program, including initial enrollment and spending trends, program features, and federal oversight. As part of that work we interviewed PCIP officials from states with and without existing high risk pools (HRP) about the steps taken to implement PCIP in their states. As a new federal program, there is interest both in how the PCIP program has been implemented and how its implementation compares to another publicly funded insurance program--the Children's Health Insurance Program (CHIP). CHIP was authorized in August 1997 to reduce the number of low-income uninsured children in families with incomes too high to qualify for Medicaid. Like Medicaid, CHIP is funded jointly by the federal government and the states. CHIP enrollment data are provided to HHS quarterly by the states, beginning with the first quarter of fiscal year 1998. When CHIP was passed, the CBO estimated that the program would provide coverage to about 2.3 million children per year after 1999. Congress asked us to compare early program implementation and enrollment across PCIP and CHIP. In this report, we examine: (1) how long it took to implement PCIP and CHIP in all states; (2) initial enrollment trends for PCIP and CHIP; and (3) any differences in implementing PCIP, and trends in enrollment, between states that had high risk pools prior to the enactment of PPACA, and those that did not.

We found that the PCIP program was implemented in all states within 7 months, while the CHIP program rolled out over a period of nearly 3 years. In comparing the two programs, there are differences to consider that may account for the difference in implementation times, such as the different statutory requirements regarding implementation time frames, the mandatory versus voluntary nature of the two programs, the relative complexity of program requirements, the number of design decisions to be made, and different funding sources. Enrollment in the PCIP and CHIP programs was slow to start but increased steadily over the first year, ending with more than 27,000 and 705,000 enrollees, respectively. Changes to PCIP eligibility criteria and premium rates intended to help expand enrollment were made immediately after the first year of the program. PCIP implementation took slightly less time, on average, in states that had an existing HRP compared to those that did not--5.5 months compared to 6.1 months. Enrollment, however, was lower relative to the uninsured population in each state with an existing HRP--3.7 individuals per 10,000 uninsured, compared to 5.5 among states without an HRP. In reviewing a draft of this report, HHS provided technical comments, which we incorporated as appropriate.