The date September 23, 2010 has come and gone and with it another major milestone in the Health Care Reform Law that was passed on March 23, 2010. The first of the major milestones is no doubt in favor of consumers with changes that include the following: the elimination of coverage rescissions, the elimination of lifetime annual maximums, the removal of pre-existing conditions for members under the age of 19, and the dependent age extension to 26 years, among a few other changes… We all appreciate broadening coverage to make sure the people who really need the system to work for them aren’t falling though the cracks, however even these initial changes have the insurance companies reeling to make the right decisions. This was clear, when several of the insurance companies shut down their “individual and family” products just days before the 9/23 deadline as rates, coverage, and networks all had to be tweaked and approved by the Department of Human Health and Services. We are back online but have yet to see the actuarial impact of opening the flood gates on plans that previously survived on a proper ratio of claims to premium. Without a doubt the insurance companies will eliminate coverage where they can to make up for the risk they must take on in an effort to avoid immediate substantial rate increases.
So, what’s next? As it stands today we can anticipate state run insurance exchanges coming in 2014. Right now, individuals within 400% of the poverty line will be given a voucher to buy insurance from the exchange. Small Group employers with less than 25 employees, earning less than an average of $25,000 to $50,000, would be given a credit between 35% and 50% of the employers total cost, if small group plans are purchased through the exchange. The survival of the private insurance market has an uphill battle for both small and large group, as Adverse Selection tells us that those young, healthy, employees who don’t really need their coverage will seek the cheapest option available. Employer’s struggling to keep those employees on their plan will face a $2,000 annual fine if they are unsuccessful, but that may the lesser of two evils when considering the cost of increasing employer contribution. Additionally, we anticipate a number of coverage extensions and programs rolling out between 2014 and 2018, but unfortunately for Minnesotans most are redundancies to coverages and programs we already had in place prior to the law. We also anticipate a series of taxes over the next eight years to offset the cost of this change. (devise manufacturer’s tax, the insurer’s tax, the Cadillac plan tax and the W2 tax) At this point it is too early to tell, but most industry experts feel these tax increases will be shifted to consumers.
We have a lot of milestones and a lot of time ahead of us. What we know today is sure to change. Before everything is said and done we are likely to see turnover in Congress and in the White House (2018 timeframe). Regardless of how you feel about reform this change will have an affect on your coverage, your business and your employees. Stay involved and make sure your voice is heard.
