Tuesday, September 28, 2010

Health Insurance Reform Update

September 23 has passed and ushered in a period of uncertainty for the health care industry with 3 more years of changes, ending with the individual mandates of 2014 and forcing insurers to do business within state based health insurance exchanges. Insurers are already adapting but the Republicans are now promising a vigorous campaign to chip away at the reforms with their new Pledge to America. Although health care reform is now law they could impact the funding if they regain control of Congress and President Obama's 2012 re-election occurs before the final reforms are scheduled to be implemented in 2014.

During the health care reform debate President Obama promised that people who liked their current coverage would be allowed to keep it. That's called grandfathering and employer group plans will only lose their grandfathered status if:
  • The group chooses a new carrier after 3/23/10
  • The group chooses any benefit changes after 3/23/10
  • The employer changes contribution levels after 3/23/10
  • The group does not maintain 1 enrollee at all times in all grandfathered plans

As the premiums continue to rise substantially employers may find it difficult, if not impossible, to maintain their grandfathered status. Changing carriers, making benefit changes to lower premiums, and cost shifting are almost a necessity for employers to continue to offer health insurance to employees amid the double digit rate increases this year. In fact, since 1999 the share of premiums paid by employees has increased 159%. But while employee contributions have grown significantly, the coverage has eroded substantially. This trend will probably only continue as the costs of health care reform are absorbed.

Thursday, September 23, 2010

Health Insurance Reform Update

Well the day has finally arrived! Starting today, September 23, the health insurance reform mandates become applicable to all health insurance plans except those that are grandfathered.

The law requires that all plans include free preventive care with no co-pays, coinsurance, or deductibles applicable; no additional charges for emergencies outside the plan's network; a pediatrician or OB/GYN can be chosen as a Primary Care Physician; no lifetime limits or annual dollar limits on essential health benefits; parents can keep adult children on their health insurance until age 26; insurers must accept children under 19 with any pre-existing conditions; and insurers cannot rescind coverage when an insured gets ill and has expensive costs but can only rescind due to fraud and intentional misrepresentation.

From a humanitarian point of view these are all applaudable reforms and once the requirement to also accept adults with pre-existing conditions and the donut hole in Medicare prescription drug plans is closed in 2014 the social inequities of our healthcare system will have been corrected. However, the inevitable cost to insurers, the federal government, employers, and consumers has yet to be revealed and I suspect that cost will be high. Insurance premiums are continuing their upward spiral this year in the midst of healthcare reform and some insurers are opting out of certain markets that requires them to take possibly unprofitable business as evidenced by some insurance companies in Florida, Oklahoma, and now California suspending the sale of Children Only policies.

Many Americans are confused as to how healthcare reform will effect them. The benefit reforms are all positive and provide health insurance for those that were previously denied coverage. This would reduce the ranks of the uninsured if the premiums were affordable but the premiums for the gap coverage for adults with pre-existing conditions that most states have rolled out recently are exorbitant. And since Individual and Group plans have continued to renew with double digit rate increases it seems that unless and until the premium costs are reformed the goal of healthcare reform cannot be met. We'll see if the proposed exchanges to be implemented in 2014 will, indeed, drive down rates.

Friday, September 3, 2010

Health Insurance Reform Update

Until 2014 purchasing health insurance is voluntary (except in the state of Massachusetts) and insurance companies can charge higher risk individuals higher premiums. But in 2014 the rules change and everyone is required to have health insurance and insurers must accept those with pre-existing conditions at the same premium as those without. There will be government subsidies and state exchanges to assist those who need help with the premiums. And until then people who can't get coverage because of pre-existing conditions can buy insurance from new government insurance programs run by their individual states. These bridge programs are aimed at those who have been uninsured for at least 6 months who have health conditions that prevent them from getting coverage with private insurers.

During the transition I predict higher premiums due to the additional benefits and protections required of all health plans this year such as the prohibition of lifetime limits, the requirement to cover preventive services without co-pays, and allowing parents to keep their children on their plans until age 26. Another, often overlooked consequence of healthcare reform, has been the ability of consumers to appeal health plan decisions and proposed rate increases. Most notably was Blue Cross of California's proposed 39% rate increase on Individual & Family Plans in March of this year. Consumer outrage and adverse publicity caused the Dept. of Insurance to investigate and, although a more modest increase of 14% was approved and becomes effective on October 1, insurers have been put on notice that they will have to cost justify any rate increases moving forward. Also, a pattern of excessive and unjustifiable rate increases could cause an insurer to be excluded from the state exchanges. The new healthcare law requires insurance companies to spend at least 80 cents of every premium dollar on medical care or activities to improve quality.