In February CMS notified the states that it was closing the Pre-existing Condition Insurance Plan (PCIP) because of dwindling finances. It will not accept applicants after March 2.

In February CMS notified the states that it was closing the Pre-existing Condition Insurance Plan (PCIP) because of dwindling finances. It will not accept applicants after March 2. The plan’s original $5 billion funding was expected to last until January 2014 when guaranteed issue health coverage will first be made available. Even though more than 100,000 people are currently in the plan, the enrollment was much smaller than anticipated. The plan would have run out of money before the end of this year if it was left open.

The PCIP closure sends a rather ominous message about the Affordable Care Law – that covering people with pre-existing conditions when they come through the Exchanges is going to cost much more that first estimated. Health insurance premiums are expected to rise between 30% to 40% for individuals and families in most states next year. These are the working people in the younger generations.

The premium increases will be due to many factors mandated by the Affordable Care Law, such as, the 10 essential health care benefits that must be added to all plans, the individual mandate, and new taxes and fees placed on insurance plans, drugs, and medical devices. But the main factor will be the mandated 3:1 age band premium rating. This means that older people in the highest age group 60 – 64 cannot be charged more than 3x the rate for the same plan as people in the lowest age group 18 – 24. The current ratio is about 8:1 in California. Young healthy adults and their families will be paying much more for coverage. The fear is that many healthy young people will opt out of paying for continuous coverage and just pay the penalty. This will reduce the total risk pool and drive up premiums for those older, and usually sicker persons remaining.

In February CMS notified the states that it was closing the Pre-existing Condition Insurance Plan (PCIP) because of dwindling finances. It will not accept applicants after March 2.

In February CMS notified the states that it was closing the Pre-existing Condition Insurance Plan (PCIP) because of dwindling finances. It will not accept applicants after March 2. The plan’s original $5 billion funding was expected to last until January 2014 when guaranteed issue health coverage will first be made available. Even though more than 100,000 people are currently in the plan, the enrollment was much smaller than anticipated. The plan would have run out of money before the end of this year if it was left open.

The PCIP closure sends a rather ominous message about the Affordable Care Law – that covering people with pre-existing conditions when they come through the Exchanges is going to cost much more that first estimated. Health insurance premiums are expected to rise between 30% to 40% for individuals and families in most states next year. These are the working people in the younger generations.

The premium increases will be due to many factors mandated by the Affordable Care Law, such as, the 10 essential health care benefits that must be added to all plans, the individual mandate, and new taxes and fees placed on insurance plans, drugs, and medical devices. But the main factor will be the mandated 3:1 age band premium rating. This means that older people in the highest age group 60 – 64 cannot be charged more than 3x the rate for the same plan as people in the lowest age group 18 – 24. The current ratio is about 8:1 in California. Young healthy adults and their families will be paying much more for coverage. The fear is that many healthy young people will opt out of paying for continuous coverage and just pay the penalty. This will reduce the total risk pool and drive up premiums for those older, and usually sicker persons remaining.