What does healthcare reform mean for the future of health insurance companies?

Healthcare reform is essentially the Patient Protection and Affordable Care Act (the Act), passed in 2010 and being implemented in phases over the next few years. Health insurance companies are looking at an increasing number of government mandates designed to improve health care in the United States and the way in which it is delivered.

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The way health insurance providers do business, what and whom they must cover all add up to fundamental changes for the health insurance industry. Thus, there is a lot of controversy surrounding this topic.

What changes to healthcare have already been put into place?

In 2010, a number of changes were implemented:

• Children covered under their parents’ health insurance policies that are under the age of 27 years old will be able to stay on their parents’ or guardians’ insurance policies. Previous age limits ranged from age 22 – 25 years of age.
• Medicare recipients will begin to see the doughnut hole close. Starting that year, they will receive a $250 rebate, with the hole completely closed by 2010.
• Pre-existing health conditions of children must be covered and cannot be made an exclusion to any policy. Adults with pre-existing conditions can sign up for high risk health insurance until a future date when insurance pools are in place.
• A temporary reinsurance program will help companies providing benefits to retirees between the ages of 55 to 64.
• Coverage for preventative services on new policies that health insurance companies write must have no out of pocket expenses to the insured. In 2011, new Medicare plans must also offer preventative services with no out-of-pocket cost to the insured.
• Certain payments from Health Savings Accounts (HSAs), those payments made before the age of 65 on non-qualified medical expenses, will see the tax penalty increase from 10% to 20% and insurance companies will have to administrate this change.
• Senior citizens will see their brand name prescription drug costs reduced by 50%; those costs will be absorbed by the insurance company.

There are new regulations regarding appeals that favor the consumer for new insurance policies.

What changes are on the horizon?

Health insurance companies will be required to implement uniform standards for sharing electronic health care information and communications. Administrative costs are supposed to be reduced by the implementation of numerous other regulations.

Health care exchanges will be formed with eligibility standards that insurance companies will have to comply with.

The largest health insurance companies, those with more than $25 million in premiums and have a certain market share, will see additional business expenses of new annual federal fees that they must pay.

All health insurance companies will be prohibited under law from using health status to refuse to issue or renew a policy. Pre-existing conditions must be covered and higher premiums cannot be charged based on health condition or gender.

In 2018, “Cadillac” health insurance plan taxes will be assessed on all employer-provided health insurance plans costing more than $27,500 for families and $10,200 for individuals. These taxes will be higher for those persons employed in so-called high-risk professions.

Will legal challenges change anything?

The many court cases challenging key aspects of the Affordable Care Act have been ruled on, with some court rulings upholding the constitutionality of the Act, some others throwing out key provisions such as the Individual Mandate. The Individual Mandate is seen as the lynchpin to the entire Act, possibly making the rest of the law unworkable if found unconstitutional.

The United States Supreme Court has agreed to hear the case of the 25 states led by Florida the National Federation of Independent Businesses next year. The first order of business for the court is to hear oral arguments to include debate of the Anti-Injunction Act. If the court finds that failure of citizens to buy health insurance is a tax, they will not be able to rule on the Individual mandate until after it becomes law. If they rule it is a fine, they can rule immediately on its constitutionality.

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