People in California who are using the California Pre-Existing Condition Insurance Plan will see their premium rates fall by 18% very soon. The price cut could help thousands of people in California to finally be able to afford health insurance. The cost of this plan has already dropped in several other states.
The Pre-Existing Condition Plan (PCIP) was created in 2010, as part of the Affordable Care Act. The purpose of it was to guarantee health insurance coverage for people who were unable to find it because they had certain types of pre-existing health conditions.
Previous to 2010, private health insurance companies were either charging this group of people more money on their premiums than the person was able to afford to pay, or they were flat out refusing to sell health insurance coverage to the people who had pre-existing conditions. After the PCIP was put into place, it made it possible for many people to finally get the health insurance coverage that they desperately needed.
The problem, though, was that the cost of the premiums on the PCIP were still too high for many people to be able to afford. The price was simply too expensive for many people to take advantage of, despite the fact that they were eligible for the program. This was a big problem.
To alleviate this problem, the federal government decided to drop the price of the premiums for the PCIP in seventeen states. The exact amount of the price drop was influenced by state-specific data about the standard rates of private individual health insurance premiums for that state. This price drop went into affect for those seventeen states on July 1, 2011.
California wasn’t among that group of states. However, as of August 1, 2011, people in California who are currently using the PCIP will see the cost of their premiums drop. This will affect 3,500 subscribers. Many will see an 18% drop in price. Others will get a price deduction of as much as 24%, (which is the maximum amount possible).
California runs it’s own PCIP program, so the state had to get permission from the federal government before it was allowed to lower the premium rates on the program. This could be why California was not a part of the original seventeen states who got a premium price reduction in July.
The PCIP program is supposed to be a temporary solution to the problem. In 2014, the health insurance exchanges are supposed to be open at that time, which should enable everyone to find affordable health insurance. In that same year, a law will go into affect the prevents private insurance companies from rejecting people who have pre-existing conditions, or to charge them more for their insurance premiums.
Image by Eric Skiff on Flickr