Health Care Reform Mandates by September 23, 2010
The most recent federal guidelines on the administration of the Patient Protection and Affordable Care Act and the Public Health Service Act are actually requiring All existing health and welfare plans to offer the following benefit mandates:
Elimination of any lifetime limits on coverage for all medical plans
Inability to rescind medical coverage for insureds except in the event of fraud
Must include children of the insured through age 25
Immediate coverage for children with preexisting conditions(no waiting periods)
The rules state that restrictions on dollar limits for conditions, will be mandated as well, TBD. These will be revealed by the plan anniversaries one would hope.
One could start to feel a bit verklempt(forgive my poor Yiddish), but again, the laws of economics dictate that the government steps in where there is private market failure. Currently, the American public feels that the insurance sector, representative of the private market has failed in providing basic coverage for families. It is not just about the money, its about the health care continuum.
Grandfathered Plan Status
The regulations state that health plans which make significant changes will lose their grandfathered status as far as the exceptions to the other health plan mandates. This appears to be a sticky wicket, but prohibitive actions include:
• Cannot significantly cut or reduce benefits; so you can raise rates and mandate benefits but they can’t change their plans to keep afloat?
• Cannot raise co-payment charges, even a $30 to $50 change will trigger this intervention, so I think many employers will just bail on health insurance.
• Cannot significantly raise deductibles, apparently more than 20% is prohibitive. This does not make any sense as employers might fund health purchasing accounts with high deductibles, which are very cost effective.
• Cannot significantly lower the employer contribution to employee health plans; again mandates raise costs in a BAD economy and employers can’t pass on any of it? OK kids, I was in the insurance business when they still used carbon paper and my deductible was based on my income.
Required Transparency of Plan Changes
One of the provisions that does make sense, is the requirement of employer sponsored plans to distribute notices to plan participants if they are subject to a grandfathered plan status.
Apparently there are 133 million American’s with employer sponsored plans that would come under this regulation (100 or more FTE’s under 5500 reporting requirements). The Obama Administration predicts that 70% of businesses fall under the “grandfathered status” but this could drop to as little as 30% because of the compliance challenges.
Medical Inflation
Allowable Changes in Co-payments will be tied to medical inflation, so up to 19% in 2011, which is much higher than the rest of the world and is not sustainable.
The insurance exchanges still appear to be a long way off and it is questionable if they are being designed by anyone who actually understands risk management and the insurance business. If your hiring standards are prejudiced toward other government workers and political considerations, are you really hiring the best utility workers for such a major social policy change by excluding the private sector?
Well, that is all for now, this is the health policy maven signing off, and you know I always tell the truth.
Thanks for your attention.
Citations:
http://www.dol.gov/federalregister/HtmlDisplay.aspx?DocId=23967&AgencyId=8&DocumentType=2
This article was written by Roberta E. Winter,a Seattle health policy consultant and may be reprinted with her permission.
