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"The Center for Consumer Information and Insurance Oversight(CCIIO) discontinued enrollment in the Early Retiree Reinsurance Program (ERRP) inearly 2011 and stopped most program reimbursements the following year to keep spending within the $5 billion ERRP appropriation. Specifically, anticipatingexhaustion of funds, CCIIO stopped ERRP enrollment in May 2011. According toCCIIO officials, CCIIO suspended making reimbursements to plan sponsors inSeptember 2012, as reimbursements had reached the $4.7 billion capestablished for paying claims under the original appropriation, and the remainder was reserved for administrative expenses."
Posted by GailL1
These programs were pre arranged to fail. First they were underfunded and second very few people knew they were available. In addition those who took advantage of those programs were among the sickest so the adverse selection was extremely high. That alone would have caused the funding to be used up much faster. There was no incentive for anyone who was healthy and uninsured to enroll.
I was familiar with the PCIP program and in order to enroll in that program the person had to apply for coverage with an individual health insurance policy and show proof of rejection. Individual health insurance must be pre-paid so that meant sending the first month's premium realizing that you stood a strong chance of rejection. Then getting the refund back often would take more than a month. In addition, you had to be uninsured no less than six months prior to applying and could not be eligible for COBRA. The premium for someone in their 50s was more than $500 per month for a plan with a $2500 deductible, hardly a bargain.
The ERRP program was just as bad. First one couldn't be eligible for COBRA, and almost all early retirees are eligible for 18 months under COBRA. If they are taking early retirement because of disability, then they have a 29 month period where they can have COBRA. This is to cover the five month waiting period before filing social security disability benefits as well as the two year waiting period before Medicare becomes effective. If it is because of the death of the covered employee, then the COBRA period is 36 months. If one exhausts their COBRA coverage, they have a 63 day window under HIPAA where they can get an individual health insurance policy that is guaranteed to cover all pre-existing conditions.
Under HIPAA, the insurance company cannot rate you more than 200% above their standard rate at the attained age. Therefore almost all HIPAA policies are very expensive. Health insurance companies do not want to issue them and agents don't want to sell them because policies issued under HIPAA do not pay commissions. Why would any insurance agent be fully exposed for liability and not be able to make any money on the deal?
Again the problem with COBRA and HIPAA as well as the ERRP and PCIP was the cost. Simply stated it is much too expensive for most people to afford, especially if they are losing their job, retiring or going on disability. There has always been a very high degree of adverse selection for people who elect COBRA and for those who choose a HIPAA continuation. There is no premium relief for anyone electing COBRA or those who want a HIPAA continuation.
COBRA and HIPAA are two very good reasons why "incremental change" in health insurance does not work. While it may solve one problem, it does not address the larger issue of affordability. Sure if someone is unhealthy and needs health insurance very bad, they will be quick to take advantage of those programs. But if one is healthy, why bother with the high expense?
One unintended consequence of COBRA and HIPAA was to greatly increase the cost of group health insurance because of the adverse selection on COBRA. According to the EBRI, the adverse selection on COBRA can add as much as 20% to the cost of that employer's group health insurance since those who elect COBRA are considered as still in the employer group. Because HIPAA mandated that employer groups must cover all pre-existing conditions with no waiting period if that person was on another employer group or if the employer is changing companies; that also has caused the cost of employer group health insurance to increase dramatically. In addition, because of HIPAA, employer groups cannot single out any employee, spouse or child for a higher premium or any exclusion on coverage.
Employer group health insurance is rated based on the composite age of the group and not on the individual's particular age. Therefore a 25 year old covered on their employer's group health insurance is charged the same rate as a 60 year old employee. Most employer group health insurance is unisex rated and must cover normal maternity and delivery expenses. When insurance companies look at rating an employer group plan, they must look at the previous five years claims experience as well as the census of covered employees and dependents. Since maternity coverage has to be included, the rates will reflect that in the number of women of child bearing age in the group.
Because individually underwritten health insurance can cherry pick only the healthy to insure and there is no COBRA continuation or maternity mandate (and normal maternity can be excluded in most states); very often if an individual is young and healthy, individually purchased health insurance very often costs less than employer group health insurance. Of course all that will change once the exchanges come on line in October.
Posted by golfinsailor
I really don't understand that answer by Gail, I never had the insurances that she is posting, My insurance was a normal County employee Health Care insurance. that got so bad for retirees, that they have forced out most of their retirees in their system. That was the Orange County California Health Care. a very rich County in So Cal.