Questions: We Got Questions About PCIP, the federally-subsidized Pre-Existing Conditions Insurance Program

More than two years after healthcare reform legislation created PCIP and its $5 billion appropriation, enrollment has been far below expectations, and HHS has not released emerging cost information. So the first Q has to be this: "Why isn't HHS telling the public anything about PCIP?”

PCIP is undoubtedly a godsend for the people who have enrolled. It’s just that very few have actually enrolled. And financial results aren’t available (at least no one can find the financial results - for example DecisionHealth can't find them)

The lack of information from HHS just raises more Q’s: Why did PCIP require a $5 billion appropriation (in addition to individuals’ own premiums)? Does the $5 billion meet a real need? Does the $5 billion create a political mirage i.e., to persuade the public that a need of this magnitude actually exists? Was there some other reason?

According to a GAO report in July 2011, “initial projections of total enrollment varied from 200,000 to 375,000.”

According to NCSL (The National Conference of State Legislatures), the PCIP enrollment was fewer than 50,000 individuals as of the end of 2011 – after almost two years, far below the projected enrollment.

What has HHS done as the result of the low early enrollment results?

(1) it reduced premiums in the 23 federally run PCIP states
(2) it increased enrollment outreach
(3) it began to require regular reporting of expense and enrollment data, and annual completion of independently audited financial reports.

The first two responses suggest HHS still thinks PCIP will help hundreds of thousands of people, even though there just don’t seem to be that many people interested.

More Qs: Are the HHS responses overreactions? Are they even necessary? (In fact as InsureBlog reported here and here, HHS has already ended one of the outreach efforts, a broker incentive arrangement).

These first two HHS responses also remind us of a previous HHS attempt to portray the Early Retirement Reimbursement Program as helping a huge number of small, private employers when, in fact, it mainly helped a small number of unions and heavily unionized major employers (recall that unions, perhaps coincidentally, are important Democrat campaign contributors):

Is the third HHS response simply an admission of poor management from the start? Or, if not, did HHS fail to include these elementary controls in the first place because PCIP funding was ONLY FIVE BILLION??? Surely HHS would not treat $5 billion of our dollars as whisky spillage . . . ?

And so we're back to the first Q – if regular reporting of expense and enrollment data from the states to HHS is now taking place – where is it?

Note however from the NCSL report: in the 23 states that ran their own high risk pool before PCIP the average cost for 2010 was just under $11,000 per covered person. It’s not clear whether a “high risk” person will have similar costs to a “pre-existing conditions” person. Maybe, maybe not. But what if PCIP will in fact cost $11,000 per year per person? That means the cost of 50,000 PCIP individuals would be $1.1 billion for 2012 and 2013, or less than 25% of the $5 billion appropriated – and that’s before counting the premiums that enrolled individuals pay.

At this time it appears that neither the PCIP enrollment nor its estimated cost come anywhere near the appropriated amount. So we must also ask: Is PCIP just another overfunded federal solution in search of a problem?

A Dickens of a Day

The Wall Street Journal today reported some optimistic health care news:

“Johnson & Johnson Tuesday . . . pointed to early signs of improvement in the health-care market.”

And in the same issue, the Journal reported some pessimistic health care news:

“Johnson & Johnson Tuesday . . . said it has seen a recent uptick in surgical procedures . . . this might be a sign that consumers are seeking more medical attention after years of sluggish health-care spending.”

In health care – as with so much else that is going on these days - perhaps 2012 will be both the best of times, and the worst of times.

". . . it is the age of wisdom, it is the age of foolishness, it is the epoch of belief, it is the epoch of incredulity, it is the season of Light, it is the season of Darkness, it is the spring of hope, it is the winter of despair, we have everything before us, we have nothing before us . . . "

Agents vs. The Exchange Part II

The future role of insurance agents in an Obamacare world is questionable at best. Even if agents are invited to participate, there are many questions that need to be addressed.

What requirements must be met for an agent to be "approved" to participate once the exchanges are established? How will the agent be compensated? Will agents be compensated? Will agents be paid a finders fee or a continuing service fee as well?

Or, will agents be thrown under the bus?

The Lund Report on happenings in Oregon seems to indicate a not-so-promising future for Oregonian agents.

The Oregon Health Insurance Exchange wants to train and use insurance agents to help uninsured individuals and small businesses purchase insurance starting in 2014

.

So far, so good.

Using the agents makes business sense for the exchange, which can use agents to help people find out about the exchange once it begins providing coverage in 2014, and buy insurance through it.

All true.

The Oregon exchange needs 100,000 to 125,000 enrolled in the plan by the end of 2015 in order to be profitable. Since when are government agencies worried about profits?

The agents working for the exchange, Wirtz said, will be paid by the exchange itself, which will take the commissions from insurance companies and pay them directly to agents. She also said that agents would be given a special training about the exchange and the plans the exchange will offer. The exchange would also develop criteria that would determine whether an agent would work for the exchange.

