Friday, November 16, 2012

A new approach to medical insurance is coming soon to Connecticut.

Following provisions in federal health reform Connecticut’s General Assembly passed legislation to establish the Connecticut Health Insurance Exchange. It is now working to begin operations on the date defined in the law - - Jan. 1, 2014 and plans to allow people to look at plan options and begin the enrollment process in October 2013.

Some points about the medical insurance plans, which will be available:
● There will be four levels of coverage Platinum, Gold, Silver, and Bronze with considerable regulations being placed on how these plans are designed.

● The Exchange Board considered four benchmark (common) plans, defined by the federal Health and Human Services department to be the basis of coverage within the four metal levels and selected a plan based on a ConnectiCare HMO. Federal health reform law provisions require these plans to cover 10 Essential Benefits (EB). Two of the required EBs are not now covered in medical insurance plans in Connecticut. They are pediatric dental coverage and Habilitative coverage, which is an expansion of what is now included in Rehab coverage. This means more cost.

● These 10 EBs are also required to be in all plans in the Individual market and the Small group market whether a plan is purchased inside or outside the Exchange.

● Current plans in Connecticut’s individual market are quite comprehensive and because applicants are subject to a review of their medical history they are less expensive than similar plans in the small group market. Adding the EB coverage to individual plans, including maternity, and eliminating the medical history review means the premium will go up a significant amount! ! !

● The Actuarial Value (AV) of the plans must also be determined. When a person enrolls in a Platinum plan the insurance company must pay for 90% of the AV of all the treatments, tests, etc. Thus, if a person encounters a major medical expense situation they would only have to pay, in the way of co-pays, etc., up to 10% of the AV. Of course the premium for any plan in the Platinum level will be very high. Gold level plans will have a 80% AV. Silver will have 70% AV and Bronze will have a 60% AV.

● Additional regulations with the steps to calculate the AV are expected to be issued by the end of November.

● Premiums will also be based on an adjusted community rate. Connecticut currently uses an adjusted community rate system and the premium in the small group market is about five times more expensive for someone in their 60s than for a 20 year old. Companies today can also use male and female rates. Health reform says premiums cannot vary more than 3 to 1 from age 20 up to the 60s. My sense is the premium for someone in their 60s will drop some but there will be a big increase for younger ages. Premiums for a male and a female of the same age are to be the same and there will continue to be variation in cost around the state based on a person’s zipcode.

Some additional information on costs resulting from federal health reform provisions is available in this summary.

It highlights some points from an article written by Americas Health Insurance Plans an association of medical insurance companies.

● Smokers can be charged 50% more!

● The health reform law says the premium a medical insurance company charges, for a certain plan, must be the same whether its offered in or out of the Exchange. Thus, since an Exchange has to be self-supporting after one year of federal funding and the Connecticut Exchange is anticipated to have a budget of about 30 million the Board is developing plans to raise the needed income by adding a FEE on top of the premium for all plans purchased through the Exchange!

More information about the impact of federal health reform on individuals and small employers will be provided as it becomes available.

Contact if anyone in Connecticut has questions - (860) 662-3000

John C Parker, RHU, LTCP