Insurers will have to scramble to revamp policies aimed at helping U.S. residents fill health coverage gaps, according to a limited-benefit market executive.
Brian Robertson, executive vice president of Fringe Benefit Group Inc., Austin, Texas, talked about the prospects for limited-benefit health insurance products in an interview expanding on a commentary his firm released earlier this week.
Only about 1 million U.S. residents have any kind of limited-benefit product, and that limits the ability of insurers and producers in the market to get the attention of anyone in Washington, Robertson says.
The result: Provisions in the Affordable Care Act – the legislative package that includes that Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act – will ban the sale or renewal of health insurance products that put annual or lifetime limits on benefits.
In practice, that means issuers of existing limited-benefit products that are regulated as group health insurance products will have to impose drastic price increases or drop the products, Robertson says.
Congress adopted the benefits caps in reaction to stories about patients insured by major medical plans who found that the plans covered far less care than the patients had expected. Few members of Congress appear to be aware of insurer efforts to sell low-cost, clearly explained products that help people who cannot buy conventional major medical coverage, Robertson says.
Products that are filed as supplemental indemnity health insurance products and are not subject to Employee Retirement Income Security Act requirements appear to be safe, Robertson says.
Most states have some kind of supplemental indemnity health insurance market, but rules differ from state to state, and a few states allow for no supplemental health insurance sales.
About 60% of the products in the limited-benefit market probably will be affected by the ACA annual and lifetime benefits caps, Robertson says.
Fringe Benefit had been focusing on supplemental health insurance market and was just getting ready to roll out “true group” limited-benefit products when ACA changed the game, Robertson says.
Companies that have been focusing on selling true-group products, with few or no supplemental products, may need about a year to develop ACA-compliant products, Robertson says.
“I’m not seeing a whole lot of action” in Washington in connection with efforts to help limited-benefit product insurers get a few more months to sell existing products while developing ACA-compliant products, Robertson says.
Brokers who sell limited-benefit products should be asking carriers, “How are you going to react?” Robertson says.
In theory, ACA and the health insurance exchange distribution system it will create could create big new supplemental health products starting around 2014, but federal regulators have not yet described the exchange-based plans in detail, and appear to be focusing on implementing ACA provisions that will take effect in 2010 and 2011, Robertson says.