Special training. Criteria.

Which begs the question, what kind of training, and what is the hiring criteria for navigators that will work for the exchange on salary and have benefits?

And then some legislator had this brilliant thought.

“I have a problem with people being charged when they don’t use an agent,” he said. ““They ought to know what they’re paying for. It should not be hidden, or buried in the costs.”

In other words, if someone elects to buy direct they should get a lower premium.

I figure the folks who want to do it themselves already pay too much any way. Under the current set up, I get quite a few new clients who bought direct from a carrier only to find out the plan doesn't work quite the way they were told by the carrier rep.

I see no reason why that would change with a navigator.

the executive director of We Can Do Better, asked how agents will be “removed,” or fired, if they do not perform adequately. She also wondered how the exchange could find particular information about an agent, such as if they speak a second language and could do outreach to minority communities.

My question is, will these exchanges work the way PCIP has? Will agents be invited to participate and then cut off at the knees once the program hit's their quota of insured individuals?

My guess is, the agents will be thrown under the bus, just like PCIP did.

Only the Healthy need Apply

“Making providers routinely pay attention to cost and quality is widely viewed as crucial if the country is going to rein in its health-care spending, which amounts to more than $2.5 trillion a year. It’s also key to keeping Medicare solvent.”

That's from a Washington Post article, “Medicare moves to tie doctors’ pay to quality and cost of care.” The mantra since the passing and signing into law of the Affordable Healthcare Act has been that doctors need to be paid on their quality of care. The prevailing theory is that better quality will result in lower healthcare costs. This theory only works, though, if you don’t get one of those expensive diseases or costly injuries. Now, however, Medicare has made the doctor responsible for the cost of care. A doctor is no more responsible for the cost of care than an oil driller is for the cost of gasoline.

A doctor provides a service. The doctor prices the value of that service on the same factors that drives all pricing in a free market society. Cost of overhead and competition. Cost of overhead is what it costs the doctor to deliver the service and competition is what the doctor down the street is charging for the same procedure. Now this is where the free market stops and reality of medicine today takes over. If a provider has a contract with a third party payer, Medicare or private, then the provider is paid based on the set fee schedule of the third party payer, meaning that the doctor can charge whatever he wants for the procedure, he will only be paid what the third party payer has deemed he will be paid. Thus, it is the third party payers, including Medicare, that are controlling the cost of healthcare, not the physician and certainly not the patients.

The article continues with this gem in response to quality care:

“…properly assessing how a doctor affects costs must include not just the specific services she directly provides, but also care other providers may give, either because the patient was referred to them or because the original doctor didn’t take the right preventive steps to avoid more expensive treatments later on. And without properly adjusting for patients’ health problems, paying bonuses to physicians who use fewer Medicare resources might encourage doctors to stint on care or shun patients with expensive-to-treat ailments.”

The writer puts it together that if a doctor will be rewarded for healthy patients and penalized for unhealthy patients, then the doctor will not see unhealthy patients. These patients will be dismissed from the practice so that the doctor’s numbers will be healthy. According to the article, this will happen sooner than people had expected, “although the program is still being devised, it will become reality for many doctors starting in January, because CMS plans to base the 2015 bonuses or penalties on what happens to a doctor’s patients during 2013."

Physicians are being squeezed financially with rising overhead and stagnant reimbursements from third party payers. Now physicians are facing the unpleasant prospect of denying care to a patient because that care will cause the physician to lose money, a prospect that no business can take on and survive. It is for this very reason that a policy has been in place for decades that a doctor cannot take into account the cost of a procedure, treatment or medication as that will unduly influence the doctor’s decision. Malpractice is based on the concept that the doctor will inform the patient of the best course of treatment, regardless of cost, because what is important is the life of the patient, not the cost. Now, that underlying concept has been deemed inappropriate and instead it is the cost of the care that will matter.

Cavalcade of Risk #155: What's Happenin' edition

Jaan Siderov presents this week's collection of risky posts, and adds his own helpful and unique spin to each one.

By the way: We're looking for summer Cav hosts. Just click here to grab yours!

Barney Says No

According to a Forbes article, retiring Rep. Barney Frank tried to tell Obama to focus on the economy, not health care.

President Obama made a “mistake” in pushing for his signature health law. “I think we paid a terrible price for health care,” he told Jason Zengerle of New Yorkmagazine. “I would not have pushed it as hard.

This is the same guy who, while in office, not only wanted Obamacare but felt the law did not go far enough. It stopped short of single payer.

So which is it?

Did Obama err or did you lie?

Ill-timed Carrier Tricks

Given the high stakes ObamneyCare© SCOTUS case, the on-going MLR assault, and the pending PCIP implosion, what better time could there be for a major health insurance company to announce....wait for it....

A new logo.

Yes, that's right, when those who actually sell its products are about to lose their livelihood, the rocket surgeons running Aetna think now's the right time to re-brand:

Oh, you may be forgiven for thinking that the one at the top of the post was it.