Health benefits that will be offered this fall on exchanges under the Affordable Care Act will be competitively priced and have offerings that are similar in quality as existing coverage for individuals already on the market, health plans and a study out this week reported.
Under the Affordable Care Act, benefits packages offered to individuals on exchanges, or marketplaces run by states or the federal government, have to have certain “essential health benefits.” Thus, the coverage being offered to uninsured individuals is largely based on health plans already being sold, insurers and analysts say.
“In spite of initial concerns from some observers that the adoption of a new benefit standard would result in dramatic changes to insurance policies – and commensurate increases in cost – regulators in most study states reported that it did not result in a major market change,” according to a report out this week from researchers
at the Urban Institute and Georgetown University that was funded by the Robert Wood Johnson Foundation.
The report comes as health plans and state or federally regulated exchanges prepare to offer their benefit packages this fall under the health law. Eligible uninsured individuals will receive subsidies of up to about $5,000 to buy private coverage. Open enrollment for individuals eligible for this coverage begins October 1 and runs for six months for broader coverage that begins Jan. 1, 2014. Most major insurers such as Humana HUM +0.2% (HUM), Aetna AET +0.08% (AET), UnitedHealth Group UNH +0.39% (UNH) and Cigna (CI) as well as Blue Cross and Blue Shield plans are offering plans in certain states.
“The essential health benefits policy gives states flexibility to ensure that coverage offered in the marketplace will reflect what has previously only been available to healthy people who can afford it,” The Centers for Medicare & Medicaid Services said in a statement to Forbes. “Thanks to the law, all Americans will have access to this type of coverage with comprehensive benefits.”
This is not to say that costs won’t go up for certain individuals, health plans say, because some health plans that are not offering certain benefits now will have to effective Jan. 1 under the “essential benefits” provisions. Some actuaries say costs could go up for younger policy holders and go down for older policy holders given younger purchasers of health insurance historically get limited benefits and the essential benefit requires more coverage than some policyholders have had.
The new law doesn’t allow for health plans to carve out certain things that might historically have allowed a health plan to price a product lower. In Illinois, for example, the state has a requirement for certain maternity coverage that will now be required for all plans operating on the exchanges.
“The value of the product has increased,” said Steve Hamman, senior vice president of network management for Blue Cross and Blue Shield of Illinois. “The price of the products are all adjusted to account for the increased benefits.”
Blue Cross and Blue Shield of Illinois’ preferred provider organization product, Blue Advantage Entrepreneur, was selected as the model other insurers will have to follow when creating basic benefit packages. A model plan was selected in each state in order for all health plans to know a baseline of benefits they need to offer. “Each state chose an existing product,” Hamman said.
Date: August 17, 2013