Does The PCIP Enrollment Problem Signal the End of Private Insurance?

There are 4 million or more Americans who can’t get regular insurance because of a pre-existing condition.  You might be one of them.  Now there’s a policy that costs less than $300 per month and covers all of your medical needs, including your pre-existing condition. 

Will you buy it?  Apparently not.

And that may signal the beginning of the end of private insurance in America.

I first wrote about the diminished role of private insurance in a column last month entitled America’s Health Insurance Myth.  Privately-financed private health insurance today pays only 17% of America’s health care bill.

Two recent developments suggest that this share will become even smaller in the future.

The first was last week’s death of the CLASS Act.  As a result, long term care will continue to be an out-of-pocket and government expense only for nearly everyone.

The second was the report of first-year enrollment numbers for the new Pre-existing Condition Insurance Plan (PCIP).  PCIP was created as part of the Affordable Care Act.  It offers low-cost health insurance for adults who have – or have had – conditions like mental illness, cancer, diabetes, and heart disease.  (Children are now covered on their parents’ policies.)

PCIP is comprehensive.  It covers hospitals, doctors, and drugs. 

There is no means test to qualify.  Provided that you have been uninsured for at least six months, all you need to apply is a note from a physician attesting to your chronic condition.

PCIP is inexpensive.  In Florida, the monthly PCIP premium for a forty-year old is only $211 for the standard option.  There are deductibles and co-pays, but annual out-of-pocket costs are capped at $5,950.  This may seem like a lot, but it is less than 20% of the 2009 average charge of $30,655 for a single hospital stay.

The federal government operates Florida’s plan and those of 22 other states.  Connecticut, on the other hand, is one of 27 states that choose to run their own programs.  In Connecticut, PCIP insurance costs $381 per month, but out-of-pocket costs are capped at $4,250 per year.  So its overall costs are similar to Florida’s.

Of an estimated 4 million people eligible for PCIP and 375,000 expected to sign up in the first year, only 30,395 bought policies.  Just 1,454 people enrolled in Florida, and only 62 enrolled in Connecticut.

Why so few?

The answer is obvious in states like Massachusetts, which has only one PCIP enrollee, and Vermont, which has none.  They have near universal coverage, so they don’t need PCIP.

What about states without universal coverage?  Pennsylvania had the highest first-year enrollment.  It had 3,762 people insured through PCIP.  If every state were like Pennsylvania, then PCIP would have around 100,000 enrollees today, still far below the expected number.

There are three explanations for why people aren’t enrolling in PCIP that speak to how little faith we have in insurance.

The first is that they believe that when there’s a crisis, hospitals and doctors will treat them whether or not they are insured.  Health care providers rarely turn their backs on people in need.

But someone still has to pay the bill.  And it usually gets paid through hidden charges in everyone else’s insurance premiums. 

The second is that people don’t think they can afford even $211 per month for health insurance, or up to $5,950 in medical bills in a year. 

But when the costs of common chronic diseases routinely run into six figures, the alternative can be bankrupting.

The third is that we don’t trust insurance.  Insurance companies take our money, fight with us about covering our bills, and make huge profits. 

But PCIP isn’t like that.  Unlike other insurance, it is designed to pay out far more money than it takes in.  PCIPs paid out four times in benefits what they charged in premiums during the first few months of the program, and Congress set aside $5 billion – of which only a fraction was spent – for this.

Here’s the bottom line.  If $211 a month is too much to pay for insurance we are sure we will use, then health insurance is dying in America.  Many of us say we will rely on our own resources, but also expect a government safety net to be there when our resources fall short.

If we roll the dice and don’t buy PCIP when we can, then we may lose more than we think.  There are political leaders who are already celebrating the demise of the CLASS Act.  Many also would happily repeal both PCIP and the Affordable Care Act, and replace them with… well, nothing.

For more information about federal and state PCIP, visit https://www.pcip.gov/.  If you have questions about this column or wish to receive an email notifying you when new Our Health Policy Matters columns are published, contact gionfriddopaul@gmail.com.

