USA Today
Health insurance regulators in North Carolina have identified nearly $156 million in refunds owed to Blue Cross policyholders because of changes coming under the nation's new health law.
Consumers with policies at other companies across the nation also may deserve refunds, says North Carolina Insurance Commissioner Wayne Goodwin. He plans to urge other states to probe potential overcharging for a type of reserve fund.
The health care law will dramatically change how health policies are sold in 2014, and many plans in effect now will cease to exist that year in their current form. Yet state regulators who scrutinized a recent rate increase request by Blue Cross and Blue Shield of North Carolina say they discovered the insurer was collecting reserves to pay claims beyond 2014.
This is exactly the sort of reform that was promised by the new healthcare law, where government acts as a regulator and backstop to ensure that price gouging and excessive premium increases are ended. The government "good guy" gets to block the insurance company "bad guy", with the state insurance commissioners receiving Federal HHS assistance in the effort.
On September 9th, HHS Secretary Kathleen Sebelius took a shot across the bow of insurance companies. In a letter to AHIP president (and fellow Catholic) Karen Ignagni, Sebelius warned:
The Affordable Care Act includes a number of provisions to provide Americans with access to health coverage that will be there when they need it. These provisions were fully supported by AHIP and its member companies. Many of the legislation’s key protections take effect for plan or policy years beginning on or after September 23, 2010. All plans must comply with provisions such as no lifetime limits, no rescissions except in cases of fraud or intentional misrepresentation of material fact, and coverage of most adult children up to age 26. New plans must comply with additional provisions, such as coverage of preventive services with no cost sharing, access to OB / GYNs without referrals, restrictions on annual limits on coverage, a prohibition on pre-existing condition exclusions of children (which applies to all group health plans), access to out-of-network emergency room services, and a strengthened appeals process. And health plans that cover early retirees could qualify for reinsurance to sustain that coverage for businesses, workers, and retirees alike.
According to our analysis and those of some industry and academic experts, any potential premium impact from the new consumer protections and increased quality provisions under the Affordable Care Act will be minimal. We estimate that that the effect will be no more than one to two percent. This is consistent with estimates from the Urban Institute (1 to 2 percent) and Mercer consultants (2.3 percent) as well as some insurers’ estimates. Pennsylvania’s Highmark, for example, estimates the effect of the legislation on premiums from 1.14 to 2 percent. Moreover, the trends in health costs, independent of the legislation, have slowed. Employers’ premiums for family coverage increased by only 3 percent in 2010 – a significant drop from previous years.
Any premium increases will be moderated by out-of-pocket savings resulting from the law. These savings include a reduction in the "hidden tax" on insured Americans that subsidizes care for the uninsured. By making sure insurance covers people who are most at risk, there will be less uncompensated care, and, as a result, the amount of cost shifting to those who have coverage today will be reduced by up to $1 billion in 2013. By making sure that high-risk individuals have insurance and emphasizing health care that prevents illnesses from becoming serious, long-term health problems, the law will also reduce the cost of avoidable hospitalizations. Prioritizing prevention without cost sharing could also result in significant savings: from lowering people’s out-of-pocket spending to lowering costs due to conditions like obesity, and to increasing worker productivity – today, increased sickness and lack of coverage security reduce economic output by $260 billion per year.
Sebelius requested the help of AHIP to "inform your members that there will be zero tolerance for this type of misinformation and unjustified rate increases".
Consumers can play a role in this effort as well. The regulations are being handled on a state-by-state basis, with federal support for the local entities. (You can find a state-by-state list of insurance commissioners here.) In a nod to Republicans concerned about "Obamacare" serving as a "massive government takeover," the Democrats who passed the final bill (over Republican objections) wisely allowed the states to serve as the primary gatekeepers and referees on healthcare costs, insurance premium increases, etc.
What this does, effectively, is promote innovation and best practices, as states can serve as incubators and laboratories of smart insurance regulation and improved healthcare outcomes. Competition among states will likely ensue, with states benefiting most when they are able to lower healthcare costs, improve healthcare outcomes, and protect consumers from waste, fraud, and abuse by health insurers and companies.
This also means that state and local elections matter like never before - a fact that seems to have been lost by many Democrats in 2010. If you're not excited about your member of Congress, you should be able to get incensed over Republicans who side with the Chamber of Commerce types over consumers and small businesses. Republicans across the country are well-aware of this, and are spending money on governorships and state legislative races, hoping to gut regulations and prop up weak, ineffective regulators.
In the comments, please share your insights about your state's insurance commissioners. Find out what your gubernatorial candidates and state legislators think about the new healthcare law, and ask them how they'll work to put patient rights ahead of profits.
President Obama is meeting today with insurance commissioners to discuss the implementation of the new health reform law.