How are those consequences affecting the cost and quality of health care for employers?
First, enhanced benefits are not free. Someone has to pay for the new ‘well care’ benefits added by the new legislation.
Second, adverse selection adds unknown and potentially tremendous risk. Several pundits are criticizing insurance carriers for increasing premiums today to prepare for the anticipated costs that will follow. One example is that employers must provide health insurance to dependents up to age 26. And it’s important to note that required proof of qualified eligibility is non-existent. Also, coverage must include payment for any pre-existing conditions. The additional risk adds up quickly and must be passed on through increasing premiums.
Third, the whole dynamic of purchasing health insurance is changing. Will employers look to their professional agent or consultant or go directly to the ‘exchange’? Health insurance is not a commodity. It is a contract for payment of health care services that are medically necessary, appropriate and completed in an appropriate setting. Who will be setting the new rules? Today you can work with your carrier. Due to cost constraints, it may all move online. Medical treatments and the consequential billing are already very complex and will get even more complex. I am afraid the government will dictate the rules for eligible services and set reimbursements. The role of the professional agent or consultant will change. Will they continue to assist with purchasing decisions as well as the service and support many provide to employers today?
What are some solutions, and how can they be implemented?
Knowing and understanding what is happening is so important today. Employers must stay informed. But that will not be easy. Things are moving very fast. Even though the full scope of the law is not to go into effect until 2014, there is a lot happening right now. For example, starting Sept. 23, (six months after the law was signed) those dependents up to age 26 must be offered coverage. Also starting Sept. 23, health plans can no longer have annual or lifetime limits within their benefit plans.
What can be expected in the future?
The law included more than 2,000 pages of text. The regulations are estimated to exceed three million pages. The regulation defining an eligible dependent child exceeds 120 pages of text. It should be quite clear numerous changes and a number of surprises are expected. All benefit plans, insurance companies and employers currently self-insuring their benefits will be required to pay at least 80 percent or 85 percent of equivalent premiums towards medical costs. Medical costs or claims may include direct payments for services and services ‘expected’ to improve the health of covered lives. This MLR (medical loss ratio) rule will apply to all insurance companies and employers self-insuring their benefit plan. As it reads today, any money available for claims not paid out during the policy year must be distributed as a rebate to the insureds of the plan and not back to the employer. Although promised to be available by July 1, the MLR regulations have not been released. This provision becomes effective Jan. 1, 2011.
Health care reform or health insurance reform, whatever you want to call it, will affect us all: large business, small business and individuals. And I do not see costs going down.
Albert Ertel is the COO of Alliant Health Plans. Reach him at (706) 629-8848 or [email protected].
