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PPACA: NAIC Consumer Reps Look at Antiselection

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The individuals who speak for consumers at the National Association of Insurance Commissioners (NAIC) have come up with ideas for how regulators and lawmakers could keep new federal guaranteed issue rules from wrecking the individual health insurance market.

The reps included  a collection of recommendations for dealing with the guaranteed issue rules in a discussion of strategies for implementing the Patient Protection and Affordable Care Act of 2010 (PPACA).

The reps presented the discussion this week at the NAIC’s summer meeting in Atlanta.

PPACA  provisions set to take effect in 2014 call for insurers in the individual market to stop considering applicants’ health when selling and pricing coverage.

Insurers will be able to charge higher rates for older consumers than for younger consumers, but the difference between the highest rates an insurer charges and the lowest will be limited, and an insurer will not be able to consider factors such as whether an applicant has cancer or has had an organ transplant when setting prices.

The Supreme Court recently ruled that Congress does have the authority to impose a tax on individuals who fail to buy a minimum level of health coverage, but the tax will be modest, and some say the Internal Revenue Service will have trouble collecting the tax.

Some have suggested that consumers may try to game the system by paying the modest tax on uninsured individuals, then acting as “free riders” and waiting until they are seriously ill to buy health insurance.

To control the free rider problem, state regulators, state lawmakers and the U.S. Department of Health and Human Services (HHS) should make sure that both the exchanges and the fully insured individual market have standardized open enrollment periods, or periods when anyone can buy individual health coverage, the consumer reps say.

The open enrollment periods for the new PPACA exchanges, or Web-based health insurance supermarkets that PPACA is supposed to create, should take place at the same time as the open enrollment periods for the fully insured individual market, the reps say.

But, when PPACA first takes effect, the individual fully insured market should offer an initial open enrollment period that lasts at least 6 months and is consistent with the initial exchange system open enrollment period, the reps say.

To make sure individuals who are facing a change in their need for individual health coverage have access to coverage, state regulators and lawmakers should establish a special enrollment period of at least 60 days from the date of a triggering event, the reps say.

Policymakers should “require insurers to inform consumers about enrollment periods by including a prominent and continuous announcement on the insurer’s website with a clear explanation that coverage is available on a guaranteed issue and guaranteed renewal basis,” the reps add.

The reps also talk about PPACA implementation matters such as procedures for reviewing health insurance rate increases, the rules governing the small group health insurance market, limits on waiting periods, the stop-loss market, reinsurance and risk adjustment programs, the limited benefit medical plan market, and the essential health benefits that PPACA will required to be included in all health plans affected by PPACA.

In the section on limited benefit medical plans, for example, the reps say the NAIC’s Limited Medical Benefit Plan Working Group, which handles the mini med plans covered by PPACA, also should “include excepted benefit plans—such as hospital indemnity, other fixed indemnity and specified disease and illness policies—and mini-med plans in its charge to ‘review issues related to limited medical benefit plans’ because such plans raise issues related to limited medical benefit products.”


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