I think we can save a bunch of time by starting with the table of contents for this division. It goes:
- Sec. 101. National high-risk pool program.
- Sec. 102. Ensuring value and lower premiums.
- Sec. 103. Ending health insurance rescission abuse.
- Sec. 104. Sunshine on price gouging by health insurance issuers.
- Sec. 105. Requiring the option of extension of dependent coverage for uninsured
- Sec. 106. Limitations on preexisting condition exclusions in group health plans
in advance of applicability of new prohibition of preexisting
- Sec. 107. Prohibiting acts of domestic violence from being treated as preexisting
- Sec. 108. Ending health insurance denials and delays of necessary treatment
for children with deformities.
- Sec. 109. Elimination of lifetime limits.
- Sec. 110. Prohibition against postretirement reductions of retiree health benefits
by group health plans.
- Sec. 111. Reinsurance program for retirees.
- Sec. 112. Wellness program grants.
- Sec. 113. Extension of COBRA continuation coverage.
- Sec. 114. State Health Access Program grants.
- Sec. 115. Administrative simplification.
Fifteen sections, some of which are short and sweet.
(more following the break)
Before I begin, however, I need to discuss definitions. Every bill begins with definitions. In addition every Division begins with definitions. Titles also begin with definitions that are unique to it. I didn’t note any real surprises but intent to re-read them all as it’s a place where lots can slip in. At the same time a lot of people read more into definitions than was put in place, mostly because they DID get burned earlier.
This title is Immediate Reforms. Every one of its sections is meant to go into place very very quickly. Some are delayed by as much as six months and a couple of elements can take up to two years to finalize – mostly rules written by the Secretary of HHS. Still, it’s pretty important to note these are NOW type items.
Section 101 is National High Risk Pool program. Put simply, the government will begin an insurance program for people who were dropped from their existing program or denied coverage or only offered coverage with restrictions due to “pre-existing conditions”. There are caveats – gotta be dropped a while ago, gotta be dropped, not jump ship, etc. There are also some sanctions to prevent insurance companies from seizing the opportunity for immediate profit. The costs are discussed: premiums are not to exceed 125% market rate for comparable programs; max annual deductible $1500; max cost-share (for multiples under one plan) of $5000; no lifetime limits. There are appeals available, and states will be required to contribute. Finally, this ends when the Insurance Exchange (part of the Real Bill) takes effect in 2013.
Section 102 is Ensuring Value and Lower Premiums. There are two parts to this and both may turn out a bit controversial.
Part one says that any plan that has a medical loss rate of less than 85% will refund the difference to its customers. Now “Medical Loss Rate” will turn out to be VERY complex once its final. See, it’s to be defined by the SecHHS. It’s NOT to include taxes, licensing or regulatory fees. It is to be simultaneously uniform while designed to take into account “the special circumstances of smaller plans, different types of plans, and newer plans.” Exceptions will be created to ensure adequate participation and competition of insurers and value for customers. Wow.
Stop for comment. Basically congress says 85% of the premium is to be applied to medical costs, and that sounds nice. However, one thing insurance companies do (and this has caused problems in itself) is put a bunch of the money into investments in case it’s a bad year. Now in theory this means the insurance company runs costs at the edge so that sometimes there are lean years. In practice most companies do NOT draw against the investment capital. At worst they pull from interest and get a loan using the capital as collateral. They then increase the premiums to pay off the loan (and interest). The insurance company’s value increases.
This will curtail that practice. It risks, however, seeing insurance companies NOT being able to counter a ‘bad year’. My personal suspicion is that if the bad year is due to cutting premiums too narrow they’ll be allowed to crash but if it’s an industry wide problem the government will bail them out.
Overall I’m not sure how I feel about this section. End of the stop, let’s continue.
Part one concludes with a sunset provision – this only lasts till the Insurance Exchange is in place.
Part two is essentially an attempt to make the same rules apply for individual insurance, recognizing the differences are real and matter.
Section 102 ends by saying it’s to take effect on January 1, 2010.
Section 103 is a specific slam at rescission abuse.
