The New Health Care System

Today is the day when several of the earliest, and most popular, patient protections go into effect. Health insurers won’t be able to turn down children with pre-existing conditions, and young adults up to age 26 will be able to stay on their parents’ health plans. If you get health insurance on your own, they won’t be able to limit how much they’ll pay in benefits over your lifetime, and they won’t be able to limit your annual benefits to less than $750,000 a year. And they won’t be able to cancel your coverage unless you have committed fraud or haven’t paid your premiums. (The complete list is in Chapter 8, “While You’re Waiting … “)

So what’s the catch? For one thing, a lot of people won’t see the changes right away. For most of them, you might have to wait until your new health plan year begins. The other issue, unfortunately, is that some health insurers have been raising their premiums and blaming it on the law. Health and Human Services Secretary Kathleen Sebelius recently scolded the health insurance companies for doing this, saying these early protections shouldn’t be that expensive to cover.

In the book, I focused a lot on what would happen to health insurance premiums in the long term. The Congressional Budget Office — which does all the cost estimates for the legislation Congress passes — decided the law shouldn’t raise premiums that much, especially since it would be expanding coverage at the same time and bringing in healthy people to stabilize the prices. Unfortunately, that prediction looked at the long term, not the short term. Right now, there are some new benefits that everyone will have to have, and there is no expansion of coverage to cover those costs.

Still, the administration and top Democrats in Congress insist that these are not expensive protections. Two of the Senate’s leading Democrats on health care — Max Baucus of Montana and Jay Rockefeller of West Virginia — warned insurers that they should explain why their estimates of the costs are so much higher than everyone else’s. These early protections, they said, shouldn’t raise premiums more than 1 to 2 percent.

Most likely, what’s happening is that health insurance premiums are going up anyway — because they always do — and the law might be raising them a bit more. So the insurers are putting as much blame as they can on the law, and that’s the message everyone hears. Still, if you were hoping the law would give you some relief from rising premiums, this will be a disappointment. The law will give you more secure coverage without so many gaps, but it’s hard to do that and bring costs down at the same time.

Kaiser Health News has a good piece about the new risk pool program for people with pre-existing conditions. So far, it’s getting a lot less business than officials expected. That could be partly because of a lack of publicity, but it’s also clear that the program has a lot of problems. The money may not last as long as it needs to, and people have to be uninsured for six months to be eligible. That rule is supposed to screen out people who don’t need the help, but really — how many people can wait six months for health insurance?

The high-risk pool program was always supposed to be a temporary measure. It would help people who can’t get coverage because of their health, the thinking went, until the broader reforms start in 2014 that will allow everyone to get coverage even if they have health problems. Unfortunately, a lot of people may also see this program as a preview of how well the rest of the reforms will work.

Granted, it’s early — the program just started in July — and probably too early to draw any conclusions. But it will not be good for the reform effort if the program doesn’t pick up momentum in the coming months. If the high-risk pools don’t work well, either because they’re cumbersome or because they don’t have enough money, that’s not exactly going to build confidence in the rest of the law.

The new federal rules are out today on the beefed-up appeal rights you’ll have under the law. The highlight is the right to appeal to an outside review board, with independent medical experts chosen by your state, when your health plan has refused to pay for something. This part of the law is covered in Chapter 2 of the book, “Fixing the Insurance Market,” and Chapter 8, “While You’re Waiting … ”

You can already appeal to the plan itself, but the law gives people in every state that extra level of appeal, which currently is available in some states but not others. It’s supposed to be available for new health plans that start after Sept. 23, but in reality, it may take a bit longer for the rules to reach everybody. The states that already offer external review have until July 1, 2011, to bring their standards up to the level recommended by the National Association of Insurance Commissioners.

In the states that don’t require external reviews now, health plans will have to offer appeals that meet a new set of federal standards. For those who think this is more proof that the federal government can’t wait to throw its weight around, there is a line in the rule that hints at the real story: The feds would just as soon let the states handle most of this. “The Departments prefer having States take the lead role in regulating health insurance issuers,” the rule says, “with Federal enforcement only as a fallback measure.”

