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Tuesday, April 19, 2011

Temporary Federal High Risk Health Insurance Pool Program

Mark Newsom
Specialist in Health Care Financing

This report briefly describes the temporary federal high risk pool (HRP) program, more commonly known as the Pre-Existing Condition Insurance Plan (PCIP) program. The PCIP program was established by the Patient Protection and Affordable Care Act (PPACA, P.L. 111- 148, as amended). Under PPACA, the PCIP program is intended to help individuals with preexisting conditions who have been uninsured for six or more months to obtain health insurance coverage before 2014. In 2014, coverage will be available on a guaranteed issue basis and preexisting condition exclusions will be prohibited.

To be a qualified PCIP, the insurance coverage must have an actuarial value (the average percentage of expenses that the plan covers) at least equal to 65% of total allowed costs, and outof- pocket costs cannot exceed $5,950 for an individual in 2011. The premiums must be established at a standard rate for a standard population, and age rating cannot exceed a factor of 4 to 1. Claims and administrative costs will be subsidized by the federal government.

States can run the program or elect to have the Department of Health and Human Services (HHS) operate the program in their states. Slightly more than half of states (27 states) contracted to operate their own PCIPs. HHS administers the PCIPs in 23 states and the District of Columbia. PPACA appropriates $5 billion of federal funds to support the program, available from July 1, 2010, until the program ends on January 1, 2014. Some observers think this will not be enough to cover the costs of the program, based on enrollment projections of 200,000 or more. As of February 1, 2011, 12,437 individuals were enrolled. HHS believes that enrollment will increase after it completes a public education campaign on the program.

This report provides an overview of the temporary federal high risk pool program and will be periodically updated to reflect any legislative or regulatory changes.

Date of Report: April 6, 2011
Number of Pages: 17
Order Number: R41235
Price: $29.95

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