Friday, November 6, 2009

Health Insurance: Your Health Plan After Reform

health insurance

This may feel like just another open enrollment season, one more anxious check of the coverage offered by your employer to see how much benefits have been trimmed and the financial pain heightened. [For help, consult America's Best Health Insurance Plans and our plan-picking tips.] But before long, at least the worry that vital coverage will be lopped off could end. After health reform, a few years from now, nearly all Americans would be required to have coverage—at a minimum, a "qualified" health plan, designed to Uncle Sam's specifications and providing a core of comprehensive protection.

Most likely, you'd get hospitalization, emergency services, rehabilitation, prescriptions, mental-health and substance-abuse services, maternity care, and well-child services. Preventive care recommended under medical practice guidelines, such as vaccinations, abdominal aortic aneurysm screening in men ages 65 to 75 with a history of smoking, and mammograms every one to two years for women starting at age 40, would be covered.

Basic qualifying plans would be grouped into tiers based on how costs are shared between plan and member. A bottom-tier plan would offer the lowest premiums, but copayments would be higher, and the insurer would pay less of the bill. Healthier people who expect to use fewer services might find such a plan appealing. A top-tier plan would have higher premiums, but members would pay less for care.

Here are other key elements, distilled from the legislation in play in early November, that are likely to appear in health plans of the future:

Guaranteed coverage. In the new world order, you couldn't be kicked out of a plan if your health changed, and a pre-existing condition could no longer give cause for rejecting coverage of care-related expenses or blocking your insurance eligibility. "In today's market, people are denied insurance because they [heeded] the advice of a doctor and took a pill to lower their cholesterol," says Dallas Salisbury, president and CEO of the Washington-based Employee Benefit Research Institute. Total annual or lifetime dollar ceilings imposed by some insurers on coverage, typically $1 million or $2 million, would disappear.

Everybody plays. A majority of uninsured Americans, now put at 46 million, would be ushered under the health insurance umbrella. Many have stayed out by preference, taking their chances on staying healthy, but others have been kept out because of health issues; now joining up would be mandatory. Individuals without access to employer-based coverage would have to buy a policy at a new "exchange" from a private insurer or potentially—the proposed public option—from the government. Information in your tax return would tell Uncle Sam whether you were on board. If not, you'd probably pay a fine—possibly a flat fee of, say, $750 for those above the poverty line or a percentage of adjusted gross income (2.5 percent is under discussion). The penalty could not exceed the average national premium of a basic insurance plan in the exchange.

No push to switch. You wouldn't be forced to abandon your current employer plan, but if it didn't meet the "qualified plan" standards—most plans, even at companies of modest size, probably do already—the company would have to create a new plan that did. The old plan would be permitted to continue, possibly only for a certain number of years, in a frozen state, with no changes. With a new plan, says Helen Darling, president of the National Business Group on Health, "you'll pay more" because of the improvements that have been added.

Age-based premiums. Currently, premiums for plans sold to individuals often are calculated not only according to age, health status, and pre-existing conditions but on gender, credit rating, employment history, and other personal information as well, says Karen Pollitz, research professor at Georgetown University's Health Policy Institute. "All of those get taken away, [except that] Congress is leaving age on the table," she says. Older people would pay no more than two to four times the premiums charged to younger people—for the former, a welcome lid on a significant expense, but a sudden jump for many at the other end of the age scale. Geography and family size also would remain as price-setting factors.

Financial aid. For those who shop on the exchange, a federal subsidy would cap premiums for households with incomes up to four times the poverty level, currently about $43,000 for an individual and $88,000 for a family of four. The cap would be a percentage of income—1 percent or so of lower incomes and about 12 percent at the top. Still, people with no current coverage could be jolted. Total yearly premiums for a plan one step up from the bottom could be less than $1,000 for a single adult of any age earning $19,000 a year but more than $5,000 for someone age 50 or older earning the subsidized maximum of $43,000. For a family of four, annual premiums might start at about $1,600 at incomes of about $40,000 regardless of age and nearly $11,000 at the $88,000 income maximum for a policyholder age 50 or older. Higher-income earners could be hit much harder. Another annual cap, on out-of-pocket costs (perhaps $5,000 or $6,000 for individuals and $10,000 or $12,000 for families), would not take premiums into account. Medicaid might be expanded to more lower-income earners.

Fewer catastrophic policies. As plans change to meet the more comprehensive baseline coverage, the current combination of relatively cheap policies that kick in only for financially catastrophic events, such as advanced emergency room care or unexpected surgery, plus individual health savings accounts might outlive its usefulness. "I suspect the days of the [high] deductible would be numbered," says Henry Aaron, senior fellow and health policy expert at the Brookings Institution, a Washington think tank. Catastrophic plans might remain available to "young invincibles" no older than 25 who bank on their youth and good health and buy cheaper, limited coverage. Or a separate provision might allow them to stay until age 26 or 27 on Mom's or Dad's plan.