Fifty Years Later: Class, Children, Mental Illness, and Cancer

Fifty years ago, we already knew that there were environmental causes of chronic conditions like mental illness.  Had we taken them on as an American nation-building project with the zeal with which we have approached nation-building overseas, we would be a healthier country today. 

Will we do any better in the next half-century?

I’ve recently been reading a book written in 1969 about the 1968 Presidential campaign, called An American Melodrama.  It is a very long book about a very short political campaign by today’s standards.

Bobby Kennedy, for example, didn’t announce for the Presidency until March, and George Wallace – who won several southern states as a third-party candidate – didn’t pick his running mate until October.  Political scientists will find many parallels from that time to today.  One example: former Governor Romney was the early favorite for the Republican nomination.  (He never made it to the starting gate.)

It was a campaign and a time repeatedly rocked by violence, and worries about domestic terrorism consumed policymakers and the public.  About halfway into the book, the authors – without today’s benefit of hindsight – searched for an explanation for the tensions of those days.  They found it partially in a mental health study published in 1961.

It was entitled Mental Health in the Metropolis: The Midtown Manhattan Study (Volume 1).

The authors surveyed a sample of 1,660 adult residents of Midtown Manhattan.  They found that 23.4% of Midtown adults were impaired by mental illness, and 45.2% had at least moderate symptoms of mental illness.

These percentages are almost identical to the percentages of US residents today who have diagnosable mental illness in a given year (around one quarter of the population) and who will have a diagnosable mental illness in their lifetime (around one half of the population).

They believed that the high percentages of mental illnesses must be related in some way to the conditions in which people lived.

So they tested this belief, by identifying and measuring attributes of good mental health:

·         Freedom from disabling inner tension
·         Ease of social interaction
·         Feeling of adequacy in social roles
·         Capacity to accept deprivations and individual differences
·         Identification with ethical and moral values
·         Adaptability to stress
·         Healthy acceptance of self
·         Conservative handling of hostilities and aggressions

They divided the Midtown population into six socioeconomic groups, and found a direct relationship between class and mental health.  Only 17.5% of those in the highest socioeconomic group had symptoms of serious mental illness, versus 32.7% of those in the lowest group.

Arguably, their most important finding wasn’t just about class, however.  It was about child health.  They divided the adult population into the socioeconomic groups based on the socioeconomic status of their parents, not themselves.  In other words, the “class” measure was a measure of the impact of childhood socioeconomic status on adult mental health.

We know today that many of the preventable causes of adult mental illness are rooted in childhood, and socioeconomic status is the culprit in a variety of chronic diseases besides mental illness.

In its recent publication Cancer Facts and Figures 2011, the American Cancer Society devotes a special section to a description of socioeconomic status as a carcinogen.  Low socioeconomic status leads to a doubling of cancers among men and similar large increases in many types of cancer among women.

As public health professionals have been explaining for years, environmental factors linked to socioeconomic status – such as exposure to violence, abuse and neglect, poor diet, unsafe living conditions, lack of health insurance, limited educational opportunities, and increased risk of smoking – are among the causes of some of the most common chronic diseases in America – mental illnesses, cancers, cardiovascular disease, hypertension, and diabetes. 

We haven’t addressed these environmental factors adequately in the last fifty years, and we have no unified governmental vision for doing so now, either.

We’ve been too busy fighting endlessly about the role of our government at home and insufficiently about the role of our government overseas.

We celebrate Independence Day this weekend.  As we do, we should remember that we didn’t fight for our independence on foreign soil and we weren’t magically transported from 1776 to 2011 without anything happening in between.  We can explain why Americans today are less healthy than their counterparts in many other developed nations by taking notice of the conditions in which we live and how we got to this point.

We may know where we want to be in the future.  But if we stumble around in the present with no clear sense of our relatively recent past, we won't get there.

If you have questions about this column, or to receive emails notifying you when future Our Health Policy Matters columns are published, please email gionfriddopaul@gmail.com.