Consumers can now select their state on a federal web page to see if any health insurers have raised rates, as well as the company’s reasoning behind the action. This information was previously unavailable, according to Steve Larsen, the Department of Health and Human Services (HHS) deputy director for oversight (only a few states include rate increases on their own websites). Now, all insurance companies must file this information with HHS as one directive of the Patient Protection and Affordable Care Act (ACA). “We are taking a good, hard look at why insurance companies are seeking to raise your rates, why your premiums might be going up, and making sure these decisions are public and justified,” HHS Secretary Kathleen Sebelius said. “This is just a start, and over time we will be reporting more of these requests.”
The announcement follows a recent survey by the Kaiser Family Foundation that showed premiums for an employer-sponsored plan for a family of four climbing nine percent in 2011. A report by Barclays Capital Equity Research showed that in the first three months of 2011, 13 of the leading 14 health insurers exceeded their earnings per share estimates; average earnings were 46 percent over estimates. Insurers who wanted to raise rates 10 percent or more for individual or small group plans are required to provide justification.
At the same time, an advisory group urged officials to create a list of essential health benefits under President Barack Obama’s healthcare overhaul that aligns with the cost of typical small-employer plans. The Institute of Medicine (IOM) report recommended that HHS be specific in deciding what health benefits should be required in individual and small group plans as the ACA goes into full effect in 2014. The IOM, one of the National Academies of Science that advises U.S. policymakers, did not address any specific benefits types, in keeping with its assigned task. “We’re in a marathon. What we’ve just gotten today is the first leg,” said Paul Keckley, executive director of the Deloitte Center for Health Solutions.
The IOM recommendation favors business groups and insurers who have sought a narrow package of required benefits because of concerns that the plans will cost too much, said Neil Trautwein, vice president for the National Retail Federation. Government should limit premiums to levels no higher than what small businesses pay on average and choose benefits “within the context of financial constraints,” according to the report. The recommendation “is the appropriate tack to take since the objective is to cover everyone with at least basic benefits,” Trautwein said.
The issue has seen businesses and patient advocacy groups — such as the American Cancer Society, which argues for robust coverage — at odds with each other. The ACA requires insurance plans to cover 10 broad categories of care, including hospitalization, mental health and pediatrics starting in 2014 and left details to Obama’s HHS secretary, who has asked the IOM to recommend the optimal way to select the benefits that should be included in the plans. Employer lobby groups argue that a generous package of benefits would cause workers to desert company plans, which could have the effect of compelling employers to pay fines and raise premiums as the number of people covered by their health plans decreases.
According to the IOM, Sebelius should start with a package of benefits that mirrors what small businesses offer their employees. She should set a “premium target” for the benefits that is approximately the same as what small businesses will pay, on average, in 2014. Next, she should select benefits that meet the target, a process the IOM compared to shopping for groceries under a budget. “If the package of essential health benefits gets too comprehensive, it quickly becomes unaffordable,” said John Ball, chairman of the institute committee that wrote the report.
Beginning in 2014, every health plan in the new marketplaces known as “exchanges” will have to provide a minimum package of “essential health benefits.” The IOM report provides federal officials with a framework for devising that package, but doesn’t provide specifics. “I’m sure a lot of people were expecting to get a list,” said Elizabeth McGlynn, a member of the IOM committee and head of the Kaiser Permanente Center for Effectiveness and Safety Research. “That was outside of our charge.”
“With this thoughtful report, the IOM is urging policymakers to strike a balance between the affordability of coverage and the comprehensiveness of coverage,” said Karen Ignagni, president and CEO of the health insurance trade group America’s Health Insurance Plans. “We agree that this balance is critical to ensuring that individuals, working families and small employers can afford health insurance.” Amanda Austin of the National Federation of Independent Business termed the report “encouraging,” and “pretty thoughtful,” although she believes that HHS still has to do the heavy lifting to write the plans.
Sebelius issued her own statement on the report, saying she will hold “listening sessions” to help people choose what benefits they want included in the mandatory package. “These conversations will help us ensure that every American can access quality, affordable health coverage they can rely on,” she said. This seems to suggests to some that a proposal from the department won’t be coming anytime soon.