The Department of Health and Human Services issued a whole slew of long-awaited regulations Tuesday about the Affordable Care Act. They are important to consumers because they have to do with both cost and (loosely) what must be covered. States have some latitude in the coverage area, more on that in a moment.
Friendly reminder that most of what the feds released are for the new state based exchanges. Individuals and small businesses will be able to buy insurance through the state's exchange, Covered California. If you get insurance through your employer, you will continue to do so.
- Guaranteed issue and renewal: you no longer can be denied getting insurance due to a pre-existing condition. Insurance companies can no longer jack up rates or drop you completely when it's time to renew. They may only raise rates annually (on your birthday!) and only by a set amount.
- Fair premiums: premiums can only differ based on age, family size, tobacco use and where you live. Adults will be within a 3:1 ratio. In other words, a premium for a 63-year-old can be a maximum of three times the rate of a 21-year-old. Everyone over age 63 is in the same rate band. Women can no longer be charged more than men.
- Young adults special option: Younger people tend to be healthier than older people. But, as noted above, older adults are capped at paying a max of three times the premium of a 21-year-old. There was concern that this would mean high premiums for 20-somethings. The new rules allow for catastrophic health insurance plans -- plans with lower premiums and higher deductibles for those generally health younger adults.
- What's covered: The feds have already detailed that each state must offer coverage within ten categories. States have some latitude in exactly what they'll put in their plans. But one question had been around prescription drugs. The federal government had initially indicated that plans need only cover one prescription drug per category in a policy's "formulary" -- which could be problematic for the millions of people with chronic illnesses who take more than one drug. There were concerns that only one drug would be covered in a huge category, such as diabetes for example. The new rules today say that insurance sold in the exchange must match the benefits of the most popular small group health plan in the state (the "benchmark plan"). In other words, in all likelihood, more than one prescription drug will be covered in each category.
- Wellness programs: A new rule encourages employers to offer a new kind of wellness program. If employers participate, people who receive insurance through their employer will be able to participate in enhanced wellness programs. Specifically, they can win a reward (real money here, folks: discount on premium or co-pay, for example) if they meet a specific health target: reduce or quit smoking; lower cholesterol; weight loss, etc.
These federal rules are in the 30-day public comment period. Then the rules will be finalized. After that, it's up to states to implement them. California will have a special legislative session (announced, but not yet scheduled) to debate state level laws and regulations, so that Covered California can move forward with creating the exchange.
It's a tight timeline. The exchange opens for business next October, just over 10 months from now. That's when people will be able to shop for insurance. The coverage will start January 1, 2014.
There are more regulations to come. On a conference call with reporters today, Gary Cohen, acting director of the Center for Consumer Information and Insurance Oversight, said, "We're working hard to get everything out as fast as we can."
Kaiser Health News: Administration Releases New Health Law Rules for Insurers, Employers