You can read the rule here, or the fact sheet here.

The Obama administration put out new federal rules today to explain how the first new consumer protections will work. In doing so, they added some details to one protection that is pretty vague in the law: new restrictions on how much your health plan can limit your benefits in any given year.

Right now, your health insurance company can put a cap on how much they’ll pay in benefits each year. That’s a problem if you get an expensive illness, like cancer, that might cause your medical expenses to go way up in one year because of all the treatment costs. So the law says those annual payment limits will be restricted until 2014, and then they will be banned completely.

But the law doesn’t say how much the limits will be restricted, so there are no details in the book (Chapter 2, “Fixing the Insurance Market,” and Chapter 8, “While You’re Waiting … “). The new rules, however, explain how it will be done. The plan is to ratchet the limits upwards each year, gradually phasing them out.

Starting on Sept. 23 this year, no plan will be able to limit your benefits to less than $750,000 a year. On Sept. 23, 2011, those limits will have to be raised to $1.25 million. As of Sept. 23, 2012, the limits will go up to $2 million. And starting on Jan. 1, 2014, no health plan that is either issued or renewed after that date will be able to limit your annual benefits at all. (This will be true for all health plans except individual health insurance that is “grandfathered,” meaning that it stays pretty much the way it is and is therefore exempt from some of the new rules.)

The rest of the rules cover other consumer protections that start Sept. 23. As of that date, most health plans will have to cover your children even if they have pre-existing conditions; they won’t be able to cancel your coverage if you get sick; and they won’t be able to limit the benefits they’ll pay over your lifetime. They will also have to let you see the primary care physician or pediatrician of your choice, let you go directly to an OB-GYN, and pay for your emergency room visit even if you had to go outside the network.

You can read the rules here, if you dare.

There’s a new federal rule that spells out what changes your health plan can make, and what changes it can’t make, if it wants to be exempt from some of the requirements of the new law. The Obama administration says the rule proves that you won’t be forced to switch health plans — that “if you like what you have, you can keep it.” The critics say it proves the opposite — that a lot of health plans will be forced to change.

The bottom line is, yes, some of the biggest protections in the new law will apply to all health plans, even the ones that already existed before the law. There are others that will not apply if your health plan stays pretty much the way it was before the law. If it stays the same, it will be considered a “grandfathered” health plan. If it changes its coverage too much, it will lose its “grandfathered” status and other benefits will kick in.

Honestly, though, you’ll get some of the biggest protections either way. The other protections you would get if your plan loses its “grandfathered” status are significant, but it’s not clear that, in the short term, they would make a huge difference in the costs of your plan — at least compared to the new protections you’ll get anyway.

For example, even if your health plan doesn’t change at all, it will have to stop putting lifetime limits on your benefits as of Sept. 23. It will also have to allow young adults to stay on their parents’ health plan until they turn 26 — which a lot of insurers have started doing early. And if you have individual coverage, as of Sept. 23, it will no longer be able to cancel your coverage if you get sick. (These reforms are discussed in Chapter 2 of the book, “Fixing the Insurance Market,” and Chapter 8, “While You’re Waiting … “)

The main early benefits that would kick in only if your health plan loses its “grandfathered” status, according to the new rule, are preventive care — at no cost to you — and direct access to OB-GYNs and pediatricians without having to get permission from your plan. Those will be welcome benefits for most people, but it’s not clear that they’re as big a deal as the protections even the “grandfathered” plans have to have.

Either way, all of this talk about “if you like what you have, you can keep it” is probably a bit exaggerated. The new protections may or may not raise costs — we’ll know more once they kick in — but they’re not going to force you to switch to a health plan you don’t like, which is what most people were worried about.

You can read the rule here, but it’s very dense and it may not be the first thing you’d want to read. Instead, you might want to read the administration’s fact sheet and Q&A first — with the understanding that they’re meant to put the rule in the best possible light — and then look at the rule to answer any questions you still have.