ALG Comment on PCIPs 09 27 10
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ALG Comment on PCIPs 09 27 10

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Americans For Limited Government 9900 Main Street Suite 303 · Fairfax, VA 22031 · Phone: 703.383.0880 · Fax: 703.383.5288 · WWW.GETLIBERTY.ORG September 27, 2010 Centers for Medicare & Medicaid Services Department of Health and Human Services Attention: OCIIO-9995-IFC P.O. Box 8010 Baltimore, MD 21244-8010 Submitted Electronically Via Regulations.gov RE: Comments of Americans for Limited Government on RIN 0991-AB71 Interim Final Rules for Pre-Existing Condition Insurance Plan Program To Whom It May Concern: These comments are submitted pursuant to the Interim Final Rule that was published by the Department of Health and Human Services (hereinafter “Secretary” or “HHS”) on July 30, 2010 at 75 Fed. Reg. 45,014 also referred to as file code OCIIO-9995-IFC. The Interim Final Rule implements the provisions of Public Law 111-148, the Patient Protection and Affordable Care Act (hereinafter “Act”) relating to the establishment of high-risk insurance pools called Pre-Existing Condition Insurance Plans (hereinafter “PCIP”). The Act requires the Secretary to establish PCIPs either directly, through 1individual states, or through non-profit private entities. As will be discussed below, we are concerned about the Secretary’s failure to implement an initial participation cap based on initial official estimates of the PCIP program’s capacity. Without such a cap, the Secretary risks luring individuals into the program only to raise rates, reduce ...

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Americans For
Limited Government
9900 Main Street Suite 303 · Fairfax, VA 22031 · Phone: 703.383.0880 · Fax: 703.383.5288 · WWW.GETLIBERTY.ORG
September 27, 2010
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attention: OCIIO-9995-IFC
P.O. Box 8010
Baltimore, MD 21244-8010
Submitted Electronically Via Regulations.gov
RE:
Comments of Americans for Limited Government on RIN 0991-AB71
Interim Final Rules for Pre-Existing Condition Insurance Plan Program
To Whom It May Concern:
These comments are submitted pursuant to the Interim Final Rule that was published
by the Department of Health and Human Services (hereinafter “Secretary” or “HHS”)
on July 30, 2010 at 75 Fed. Reg. 45,014 also referred to as file code OCIIO-9995-IFC. The
Interim Final Rule implements the provisions of Public Law 111-148, the Patient
Protection and Affordable Care Act (hereinafter “Act”) relating to the establishment of
high-risk insurance pools called Pre-Existing Condition Insurance Plans (hereinafter
“PCIP”). The Act requires the Secretary to establish PCIPs either directly, through
individual states, or through non-profit private entities.
1
As will be discussed below, we are concerned about the Secretary’s failure to implement
an initial participation cap based on initial official estimates of the PCIP program’s
capacity. Without such a cap, the Secretary risks luring individuals into the program
only to raise rates, reduce benefits, or drop them when funding is exhausted.
Relevant Authority
The Interim Final Rule was promulgated to implement Section 1101 of the Act.
1
Patient Protection and Affordable Care Act, Pub. L. No. 111-148 § 1101(a)(1-2)
RIN 0991-AB71 Comment
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September 27, 2010
Analysis of the Rule
The PCIP Program is Unsustainable Absent a Cap on Enrollees
Funding Limits
Funding for the plans is capped at $5 billion dollars.
2
The Act requires that, if the
Secretary estimates that there are insufficient funds to pay expenses for a particular
year, she is required to “make such adjustments as are necessary to eliminate such
deficit.”
3
The regulations give individual PCIPs the power, after HHS Approval, to limit
enrollment through “adjust[ing] premiums, alter[ing] required benefits, or other
measures to eliminate a projected deficit.”
4
Based on this cap, both the Congressional Budget Office (CBO) and the Center for
Studying Health System Change (HSC), a nonpartisan, nonprofit organization, have
estimated that the PCIP program will be able to support no more than 200,000 enrollees
per year over a three and a half year period.
5, 6
The spending cap does not limit the amount that can be spent in any one year.
7
In fact,
there does not appear to be anything in the Act that prohibits all $5 billion from being
spent in a single year. There is the potential, then, that the program could run out of
funds before 2014.
