HHS Sets Final Rules for Health Coverage Under Affordable Care Act
On Friday, HHS Secretary Kathleen Sebelius released the final rulesÂ on how insurers can implement individual and group health insurance policies under the Affordable Care Act,The Hill's "Healthwatch"Â reports (Baker , "Healthwatch,"Â The Hill, 2/22).
The rules -- which govern how insurers can vary premiums, require preventive coverage in catastrophic coverage plans and mandate statewide, high-risk pools -- regulate insurance plans providing coverage beginning in 2014.
Rules Regulating Cost of Insurance Premiums
Under the finalized rules, insurers will be prohibited from denying coverage to individuals with pre-existing conditions or varying premiums based on factors of pre-existing conditions, health status, claims history, gender or occupation.Â
However, insurers will be permitted to vary premiums within certain limits based on age, tobacco use, family size and geography. Within those limits, insurers can charge regular tobacco users -- defined as anyone who has used a tobacco product four times a week within the previous six months -- up to 50% more than nonsmokers (Daly,Â Modern Healthcare, 2/22).
The rules also limit insurers from charging older beneficiaries premiums that are more than three times what younger beneficiaries pay (Morgan,Â Reuters, 2/22).Â
In addition, the rules cap the number of children that insurers can take into account when computing family premiums. The cap applies to the three oldest "covered children" under age 21.
Rules on Catastrophic Coverage, High-Risk Pools
The rules also mandate that insurers provide a catastrophic coverage plan in the individual market for young adults and others who would otherwise find coverage unaffordable (Modern Healthcare, 2/22).
Although such plans typically come with a high deductible, the new rules require that many preventive services be offered to enrollees at no out-of-pocket cost.Â
In addition, the rules require that insurers create a single, statewide risk pool for the individual market and another for the small-group market (Frieden,Â MedPage Today, 2/23).
The alteration means that rate changes will be based on the health risk of the entire pool. Further, states are allowed to merge the two pools into one pool, but student health coverage will be exempt from the risk pool requirements (Modern Healthcare, 2/22).
Groups React to Final Rules
America's Health Insurance Plans President and CEO Karen Ignagni criticized the rule on age rating, saying that the mandate will result "in an overnight increase in health care costs for people in their 20s, 30s and early 40s" and "increas[e] the likelihood that younger, healthier people forgo purchasing insurance until they are sick or injured."
AHIP had pushed for the premium restrictions based on age to be delayed, but HHS refused to do so (Baker , "Healthwatch,"Â The Hill, 2/22).Â
Federal officials have contended that the pressure for higher rates will be mitigated by increased competition among insurers and the federal subsidies available to low- and middle-income families.
Meanwhile, AARP has expressed support for the rule, noting that age restrictions protect older beneficiaries from "a negative and disproportionate effect" (Reuters, 2/22).
Separately, Christopher Hansen, president of the Cancer Action Network at the American Cancer Society, voiced concerns about the higher premiums for tobacco users. He said, "Levying a surcharge on tobacco users could make health insurance unaffordable and prohibit them from getting either the medical help needed to break their addiction or the basic health care we all need" (MedPage Today, 2/22).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.