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State regulators are studying coverage proposals from insurance companies ahead of the Oct. 1 federal deadline to launch the health insurance market places.
Tuesday, July 16, 2013
RICHMOND — For that rare bird in the health care world — a high income, young and healthy man who bothers to buy health insurance — the Affordable Care Act is likely to mean a rate shock, health plans’ presentations to the State Corporation Commission suggest.
Insurers who aim to offer coverage through the new health insurance exchanges sketched their proposals to the commission on Tuesday, even as the staff of the commission’s Bureau of Insurance sprint to review tens of thousands of pages of filings from the companies saying what their plans will look like and how much they’ll cost.
The bureau must tell federal officials by the end of the month if the insurers’ proposals meet standards set by the Affordable Care Act and are financially viable.
But the companies and the regulators are venturing into the unknown, since the federal law requires more generous benefits than is now standard in Virginia’s individual health insurance market — and also forbids several standard techniques insurers have used for decades to hold down their costs.
“It’s more art than science — a lot more art than science at this time,” said Michael Dudley, president and chief executive officer of Optima Health Plan.
Usually, health plans can set premiums based on recent claims-paying experience, but the changes coming with the Affordable Care Act make that impossible, said David Shea, health insurance actuary with the Bureau of Insurance.
The Affordable Care Act says insurers can’t turn people down, or even charge higher premiums, because of their health, and limits the difference between what health plans can charge their oldest and youngest customers. Insurers can no longer charge men and women different premiums, either.
“It’s as if all the people in this room are covered now, and then they walk out, and some come back and people from somewhere else walk in and the health plan has to figure out how to cover the new group now,” Shea said.
Still, insurers walked through scenarios meant to show what some people who now have coverage might pay for their new exchange plans.
Though the scenarios weren’t comparable, since the insurers all started from different current plans and many ended with comparisons to different levels of coverage, all generally pointed to double-digit percent — and in some cases actual doubling — of premium bills for healthy young men.
The main reason is an Affordable Care Act mandate that a company can’t charge its oldest customers more than three times what it charges its youngest adult customers — a spread that can now exceed a five-fold difference, insurance actuaries told the commission. The requirement to cover maternity care, which is not standard now, and the ban on charging men and women different rates are also factors.
Generally, the jump in rates will be much less for families and for adults in their 60s, the two other scenarios the insurers outlined.
The scenarios did not factor in the subsidies that roughly 60 percent of people who now buy insurance could be entitled to through the exchanges.
The scenarios for older adults and families all assumed people are currently able to buy insurance now, though one of the big additional costs for insurers in the future is that they will no longer be able to turn people down or charge higher premiums because of their health.
In addition, people who aren’t in good health, and those who now buy coverage that requires low out of pocket expenses are also likely to see smaller increases — and may even see decreases. That’s particularly so for people who are covered by small employers’ policies that will be available through the exchanges.
Health plan officials say they have been able to save some money in their latest rounds of negotiations with doctors, hospitals and other providers over fees. But they said they don’t expect people will need to adjust to more limited choices in where they go.
Aetna, which has a partnership with Carilion Clinic in Roanoke as part of its exchange effort, will still cover care at LewisGale Medical Center or other facilities, said Tom Gross, the company’s top Virginia executive.
“We’re trying to collaborate in any way we can collaborate,” he said, citing wellness programs and consulting on what kind of care is best in particular customers’ cases as examples.
State regulators are close to finishing a review of tens of thousands of pages of health plan filings detailing the plans they want to offer on the new health insurance exchanges.
“We’re getting close,” Virginia Commissioner of Insurance Jackie Cunningham said.
She said state officials and health plan staff alike have been working to tight deadlines and dealing with late guidance from federal officials in order to have coverage available for consumers in time for the Affordable Care Act’s Oct. 1 kick-off date for the exchanges.
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