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.