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States Struggle To Cover Uninsured With Pre-Existing Conditions

An actuary named Cecil Bykerk spends his days walking a fine line.

As the head of the board that runs Iowa's health plan for uninsured residents who can't qualify for private coverage, he wants to make sure that folks who need insurance can get it.

But he also worries that, given the high health-care costs of people in the pre-existing condition insurance plan, the state might burn through $35 million in funds from the federal government ahead of schedule if too many people sign up. The money is supposed to last until 2014, when insurers will be required to cover everyone even if they're sick.

His concerns may be justified.

To qualify for the PCIP program, people must have pre-existing medical conditions and have been uninsured for at least six months. Juding from their claims activity, once they finally get insurance these people have a lot of pent-up demand for health care services in addition to ongoing needs for expensive care.

In Iowa, for example, the average monthly costs for someone who has been enrolled in the PCIP for less than six months is $4,800, compared to $1,800 for longer term enrollees, Bykerk says.

In Alaska, the dollar values are even more striking: The average monthly medical costs for someone who's been enrolled in the PCIP for less than six months is $17,500, compared with $7,500 for people who've been enrolled for longer than that, says Bykerk, who also serves as executive director of the Alaska PCIP (as well as Montana's).

Adding to the program's costs, some people sign up, get the health care services they need, and then drop coverage. Bykerk cites the example of a woman who signed up for coverage, had knee surgery, then dropped the plan. The cost to Alaska: $110,000.

The PCIP program, created under the 2010 health law, was allocated $5 billion to cover people nationwide until 2014. But premiums are expensive, and only about 49,000 people have signed up so far. At least nine states have asked for and received additional funding to cover their costs.

In Iowa, state health officials would like to use federal AIDS Drug Assistance Program funds to buy uninsured residents with HIV/AIDS coverage through the high-risk pool.

But Iowa is one of nine states that don't permit third parties to pay health insurance premiums, according to the Department of Health and Human Services. And the board won't consider asking HHS to amend its contract to permit it.

Bykerk says that he's been told by other states that allow third-party payment that drug costs alone for HIV patients can run more than $20,000 annually, not including other medical costs.

"The board is concerned about their fiduciary responsibility to the 300 people that are already in the program," he says. "We don't want to run out of money."

Copyright 2012 Kaiser Health News. To see more, visit http://www.kaiserhealthnews.org/.

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