"Uninsurable": A Notion of the Past?

A $5 billion federal plan aims to help millions of Americans with pre-existing conditions, but after a year in effect, enrollment remains slow. Here’s a look at how the plan has worked so far, and what the government is doing to entice people and further spread the word.

When Edward Kenyon Jr. was diagnosed with multiple myeloma in early 2010, he didn’t have health insurance. “It was quite a surprise,” he says. “At the time, I would only go to the doctor when I had to — back pains and such. I just thought I was getting older.”

A self-employed electrician, Kenyon is 49 and lives in Sanford, Maine. He hasn’t been insured in over 20 years and his efforts to contact his last insurance company were futile, as they informed him he’d have to wait at least a year’s time before his coverage could start because of his blood cancer — a pre-existing condition. Currently, insurers can charge exorbitant premiums, limit benefits, or flat-out deny coverage based on health conditions ranging from asthma to heart disease, inequitably to those who need healthcare the most.

As Kenyon’s illness worsened, he suffered from chest pains, heart trouble, dehydration, anemia, and kidney failure. He needed to begin treatment urgently, and while his local cancer center was able to put him on a payment plan, the medical bills were dauntingly stacking up. Then he found out he needed a stem cell transplant, which he simply couldn’t afford. He tried the Dana-Farber Cancer Institute in Boston, an affiliate of Harvard Medical School, but he couldn’t get financial assistance there since he was from out-of-state. “It was getting pretty bad,” Kenyon says. “My wife and I were overwhelmed.”

Although he was undergoing chemotherapy (which he paid for with the help of family and friends), Kenyon was still working and at some point fell upon an article about the Pre-Existing Condition Insurance Plan (PCIP). He applied and was enrolled by August 2010, with a premium of about $400 and was able to get the transplant — a procedure that would have otherwise cost him between $280,000 and $360,000. After the operation, he was prescribed Revlimid, an effective albeit expensive maintenance therapy drug that would usually cost uninsured patients around $7,000 a month. Kenyon’s co-pay was only $100.

Established as part of the Affordable Care Act — the new health insurance plan signed into law by President Obama in March 2010 — the PCIP program targets a large segment of the population who can’t access relatively affordable healthcare because of pre-existing conditions. The government bills it as a transitional bridge to 2014 when insurance companies won’t be legally allowed to deny applicants with pre-existing conditions (including cancer, heart disease, diabetes, asthma, arthritis, high blood pressure, and HIV/AIDS). According to the federal Department of Health and Human Services (HHS), recent surveys have found that 36-percent of Americans with such conditions who tried getting coverage in the individual market were faced with difficulties.

“More and more Americans are challenged by chronic conditions,” adds Myrl Weinberg, president of the National Health Council (NHC), a non-profit association of national health organizations. “At present, there are more than 133 million people with chronic diseases or disabilities in this country. Those most in need of health insurance are often unable to obtain coverage precisely because they have one or more of these conditions. In 2009, 45 states permitted insurers to deny coverage based on a person’s health history or other risk factors.”

And it can extend to various versions of bad health, such as high cholesterol or even being overweight. In Washington, D.C., Karida Collins left a secure job with great benefits at the Corporation for Enterprise Development to pursue her own creative endeavors. The Baltimore-based 29-year-old then applied for health insurance through the National Association for the Self-Employed, yet insurers rejected her. Collins is 5’6” and weighs 230 pounds.

“They turned me down because I’m too fat,” she says. “They basically told me I was ‘medically uninsurable’ and I was directed to the PCIP. I was accepted there and it took me a month to get coverage. My premium’s about $252, so it's still a pretty significant bill — the only expense I have that’s bigger is my rent — but I need healthcare.”

About $5 billion in federal funds are being directed to contractors to help in administering the PCIP program, which is either run by the U.S. Department of Health and Human Services (in the case of Maryland for instance) or the states themselves with federal money (as with 27 of them, including Maine). It should be noted the PCIP hasn’t replaced high-risk pools in individual states, which have been offering coverage to people with pre-existing conditions for a while. But the premiums in the PCIP plans — especially those run by HHS — are much lower overall.