Likely Participants Without Limits
Both the CBO and the Chief Actuary of Centers for Medicare and Medicaid Services
(CMS). The CBO estimates that an uncapped PCIP program could attract 400,000-
2
Id
. § 1101(g)(1, 4).
3
Id
. § 1101(g)(2).
4
Pre-Existing Condition Insurance Plan Program, 75 Fed. Reg. 45,014, 45,021 (July 30, 2010).
5
Letter from Douglas W. Elmendorf, Dir., Cong. Budget Office, to the Honorable Michael B. Enzi,
Ranking Member, Committee on Health, Education, Labor, and Pensions of the U.S. Senate, (June 21,
2010).
6
Mark Merlis, Health Coverage for the High-Risk Uninsured: Policy Options for Design of the
Temporary High-Risk Pool, National Institute for Health Care Reform no. 2, May 2010 Policy analysis.
7
Supra
note 1 § 1101(g)(1).
RIN 0991-AB71 Comment
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September 27, 2010
700,000 enrollees per year with a total cost of between $10 and $15 billion dollars.
8
Similarly, Richard S. Foster, Chief Actuary of CMS in a memorandum said:
We estimate that the creation of a national high-risk insurance pool will result in
roughly 375,000 people gaining coverage in 2010, increasing health spending by
$4 billion. By 2011 and 2012 the initial $5 billion in federal funding for this
program would be exhausted, resulting in substantial premium increases to
sustain the program….”
9
The Secretary’s Estimate of Likely Participants
Ignoring that this estimate came from within HHS,
10
the Secretary states that “the
Department has not produced its own estimates of the number of individuals
likely
to
enroll in the PCIP Program….” (emphasis added). Instead, the Secretary states that they
“believe[]” the number of participants will range between 200,000 and 400,000.
11
The higher end of this range is supported by the evidence stated above.
There is no evidence, however, to support the lower end of this range. The Secretary
implies that the above mentioned studies by the CBO and HSC suggest that the number
of likely participants may be as low as 200,000,
12
but neither organization made such a
claim. When the CBO estimated that there would be an average of 200,000 enrollees, it
did so under the assumption that the Secretary would cap the number of participants so
as not to exceed the $5 billion dollar spending cap.
13
Similarly, HSC estimated that “the
annual number of people who
could
be covered would be around 200,000.”
14
(emphasis
added) These estimates measure only the
capacity
of the program—not the number of
likely participants
without a cap on enrollment.
Essentially, the Secretary is using the logical fallacy of equivocation by using figures
meant to represent the
maximum number of participants
given the $5 billion dollar
spending cap, to represent instead the number of
likely participants
.
8
Supra
note 5.
9
Richard S. Foster, Chief Actuary,
Estimated Financial Effects of the “Patient Protection and Affordable Care
Act,” as Amended
, (April 22, 2010), 16.
10
Id
.
11
Supra
note 4 at 45,026.
12
Id
.
13
Supra
note 5.
14
Mark Merlis, Health Coverage for the High-Risk Uninsured: Policy Options for Design of the
Temporary High-Risk Pool, National Institute for Health Care Reform no. 2, May 2010 Policy analysis.
RIN 0991-AB71 Comment
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September 27, 2010
No one believes the number of
likely
participants in the PCIP program per year will be
fewer than 200,000—not even the Secretary. And no one but the Secretary has suggested
that this number may be less than 375,000—not the CBO, not HSC, and not the
Secretary’s own actuary.
Without any analysis the Secretary claims that the Department can “mitigate the need
for enrollment constraints” through “efficient program implementation, effective cost
control, targeted benefit design, and enrollment patterns that are different than
projected.”
15
The effect of such factors is merely claimed; the Secretary provides no
details on the effect these factors will have on costs or total enrollment.
Conclusion
While the internal and external predictions that the PCIP program will run out of
money before the end of its term may be wrong, it would be imprudent to ignore them
by not establishing an initial cap on enrollees. Then, should the predictions prove false,
the cap could be removed or raised. But without a cap, the Secretary risks enrolling a
quantity of individuals that will not be able to be sustained for the duration of the
program. She would then be forced to raise premiums, reduce benefits, or drop
enrollees.
As such, the Interim Final Rule should be rescinded and a new Notice of Proposed
Rulemaking should be published that includes a provision that implements an initial
cap on participation.
Sincerely,
William Wilson
President
15
Supra
note 4 at 45,026.