Payments to health care providers will be capped at Medicare rates, which are substantially less than the commercial insurance rates they have been receiving. The new policy generally prohibits doctors and hospitals from increasing charges to consumers to make up the difference.Michael T. Keough, the executive director of the North Carolina Health Insurance Risk Pool, said the new policy was one of several steps taken recently by federal officials to control spending.“They are trying to stanch the hemorrhaging,” Mr. Keough said.
The PCIP is a temporary program, ending on January 1, 2014, at which point all the people in it will be shifted onto the new exchanges the law creates or onto some other kind of insurance.The PCIP may therefore seem like an inconsequential piece of a gargantuan health care law, but the failures of this small piece go to the heart of the challenges the ACA as a whole will face in coming years. In effect, beginning on January 1, 2014, all insurance plans will be like the PCIP. The Obama administration is doing everything it can to convince young, healthy Americans to buy insurance through the exchanges. Only with their participation can American insurance plans avoid the cash-flow crisis currently driving the PCIP into bankruptcy. Whether enough young people will sign up is anyone’s guess.[Ball and chain image courtesy of Shutterstock]