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On PCIP, A Misfire from the Circular Firing Squad



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An early Obamacare program already is running out of money, and the president has decided to close it to new enrollment, leaving out tens of thousands of people who were expecting help.

The House of Representatives is expected to vote this week on legislation that would extend this safety net, the Pre-Existing Condition Insurance Program, and it would do so with money from an Obamacare ”slush fund.”

The Helping Sick Americans Now Act (H.R. 1549) is a win-win. Providing insurance to people with pre-existing conditions was a key motivation for passage of Obamacare in the first place, and the House leadership is right to propose legislation that will continue this coverage. 

Allowing the pre-existing-conditions pool to accept applicants will make delaying the implementation of the exchanges more feasible, just as such a delay looks increasingly necessary.

Obamacare initially allocated $5 billion for the Pre-Existing Condition Insurance Plan (PCIP), which was designed to provide temporary bridge coverage for those most needing insurance until the health law takes full effect in 2014. Katrina Trinko also wrote about the program for NRO, laying out House majority leader Eric Cantor’s reasons for supporting its extension.

But the Obama administration has already closed the plan to new customers, saying it needs the remaining funds to cover the medical costs through the end of the year of the 100,000 or so people already enrolled.

And the costs are significant: The average cost per enrollee in 2012 was $32,108 a year. But the costs varied widely by state, from a low of $4,276 per enrollee to a high of $171,909, and some patients have annual claims as high as $225,000 per person.

But the bill, which passed the Energy and Commerce Committee on Wednesday by a 27–20 margin, is causing considerable division among conservatives.

The Club for Growth, for example, is urging House members to vote no, while others are arguing that supporting the pre-existing condition funding enables Obamacare. 

“This proposal would further extend the federal government’s role in healthcare,” the Club argues. “Because this bill eliminates a previous requirement for enrollees to be uninsured for six months, it creates the moral hazard of avoiding insurance until it is needed and provides an extra incentive for people to enroll in federally-run insurance. Furthermore, this bill does nothing to lower healthcare costs, which should always be the goal of any health reform proposal.”  The Club then goes on to describe a series of market-based health reforms which have zero chance of passage in the current  environment. 

This is a political misfire.

One of the most common — but highly inaccurate — criticisms of Republicans is that they don’t have a plan to fix the significant problems of the American health-care system. High-risk pools are one idea Republicans already have, and have been part of the House leadership’s reform plan since before Obamacare was enacted. Such pools are designed to hold down the cost of private insurance by removing the most expensive people from the normal market.

This safety net makes sense politically, offers a solution that helps vulnerable people, and redirects existing Obamacare spending to actually helping sick people. But conservatives have to give up their circular-firing-squad habit.

About 4,000 people have been enrolling in the program every month, meaning an estimated 40,000 people needing coverage will be turned away before the end of the year. “With your support, we could help these Americans get the care they need,” House leadership wrote in an earlier letter to President Obama seeking his support for the initiative.

No word yet from the White House, but the president’s hand would certainly be forced if the measure reaches his desk. Does he want to help sick people, or not?

The legislation is sponsored by health-subcommittee chairman Joe Pitts (R, Pa.) and vice chairman Michael C. Burgess, M.D. (R., Texas), along with Representative Ann Wagner (R., Mo.). “In the context of health reform, helping those with pre-existing conditions obtain health insurance has been one of the few areas of agreement between Republicans and Democrats over the last several years,” Chairman Pitts said.

Dr. Burgess added: “House Republicans have urged the president to work with us on a solution to this issue, yet he has remained silent. Today we have a solution. I applaud this committee’s action to correct the administration’s failure to follow-up on their promises to the American people.”



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