Tag Archive: risk rating

House Passes AHCA. Next step is to the Senate… with a whole new bill. | Michael Lujan | Pulse | LinkedIn

Source: House Passes AHCA. Next step is to the Senate… with a whole new bill. | Michael Lujan | Pulse | LinkedIn

In this piece, Michael Lujan does a good job outlining the basic insurance principles. The problem however in the non-group market goes deeper than a failure to understand the relatively simple rules that govern all forms of insurance. Paying for medical costs shifted away the major medical risk insurance model to the prepaid model that came with the rise with HMOs and managed care organizations in the 1970s and 1980s.

Hence, consumers don’t see medical risk sharing in the same way they view other forms of personal insurance intended to protect against accidental or unexpected large losses such as life, homeowners and auto. The managed care model of bundling in relatively low cost primary care has furthered that perception. Consequently, consumers chafe at basic insurance functions such as underwriting and being asked to pay deductibles and otherwise assume a degree of risk. To them, it appears as a take away — “unusable” coverage that reduces value in their eyes, especially as premiums rise.

Unless consumers of individually sold medical plans see them as insurance and something only to be used when needed to cover large, unexpected medical costs, the segment will continue to struggle regardless of reform efforts such as the current House bill. It would restore another insurance basic with medically underwritten premium rating for states that opt to allow it for individuals who have not maintained continuous coverage provided the state has established a high-risk pool or participates in a federally-sponsored high-risk pool.

As long as consumers are reluctant to be insured in the conventional insurance sense for medical risk and insurers are reluctant to cover it, the long term viability of the non-group market remains in question.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Concerns over large group plan exchange option overblown

Concern is being raised that a Patient Protection and Affordable Care Act provision allowing large group plans (defined as those offered to employers of 101 or more beginning in 2017) to offer plans on state health benefit exchanges could disrupt the large group market. The basis of the concern is an ACA requirement at Public Health Service Act Section 2701(a)(5). The section would apply the ACA’s mandate on individual and small group plans, requiring they use modified community-based rating (rather than risk rating) to large group plans in those states that elect to allow large group plans to be sold via their health benefit exchange marketplace:

(5) SPECIAL RULE FOR LARGE GROUP MARKET.—As revised by section 10103(a). If a State permits health insurance issuers that offer coverage in the large group market in the State to offer such coverage through the State Exchange (as provided for under section 1312(f)(2)(B) of the Patient Protection and Affordable Care Act), the provisions of this subsection shall apply to all coverage offered in such market (other than self-insured group health plans offered in such market) in the State.

My impression is this concern is overblown. It’s both unlikely that states will be interested in bringing large group plans into their exchange marketplace or that large group plans would want to participate. The Affordable Care Act’s enhanced risk spreading mechanisms contained in market rules and the exchange marketplace needed in the individual and small group markets are less necessary for large group plans that already benefit from greater scale and spread of risk. In addition, a robust private exchange marketplace is springing up to offer large employers more opportunity to create even larger pools and greater spread of risk.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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