The U.S. Department of Health and Human Services (HHS) announced on July 1 that a national Pre-Existing Condition Insurance Plan (PCIP) is open to applicants in 21 states where HHS is running the program. Coverage will begin in these states on August 1 for qualifying individuals who submit applications by July 15. The PCIP is based on the high risk pool provisions of the federal health care reform law, which authorized $5 billion as a stop-gap measure (pending full implementation of federal health care reform in 2014) to help finance health plans for legal residents who have been uninsured for at least six months due to pre-existing health conditions. Federal funds have been allocated among states using an allocation formula similar to that used under the Children's Health Insurance Program (CHIP). Enrollees in each state will be charged a standard premium (e.g., monthly premiums in the Colorado program will be $120-$551 with a $2,500 deductible) based on expected costs of covering a medium risk population in that state, rather than a high risk population. Federal subsidies will cover the difference. Twenty-one states elected to have HHS and its contractors run the program directly while 29 states and the District of Columbia have chosen to run it themselves using various models that the federal health care reform law allows. States in the forefront of preparation for implementation include North Carolina and Colorado. All state operated plans are expected to begin enrollments by August 31, but many states still await HHS approval of state plans and/or required changes in state law. California, which leads all states with a $761 million allocation, passed legislation on June 28 which the Governor signed into law on June 29. Many states remain concerned as to the adequacy of federal subsidies if enrollments are not capped. A report released by the Congressional Budget Office (CBO) on June 21 estimates that the federal subsidies could be exhausted by 2013 if monthly enrollments exceed 200,000 persons nationally.