Commentary begins:There have been a crapload of stories of the abuses. The insurance CEOs tried to bury the problem by noting only half a percent of all insurance goes through rescission. Unfortunately for them independent investigators found that rescission analysis isn’t even begun unless the payout exceeds a certain level – a level which is met by only about 25% of all insured customers. That 0.5% suddenly turns into at best 2% even before actual rescission to payout costs are evaluated (which are as it happens not available). So here’s the deal: when you really need your insurance there’s at LEAST a 1 in 50 chance you won’t have it. When you add to this the fact rescissions have been for “you went to the doctor (for a flu shot) a year prior to beginning and failed to note it in the application” and, well, it is ugly regardless of how deserved it may or may not be.
So we get this section. It is surprisingly simple. Rescission can only be done for fraud, and the fraud must be capable of being verified by an independent third party (I3P, my abbrev). If a customer appeals the insurance stays in effect until and unless the I3P confirms the fraud. One more editorial remark: Business Opportunity for people with the skills to do the fraud review.
Section 104: Sunshine on Price Gouging by Health Insurance Issuers. My, what a provocative title. Let’s see what we’ve got, shall we?
HHS will review premium increase REQUESTs which will be accompanied with justifications from the companies making the increases. Rules for what’s legit to be written by HHS.
Ummm. That’s … I like the idea that the premium increases have to have written justification – probably accounting documents of where the anticipated costs are going to occur or how the previous year’s premiums weren’t enough. Recall section 102 – 85% medical loss rate. The bad, here, is that HHS gets pretty much a blank check on the rules. I generally expect bureaucrats to do solid rules, but not when there aren’t guidelines. This one needs some fixing in my opinion. Onward…
Section 105 is a longwinded title with a surprisingly simple summary. If your kid is still your dependent and has no other insurance, your insurance must carry him or her till he/she is 27. This section gets VERY long, but it’s because it’s making that little change in a lot of places in law. Oh – in one of the places changed there’s an interesting clause: nothing in this prevents insurance companies for charging higher (justified) rates. IOW if your 24 year old son decides to do a walkabout across Africa, your insurance CAN raise the price of your insurance.
Section 106 is another ‘stop the abuse’ line. Basically the amount of time a company can “look back” for pre-existing conditions is reduced. Retirement lookback goes from 6 months to 30 days. Other insurances are moved from 12 months and 18 months to 3 months and 9 months respectively. Like the preceding section it gets repeated for various sections of law, in this case a few sections of the IRS code. (Your tax loopholes and such will change.)
Section 107 came out because of a MAJOR abuse. In case you missed the news it turns out that some insurance companies were denying coverage for a pre-existing condition: victim of domestic abuse. So she (or in some cases he) finally leaves the abusive bastidge and now CANNOT GET INSURANCE. Ummm, no.
108 is another potentially controversial section. See, it’s basically a plastic surgery rule. Paraphrasing: If the policy covers surgical benefits, the benefits will include plastic surgery for deformity, disease, or injury (but NOT appearance or ‘self esteem’) on anyone 21 or younger. On the one hand, “honey, just because your breasts are AA size it’s not a deformity.” On the other hand, “Yes, the massive scarring left by the accident is covered.” Loophole potential (and I’m joking a bit here): is the scarring from a botched breast augmentation covered? sigh. Once more it’s something that needs done in a lot of places in the law if done at all, so this section is long.
Section 109 is simple to understand.. There are no lifetime caps allowed. If you’re paying, you’re getting, period. Now the insurance companies do have some reason for this even though they abuse it. The reason is “what if I suddenly need a million dollars in medical care?” The counterpoint is that ALLEGEDLY good analysis of the odds by which premiums are set will take care of this. Provided that is the policyholder pool is large enough. Recall I mentioned that insurance companies built investment pools back in the 85% limit section? Here is the reason why. This will probably stand because insurance companies got greedy and put these limits on while at the same time generating premium to payout ratios to ‘prepare for catastrophic needs of our customers’. As you sow, so shall you reap. Still, I suspect the removal of lifetime benefits will mean an adjustment in the 85% sometime down the road.
110 is to protect retirees. Insurance companies have had a bad habit of changing benefits on retirees. That is, you retire, you’re still part of the group insurance paying the same rates, but because you’re retired your benefits get cut. Bottom line here: if you’re paying the same you should get the same.
