As many as 129 million--or 1 in 2--non-elderly Americans have some type of pre-existing health condition, ranging from a life-threatening illness like cancer to chronic conditions like heart disease, diabetes, or asthma.   In most states, these individuals can be denied individual health insurance coverage or have benefits for certain conditions excluded by insurance companies.   Even if some small groups desire to cover all conditions, there is little that can be done to prevent exorbitant premium increases.

Starting in 2014, the proposed rule  of The Affordable Care Act (ACA) prohibits denying coverage because of pre-existing conditions.  It does state that individuals would have to buy coverage during open enrollment periods.  In addition, individual would have new special enrollment opportunities in the individual market when they experience certain losses of other coverage.

Health insurance issuers in the individual and small group markets would only be allowed to vary premiums based on age, tobacco use, family size, and geography.   All other facts--such as pre-existing conditions, health status, claims history, duration of coverage, gender, occupation and small employer size and industry---would no longer be able to be used by insurance companies to increase the premiums for those seeking insurance.

Under the ACA, states can choose to enact stronger consumer protections than the above minimum standards.  In addition, starting in 2017, states have the option of allowing large employers to purchase coverage through the Exchanges*.  For states that choose this option, these rating rules also would apply to all large group health insurance coverage.   These proposed rules standardize how health insurance issuers can price products, bringing a new level of transparency and fairness to premium pricing.

Health insurance issuers would be required to 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 groups into one pool.   Premiums and annual rate changes would be based on the health risk of the entire pool.  This provision prevents insurers from using separate insurance pools within markets to get around the market reforms and to charge people with greater health problems higher rates for their pool,   than rates in other healthier pools (Note:   This practice has often been called "cherry-picking" , i.e, limiting certain pools to  healthy people in a.)

This proposed rule also covers individual and employee renewals, prohibiting issuers from refusing to renew coverage because an individual or employee suddenly becomes ill with a chronic or severe condition.  There is also a provision for enrollment in catastrophic plans, providing affordable individual coverage options for young adults and people for whom coverage would otherwise be unaffordable.  To see the proposed rule, visit http://www.ofr.gov/inspection.aspx.

*Exchanges are the mechanism through which low and moderate-income individuals receive premium and cost-sharing subsidies to make health coverage more affordable. Many states have started implementing them, some have not.   They must be implemented by January 1, 2014.  In states who have not established an exchange, a federally-facilitated exchange will be implemented.  Some states are delaying action until all lawsuits against the ACA have been settled.

 

 

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