California’s Pre-Existing Insurance Plan to Close the Window
The federally subsidized Pre-Existing Insurance Plan (PCIP) authorized and funded by the Affordable Care Act will stop accepting new applications as of March 2, 2013. New applicants will only be offered the much more expensive Major Risk Medical Insurance Plan (MRMIP).
The PCIP was guarantee issue for those who had been denied an individual health insurance policy from an insurance company and had been without insurance for at least six months. While it wasn’t cheap, it was a good plan with a low deductible and a pharmacy benefit. The federal subsidy made health insurance affordable for many who had lost coverage from a previous group plan and found the guarantee HIPAA coverage too expensive.
Current members of PCIP will be unaffected and continue with their coverage until it is assumed the Covered California health insurance exchange starts in 2014. It is unfortunate that there will be a gap of affordable guarantee issue health insurance until the new exchange opens for business.
Part of the rational for early closure of the plan is higher than expected utilization of the health plans benefits. It could be that the premium increases from private health insurance companies handling plans were increasing faster than thought. This may have necessitated using more of the federal funds to subsidize the current member premiums than was originally allocated.