Consumer groups on Monday said state and federal regulators should move quickly to set rules to protect Americans from health insurance premium “rate shocks” and to prevent insurers from charging far higher rates in low income areas, when major provisions of the federal health law take effect in 2014.
Dozens of recommendations for implementing a wide variety of health law requirements are included in a report by 20 consumer groups, including the American Cancer Society Cancer Action Network, and others appointed to represent consumers before the National Association of Insurance Commissioners, the professional association for state insurance regulators.
Many of the recommendations affect insurers, who need to know soon how to design the policies they will sell starting in 2014, according to the report.
Provisions of the federal law that take effect in 2014 include a ban on insurers rejecting applicants who have medical problems, the opening of new marketplaces, called exchanges, where individuals and small businesses can shop for coverage and the provision of sliding-scale subsidies to help many low- and moderate-income Americans purchase coverage. That year, the law also requires most Americans to carry coverage and creates penalties for businesses with more than 50 workers who don’t offer insurance to their workers.
The law allows insurers to vary premiums based on where a person lives and to charge older policyholders no more than three times what they charge younger ones. Currently, the majority of states have no such age restriction on policies sold to individuals. As a result of the changes, younger people may see higher premiums than they do now, although those increases are expected to be offset in many cases by federal subsidies that will also be available.
To avoid rate shock – big jumps in premiums – the groups recommend national standards for how insurers implement the new three-to-one variation in age-based premiums.
“How are insurers allowed to adjust rates as you age?” says Sabrina Corlette, one of the report’s authors and a research professor and project director at the Center on Health Insurance Reforms at Georgetown University. “Do they go up every year (of a person’s age) or every five years? If insurers are allowed to keep rates the same early in life, but have big jumps as policyholders age from one year to the next, it can be really a shock.”
The group said state regulators should also carefully craft the geographic limits that insurers will use in determining premiums. Those geographic bands should be wide enough to ensure there is no “redlining” of people living in lower-income areas.
The report said standardized open enrollment periods should be set up, so that consumers purchasing coverage outside the new marketplaces will have the same time frame as consumers buying through the exchanges. That could reduce the chance that insurers find ways to attract healthier people to policies offered outside the exchanges, which could drive up the cost for those purchasing insurance inside.
Subscribe
Hang on. I thought the ACA was going to lower my health insurance premiums?
Another government sponsored scam-blaming insurers for the high cost of health care. Sorry folks, that simply just ain’t so. Insurers don’t provide services or bill for them. How could the people that pay your bills want higher prices? Having set prices by providers would make insurance much more profitable than trying to keep pace with providers who raise prices faster than any other part of our economy.
A THOUGHT ON THE RESULTS OF 3 TO 1 PRICING
The current premium spread is 15 to 1. $100 for a healthy 18 year old and $1500 for an unhealthy 64 year old who buys guaranteed issue coverage required under HIPPA. And this is with insurance companies being required to pay at least 80% of the premium recieved back out in benefits, keeping 20% to run the program. Assuming ACA lowers administration 50% to 10%, current health care spending does not increase and the distribution of participants is linier, a 3 to 1 rate variation will result in the healthy 18 having a cost of $360 and the unhealthy 64 year old having a cost of $1140. At these rates the 18 year old will not buy coverage and $1140 will still be to high for the 64 year old. So the premium subsidies will need to be substantial.
Again, corrupt health insurers are at the center of this issue. Any chance they get, they will find a way to raise rates. My health insurer hates the fact that they recently had to send me a sizable rebate because they overcharged me over many months. It’s a result of the Affordable Care Act provision where insurers must spend at least 80 cents of every premium dollar on actual health care good and services and not on management costs and executive salaries and bonuses. The “Rate Shock” issue proves that the health care insurance industry is as corrupt as it can be and needs to be removed completely from our health care system. Health insurers are a cancer. They need to go. As Republicans continue to try to keep these shysters in the equation, we will someday come to the inevitable understanding that we need a single-payer system because health insurance companies have proven that they can not be trusted. Time and again, they show us how dirty and filthy they really are. Organized crime syndicates have nothing on the health care insurance industry. The health care insurance industry makes organized crime look like kindergarten. There’s absolutely no honor and integrity in the health insurance industry. None!
Patty,
It is a very sad state of affairs that you feel so very negative about what has occurred in your situation. However, there are those of us that work in the insurance industry, that are wonderful people, that care very deeply for the people they serve. I personally do everything within my power to provide excellent customer service and to help insured members navigate through the red tape of the health care industry. The system is broken, we all agree, however, the blame is to be laid in many places….but, rather than being angry and pointing fingers let’s all move in a positive direction to identify the true source of brokeness and work together to fix it. And, by the way…Obamacare doesn’t fix it.
Sharon,
You are right on track. Insurance companies aren’t the problem and Obamacare doesn’t do anything to fix rising costs. As insurers hands are being tied and additional services are required to be covered, then costs will continue to go up. Business owners who have responsibly provided medical coverage for their employees will not get rate relief. And many companies will be put out of business and have to reduce their workforce to comply with the mandate. Obama touts that small businesses will reduce costs because of the rebates, but truthfully a very, very small percentage qualify for that rebate. It’s truly sad what this could do to businesses that are providing people with jobs.
PPACA is going to be a great opportunity for businesses to dump their employees insurance costs onto the government. Did you know that up to 73 percent of Americans will receive a subsidy of some kind. the subsidies are substantial too, a family of four making $60,000 a year will cost about $17000 a year and receive subsidies of of up to $12,000 per year, if you were w business owner, why would you offer coverage when doing so as a small employer would take a families subsidy away and cost them and the business thousands of dollars?
Tom is right, and I think that has been the aim of PPACA all along. They are working toward single payer, and this is a step on the road. There is plenty of blame to go around with the broken health insurance system. It isn’t healthCARE that is broken, but how we pay for it. Many years ago insurance premiums were pretty reasonable and people usually paid 50% of covered costs. Then different levels of coverage were mandated, making it more expensive for everyone. The process became so convoluted that Drs had to hire staff to file claims because patients couldn’t navigate the process. Drs costs went up with extra staff and higher malpractice coverage and so their fees went up. It isn’t going to be easy to clean this stygian stable.
The Unemployed Mom
Thank you for the good writeup. It actually was a enjoyment account it. Look complex to far introduced agreeable from you! However, how could we be in contact?