Thursday, December 27, 2012

New insurance rules a mixed bag

There are such to be winners and losers as the federal government finalizes new rules for health insurance plans in the coming months.

Starting in 2014, the federal health care overhaul will limit the factors that insurance companies can use in setting rates, allowing premiums to be based only on a person’s age, history of tobacco use, family size and geographic location. And even those disparities in premium rates will be limited.

And the law requires health insurers to provide “essential benefits” as part of their coverage, ranging from mental health services ad prescription drugs to preventive and pediatric services. That will provide a greater degree of health care security for people who buy health insurance on their own, but it also will increase the cost.

The rules, proposed in late November, are likely to have the greatest impact on those who buy health insurance on their own. An estimated 350,000 Ohioans bought their own health insurance in 2010, but the number is expected to increase to 537,000 by 2014, according to a report produced by Milliman Inc. last year for the Ohio Department of Insurance.

In Ohio, overall premium rates for those who buy individual policies are expected t rise by 55 percent to 85 percent. For employers with fewer than 100 workers, premium increases are expected to be 5 percent to 15 percent. At employers with 100 or more workers, the increases, if any, should be less than 5 percent, according to Milliman.

Young, healthy men are likely to see the biggest premium hikes under the new rules. In part, that’s because women can no longer be charged more than men for health insurance, s men who buy individual insurance will effectively subsidize the premiums of women, Milliman said.

Currently, premium rates for those on the cusp of Medicare eligibility are about six times what they are for young adults, according to Milliman. Under the new rules, those rates can be only three times as high. That’s likely to lower premiums for older workers who are ill.

Health insurers are concerned that some young people will find that it’s to their advantage to decline to buy health insurance and instead pay a penalty.

“You need the young and healthy people in the system for this to work,” said Robert Zirkelbach of America’s Health Insurance Plans, which represents insurance companies.

There also will be implications for choice; those who are older than 30 won’t have the option of buying an individual health plan that provides only bare-bones, catastrophic coverage.

But Fabien Levy, press secretary for the U.S. Department of Health and Human Services, said young adults will benefit from the law in several ways. Those who don’t have health insurance coverage available elsewhere can remain on a parent’s health plan until age 26, he said. And tax credit subsidies of premiums also should defray the cost, he said.

Aetna said the proposed rules’ limits on deductibles and their minimum-coverage requirements will change the mix of plans it offers. But Kelly McGivern, Aetna’s senior director of government affairs, said the health insurer sees opportunities to customize its products and plans to meet its members’ health and financial needs even after the new rules take effect.

“For instance, we could see a product that could be offered in the marketplace that has a more-narrow network design focused on the highest quality providers, “which could result in lower premiums for consumers, McGivern said.
Information from "Middletown Journal," December 2012 edition