The ACA and Pre Existing Conditions
Today, as many as 129 million-or 1 in 2-non-elderly Americans have some type of pre-existing health condition, ranging from life-threatening illnesses like cancer to chronic conditions like diabetes, asthma, or heart disease. The Centers for Medicare & Medicaid Services (CMS) is publishing a final rule to implement several key provisions of the Affordable Care Act to prevent insurance companies from discriminating against people with pre-existing conditions and protect consumers from the worst insurance company abuses. Some of the provisions put into place are listed below:
Guaranteed Availability of Coverage-Health insurance issuers will be prohibited from denying coverage to people because of a pre-existing condition or any other health factor. All policies in the individual market will be guaranteed available and will be offered during open enrollment periods. All policies in the group market will be available continuously year-round. In addition, individuals will have special enrollment opportunities in the individual market when they experience certain significant life changes, similar to those in the group market today.
Fair Health Insurance Premiums-Health insurance issuers in the individual and small group markets will no longer be able to use factors — such as pre-existing conditions, health status, claims history, duration of coverage, gender, occupation, and small employer size and industry – to charge consumers greater premiums. Health insurance issuers may vary premiums only based on age (within a 3:1 ratio for adults), tobacco use (within a 5:1 ratio for adults and subject to wellness program requirements in the small group market), family size, and geography. States can choose to enact stronger consumer protections than these minimum standards. In addition, starting in 2017, states have the option of allowing health insurance issuers that offer coverage in the large group market to offer such coverage through the marketplace. For states that choose this option, these rating rules also will apply to all large group health insurance coverage. These rules standardize how health insurance issuers can price products, bringing a new level of transparency and fairness to premium pricing.
Single Risk Pool-The single risk pool provision prevents insurers from segmenting enrollees into separate rating pools in order to increase premiums at a faster rate for higher-risk individuals more than lower-risk individuals, as is often the practice today. Health insurance issuers will maintain a single statewide risk pool for each of their individual and small employer markets, unless a state chooses to merge the individual and small group pools into one pool. Premiums and annual rate changes will be based on the health risk of the entire pool.
Guaranteed Renewability of Coverage-The final rule reaffirms existing protections that individuals and employers have with respect to coverage renewal. For example, these protections will prohibit issuers from refusing to renew coverage because an individual or employee becomes sick or has a pre-existing condition. In addition, the final rule includes some additional provisions to protect consumers and increase choice for small employers.
Updating Rate Review-Finally, in preparation for the market changes in 2014 and to streamline data collection for insurers and states, the rule amends certain provisions of the rate review program. Specifically, it adds standards for assessing premium increases in Effective Rate Review Programs. And, to monitor rate increases across the markets, all rate increases must be reported with those that are 10 percent or higher still subject to review.