What's reform going to mean for us?

Truth and Consequences

The immediate effect for most of us will be an increase in insurance premiums. There are dozens of provisions that take place right away (like in 90 to 120 days) that will raise costs of coverage. These include:

• New taxes on medical equipment and drugs that will raise prices for services.
• The so-called “slacker mandate” that will allow “children” to age 26 to stay on their parents coverage. Most people in this age group can get far less expensive coverage in the open market, leaving only the sickest and most expensive to exercise this option.
• The elimination of lifetime caps. This one shouldn’t be very expensive, but for reasons discussed below there will be substantial administrative costs involved with compliance.
• Mandatory first dollar coverage for preventive services. This sounds benign, but the law defines “prevention” very broadly to include pretty much everything you might see a doctor about if you aren’t actually bleeding to death.
• Minimum loss ratios of 80% for small groups and individual coverage, and 85% for larger groups. Minimum loss ratios encourage excessive spending on services resulting in higher – not lower – premiums.

Because these provisions go into effect within the next six months, health insurers may have to raise premiums in the middle of the year. The premium you or your employer are currently paying was not set to accommodate these additional costs. That means insurers will have to send out notices of even higher rate hikes, and adjust all their computer software to accommodate the new benefits. They will also have to send out new plan documents describing the changes in coverage. This to all 160 million Americans currently covered. That alone will be a substantial new cost that no one planned for.

Plus, there does not currently exist any federal office to oversee these changes in private health insurance contracts. Presumably the new plan documents will have to be filed with someone, but with whom? Nobody knows.

Curiously, because the requirement to accept people with pre-existing conditions doesn’t go into effect for several years, there is also a provision to create a temporary national high risk pool, effective June 23, 2010. But no such organization currently exists. They have less than three months to create one. How in the world can they do this (remember, we’re talking about the federal government here)? And why did they not simply use the state pools that already exist?

As is often the case with new programs, the “Law of Unintended Consequences” may soon be showing its ugly head.

(Hat tip to Greg Scandlen at “Consumers for Health Care Choices.”

AC Forrest is ready to help you navigate these new, murky waters – give us a call or drop an email to us at info@acforrest.com.