Have you had a phone conversation like this or something similar?
Sally: “Hi, I’m calling to see if my claim for medical services has been processed.”
Insurance Company: “Okay, I see you filed that claim last month because you were in the Hospital to give birth, Congratulations.”
Sally: “Thank you, yes I filed the claim last month, there were a few unexpected procedures with the birth of my daughter, but she is doing great.”
Insurance Company: “That’s terrific, unfortunately you policy doesn’t cover any benefits for maternity.”
Sally: “So…my health insurance, that I have had for years, won’t cover the costs for the delivery of my daughter?”
Insurance Company: “No, I’m sorry, it doesn’t”
Comprehensive benefit coverage
Until recently, most individual and family health insurance plans (IFP) in California did not cover expenses associated with maternity. As of July 1st, 2012 all IFP policies do cover maternity but this might not be the case in other states. As was to be expected, health insurance premiums for the IFP policies did increase. With the inclusion of maternity benefits in IFPs, California is closer to meeting the minimum Essential Health Benefits mandated under the Affordable Care Act.
Minimum Essential Health Benefits (EHB) mandated to take effect 2014 to be included in IFPs
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management, and
- Pediatric services, including oral and vision care
Behind the curve
While many health insurance plans covered most of the top 10 EHB, potentially costly claim generators such as maternity and mental health services were excluded. States that have not included most of the EHBs before the 2014 mandate will most certainly see the average plan premium jump. However, most group health insurance plans have included all of these benefits for years and should see little change in plan composition or cost.
Deductibles will still be available
All plan premiums are moderated by deductibles, coinsurance and copays. Before any of the new
EHBs are covered the insured will still have to meet the deductible before the insurance coinsurance takes effect. A combination of deductibles and different levels of coinsurance will still be available to decrease plan premiums for those looking for the least expensive plan.
Another premium inflationary impact will come from plans that can no longer discriminate based on gender. As of 2014 health insurance premiums will be based on age, location and tobacco use. No more gender based ratings. Typically, women always incurred a higher premium up into the 50 year-old age range. At which point, men became more expensive to insure. This was primarily because of the potential for reproductive health issues for women. Men become more expensive over 50 because we never go to the doctor when we are younger.
Covering people with pre-existing conditions
There has been much consternation that having to cover people with expensive pre-existing conditions will also force premiums to skyrocket or crash the health insurance exchanges. Just as group health insurance plans have offered all the EHBs, they also must accept anyone with a pre-existing condition. The guarantee issue aspect of group health insurance plans is one reason people choose to work for a company that has a group plan.
While group plan premiums have been rising just as fast as the IFP, there is nothing to suggest that people with expensive medical conditions have or will cause these plans to fail. In addition, there are plenty of people with no medical conditions without health insurance that will enter the market. Their participation, just like in group plans, will stabilize the overall market so that premiums continue to exceed claims paid.
Delay = sticker shock
There will be upward pressure on health insurance premiums where states have not moved to include the EHBs and remove gender discrimination. Although, we are unlikely to see excessive escalation of premiums in the group market because they already cover many of the EHBs and accept folks with pre-exisiting conditions. Since California has been pro-active in including EHBs and remove gender based rating within insurance plans, we should see little to no premium increases because of the ACA mandates.
By: Kevin Knauss
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