Starting July 1 this year, HHS actually reduced monthly premiums for several states who have federal-run plans — some as much as 40-percent, including Florida, Arizona, Delaware, Kentucky, Virginia, and Alabama — and also sent letters to the 27 states running their own PCIP plans to notify them of the possibility to lower their current premiums. Kenyon lives in Maine, where the program is state-run, and his premium went up to over $500 this year.

Due mostly to a lack of general awareness and some inconvenient requirements, PCIP enrollment has been slow so far. The plans have been in business for over a year now and according to HHS numbers from earlier this summer, the program has just under 25,000 people covered.

“There’s no question we're doing a lot of outreach to the states and chronic disease groups,” says Keith Maley, a spokesperson for HHS. “We’re finding ways to improve on this as we go along and make it easier for people to find out that the PCIP exists.”

The Obama administration has tried to boost enrollment by recently lowering some premiums and also getting rid of a pesky stipulation that candidates must have applied for and been denied health coverage (now a doctor’s note will suffice). But one issue of contention still remains: a provision stating that all applicants are required to have been without insurance for six months prior. “That means you pay for all of your healthcare costs during those six months, and for someone with a chronic condition, that can get very expensive,” says NHC’s president, Myrl Weinberg. Nonetheless, the notion of cheaper insurance has some people dropping former policies for the PCIP, even though they’d have to wait the six months to do so.

Adds Michael Osborne, Jr., an insurance agent based in North Carolina: “On a ‘macro’ level, I worry that the requirement of not having previous insurance in the last six months can incentivize bad behavior. Apart from the obvious risk involved in going without coverage [during that time], it also rewards individuals who have ‘opted out’ of our system and have waited to buy insurance until they get sick. That's not a sustainable insurance model. That said, the PCIP is a great tool for me to help out some people who find themselves in terrible situations.”

In its latest measure to promote the PCIP, the federal government announced it will be offering a flat fee of $100 to insurance agents and brokers for each applicant they successfully enroll in the program — an incentive that’s been met with mixed reactions.

“I think it’s a bit low,” says Osborne. “To truly give agents enough incentive you would want to increase that to $200. These applications can be very time-consuming.”

Krzysztof Kujawa, VP of marketing at GetInsured.com, believes the PCIP “fills the huge gap in the individual health insurance market between the major medical insurance and guaranteed issue plans” and sees the $100 as “a meaningful incentive to promote this type of coverage in cases when a consumer cannot qualify for major insurance. A broker will also be able to build a custom insurance package for families where one or more family members have health conditions.

“However,” he points out, “I do not think brokers will regard these fees as an attractive additional revenue, but more as a way to recover some of their marketing dollars. I also doubt it will be economically viable for brokers to proactively target consumers with pre-existing conditions.”

The main challenge now is to gain a wider public understanding of the program. “Many Americans are still unaware of the PCIP,” says Janet Trautwein, CEO of the National Association of Health Underwriters (NAHU), which represents 100,000 professional health insurance agents and brokers. “NAHU members are actively seeking ways to educate potential beneficiaries about the program and encourage enrollment. As licensed and trained benefit specialists already working with consumers at the community level, agents and brokers are ideally well-suited to help HHS expand consumer outreach to all uninsured Americans.”

Despite their varying premiums, those like Edward Kenyon Jr. are happy to have health coverage. As of this writing, doctors have told him there's no sign of the cancer anywhere and he feels a sense of hope: “Everything is as good as it can be at this point. We've never missed any meals, and when business is good, it's good. But people get caught in bad economies, so I'm very thankful for this. It's been a real blessing for us.”

For more information, log on to healthcare.gov and pcip.gov, or call 866-717-5826.

UPDATE [2/22/2012]: Pre-Existing Conditions Insurance Plan Enrollment Map (inset) updated with latest enrollment figures from 11/30/2011. Updated by Sam Tabes.

Related Information: Health Insurance with Pre-Existing Conditions | Health Insurance Quotes | Healthcare Reform News | Individual Health Plans