Oh – 110 has a waiver allowed. If the EMPLOYER can demonstrate that continuing the insurance benefits is a hardship (not just a burden), the reduction can happen. Insurance companies don’t get to apply for the waiver except for their own employees.
111 is something of a counter-point here. Basically it says that an employer maintaining his share of the premium for the retiree can be reimbursed. Remember the hardship waiver? Yep, out the window. There are restrictions and caveats here but that’s the gist. This is a section I suspect I’ll be revisiting to look for peculiar loopholes – money to businesses ‘just because’ makes me twitch.
112: Wellness Program Grants. Money for “wellness programs” – programs meant to help people be healthier. HHS and Labor jointly administer the grants which are given to small businesses. (why not large businesses?) The grants will be for 50% of the costs for up to three years with additional dollar limits of the lesser of $150 times number of employee or $50,000. (Note that’s 333.33 employees – small businesses are bigger than you think.) Programs have some requirements to qualify, the most onerous (beyond record keeping) being that it provide for at least three of the authorized ‘wellness program components’. These are:
Health Awareness (education and screenings);
Employee engagement (on-site assessments, improvements and evaluations);
Behavioral Change (tobacco, stress, obesity, physical fitness, nutrition, substance abuse, depression, and mental health promotion):
and Supportive Environment (policies and services to support the preceding three components).
Lots of opportunities for mischief. I can also see a lot of people complaining – “My tax dollars going to pay for people putting new coat of paint on the office walls? Bull.” (on-site improvements, doncha know.)
I think the basic idea is good, not sure about the implementation.
Section 113 is extention of COBRA. For those who haven’t run into it before, COBRA is a law that says if you’re laid off you are able to keep your insurance. The employer can quit paying part of the benefits in which case you have to pick up the slack, and further the total can increase to 103% (or is it 105?) of the normal total premium, but YOU ARE STILL COVERED. (Me, I think it sucks. You lose your job and your personal premium cost doubles? So, where is this money supposed to come from, unemployment benefits? sigh.) That said, it DOES help a lot of people who would otherwise be completely destroyed. This section extends the duration of COBRA to basically indefinite. Ummm, a caveat. It only removes the ability to drop a person from COBRA due to time limits. Other causes (abuse, failure to pay, etc) are still in effect.
114 is going to take some time. See, it’s a bit of a backdoor to providing state alternatives to the Federal system and getting them in place NOW. The feds will provide grants to assist in putting some of these in place. They won’t pay for it if it’s already in place, they won’t pay indefinitely, but they’ll help put them in place. (the indefinite part might happen in conjunction with The Plan going into effect – I’ll keep the point in mind when I get to that section.)
State options include:
State insurance exchanges;
Community Coverage (aka co-ops);
Reinsurance (subsidize some carrier loss);
Transparent Marketplace (everybody can see ALL costs and benefits and choose freely among them);
Automated Enrollment (no-delay auto enrollment in subsidized programs like Medicaid);
Innovative Strategies (Buzzword Warning – ripe for abuse);
Purchasing Collaboratives (Another way to get group rates among much smaller groups and individuals).
The rest of this section boils down to “the state has to prove it means it and isn’t just doing the minimum to get the money.”
Once more, the grants are supplemental, not supplantation; and they expire when The Plan goes into effect (2013 as currently written).
115 is one of the hardest to understand by casual reading yet probably one of the better intents I’ve seen so far. Bottom line: kill the miniscule print and quit killing trees to keep getting the same information over and over. While a good part of this is for the customer’s direct benefit, the big changes are in the physician-insurance sections. Every doctor’s office today requires at least one full-time person just to go through insurance claim forms for every visit. This is intended to reduce the need for that employee, reducing costs and headaches for everyone not employed by the insurance companies.
This one is the exception to “immediate”. HHS has up to two years to finish getting it straight – and I think that may be pressing things.
That’s it for the first run through of Division one Title one of the AHCAA as currently entered. Next, Title two: Protections and standards for qualified health benefits plans . (Or as it looks at first glance, “the minimums”.)