President Barack Obama signs the Patient Protection and Affordable Care Act into law, Mar. 23, 2010. (AP)

(CNSNews.com) – A pre-existing condition health insurance program established by Obamacare is already straining its own budget and, to control costs, the administration’s Health and Human Services Department (HHS) has stopped enrolling any new people in the program, according to an audit by the General Accountability Office (GAO).

In addition, to further control spending, HHS has directed the program to shift more of the costs onto the current enrollees, thus raising the out-of-pocket health care expenses for the people with pre-existing conditions.

“Finally, due to growing concerns about the rate of PCIP [Pre-existing Condition Insurance Program] spending, in February 2013, CCIIO [under HHS] suspended PCIP enrollment to ensure the appropriated funding would be sufficient to cover claims for current enrollees through the end of the program,” states the GAO report, Patient Protection and Affordable Care Act: Enrollment and Spending in the Early Retiree Reinsurance and Pre-existing Condition Insurance Plan Programs.

The rationing or denial of health care coverage in the marketplace for people with pre-existing conditions, or insurers charging higher premiums to people with pre-existing conditions were among the reasons cited by President Barack Obama and most congressional Democrats for implementing Obamacare, the Patient Protection and Affordable Care Act.

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“This year, tens of thousands of uninsured Americans with preexisting conditions, the parents of children who have a preexisting condition, will finally be able to purchase the coverage they need. That happens this year,” said Obama when he signed the Affordable Care Act into law on Mar. 23, 2010.

“This year, insurance companies will no longer be able to drop people’s coverage when they get sick,” said the president.

President Barack Obama and Health and Human Services Secretary Kathleen Sebelius. (AP)

As Obamacare went into effect, two temporary programs were established in March 2010, the Early Retiree Reinsurance Program and the Pre-existing Condition Insurance Plan (PCIP) program. Each program is supposed to operate through Dec. 31, 2013, after which their respective enrollees are supposed to transition into the health insurance Exchanges established by Obamacare.

Each program was allotted $5 billion.

Retirees and people with pre-existing conditions, said the GAO, “historically have faced challenges obtaining health insurance in the individual market due, among other things, to being charged higher premiums than younger or healthier individuals on the basis of age or health status, or to being denied coverage altogether.”

The Pre-existing Condition Insurance Plan (PCIP) is overseen by the Center for Consumer Information and Insurance Oversight (CCIIO), which is part of the Department of Health and Human Services, which is headed by Secretary Kathleen Sebelius.

To be eligible for the PCIP, “individuals must have a pre-existing condition and have been without creditable coverage for at least 6 months prior to application,” explained the GAO. That limits “the program to individuals who likely have been unable to access insurance because of their pre-existing condition.”

The $5 billion for the PCIP is distributed state-by-state based upon population, the number of uninsured people, and variations in the cost of care by location.

The PCIP programs cannot impose waiting periods for coverage “based on the enrollee’s preexisting condition, and plan benefits must cover at least 65 percent of the total cost of coverage until enrollees hit a statutory out-of-pocket spending limit, at which point PCIP covers 100 percent of the cost,” said the GAO.

(AP)

Under Obamacare, enrollment in the PCIP started in July 2010. However, given that the program had a fixed $5 billion to operate, the costs of enrollment and how long funding would last were ongoing concerns, said the GAO.

“For example, while enrollment in the PCIP program has been lower than initially projected, per member per month claim costs have been higher than expected, leading some to question whether spending could exhaust its $5 billion appropriation as enrollment continues to grow,” reported the GAO.

Under the law, if HHS determines that spending for the PCIP is too much and it might run out of funds, it can make “adjustments as are necessary” and “stop PCIP enrollment.”

The GAO audit found that enrollment in the PCIP was substantial: Between July 2010 and the end of December 2012, enrollment had hit 103,160, which was up more than 50,000 over the 2011 enrollment of 48,862.

Enrollment varied widely. Vermont had 1 enrollee, for example, and California had 15,101.

By the end of January 2013, the GAO found that PCIP spending had reached $2.6 billion, more than half of its $5 billion budget.

(AP Photo)

To control those costs, the HHS, through its Center for Consumer Information and Insurance Oversight (CCIIO), implemented changes. For example, in August 2012, reimbursement rates to the health care provider were lowered in some areas. In addition, some of the federally run PCIP hospital facility fees were renegotiated to match the same fee-rate as Medicare. About 25 percent of the hospitals approached agreed to this renegotiation, said the GAO.

Further, the CCIIO “instituted benefit changes for the federally run PCIP that shifted more costs onto enrollees starting in January 2013,” reported the GAO. “For example, it increased enrollees’ out of pocket maximum for in-network services from $4,000 to $6,250 and for out-of-network services from $7,000 to $10,000.”

The report concluded, “Finally, due to growing concerns about the rate of PCIP spending, in February 2013, CCIIO suspended PCIP enrollment to ensure the appropriated funding would be sufficient to cover claims for current enrollees through the end of the program.”

The GAO noted that, according to HHS officials, if they think they will not run out of money as quickly as projected “they might reinstate PCIP enrollment to use remaining funds.”