Avoiding 2014's Outrageous Premiums with New-Old Plans?

[AllenChicago]

Some very interesting and exciting information was gleaned in a conference call on Friday.

It seems that many of the medium sized health insurance companies will be reinstating a lifetime limit on their major medical plans...thereby making them non-major medical. By doing so, they can keep the policies essentially the way they are now structured, thereby keeping premiums close to where they are now.

Their logic is that a relatively healthy person would rather pay $300 per month for a policy with a $10million lifetime limit, than pay $700 a month for an exchange policy that's (potentially) partially subsidized by Uncle Sam. For a family, that premium spread is even wider.

After seeing some of the projections and knowing human nature, I have to agree with that logic. There is the tax-penalty for not having major medical, but the IRS says payment of this tax/penalty by the Affordable Care Act violator is voluntary, and it's collection will not be enforced.

Does this sound like a good way to legally offer good-quality alternatives to the ultra-expensive, federally regulated exchange health plans?

One thing I do know from experience is that a few of companies smaller than BCBS, Aetna, UHC, etc., pay twice as much in commission, yet still provide excellent customer service and timely payments to providers.

-Allen in Chicagoland

 

[Yagents]

I believe:

1. Insurance companies will figure out the loopholes in the law these idiots passed.
2. If due any kind of tax refund, the penalty will be taken from that refund due
3. I believe mid/higher income will be doing an analysis, hence why I bought paythehealthtax.com
4. It's another reason why private exchange products will thrive.
5. See #1 above
6. The unlimited lifetime limit provision only adds about 1% to the premium. They'll have to come up with other ways to keep premium down.

 

[somarco]

The biggest cost factor will be GI, community rating, maternity and the actuarial constraints . . . not the LT max

 

[stuy119]

The biggest cost factor will be GI, community rating, maternity and the actuarial constraints . . . not the LT max

Yes, but unhealthy people with chronic conditions will be less likely to gravitate towards a plan with a low lifetime limit, so we'll get preferred selection under this scenario.

 

[Yagents]

Sad thing is that those who need insurance the most will still be paying $5950 out of pocket. I'm projecting every plan will have this OOP. NO more $2500, then 100% plans. All will have coinsurance, and copays. We best pray that HSA's are still allowed in the IFP market so they can at least tax deduct the OOP. The difference in the metal plans will be deductibles to meet the AV values. 1k, 2k, 3k and 20/30% coinsurance. Maybe a smattering of different EHB coverage. They can still have caps on # of visits, like physical therapy and still be compliant. So, OOP will be higher than $5950 with some conditions.

 

[Ann H]

Hmmmm.... This is very interesting. If I understand Allen from Chicago correctly, the main point is that insurers who are not interested in Exchange business (medium-sized insurers) are finding loopholes to have their products categorized as NON major medical, thereby not subject to most of PPACA's provisions.

That's interesting. Let's see if I remember Obamacare's rules correctly. An insurer who wants to participate in the exchange may also offer plans outside the exchange if the premiums are the same in and out, for like coverage. There can be more products outside the exchange than inside, but those products have to adhere to PPACA's rules including the actuarial values, minimum benefits, and EHB's that it requires. An insurer that does NOT want to participate in the exchange cannot offer major medical insurance at all. Am I correct on that? (Trust me, there's plenty about this law I still struggle with!)

So (if my assumption in the last paragraph is correct), then these medium-sized insurers are saying they don't want to be players in the exchange anyway. They probably feel they wouldn't get market share in the exchange, when compared to UHC, Blues, Aetna, Humana, etc. They also see a great market for non-PPACA health coverage (sheez, they are certainly right about that one!!). So, to offer any medical products at all, they would have to design products that aren't categorized as major medical according to PPACA.

That's where it falls apart according to what I THINK I know about PPACA. I was under the impression that any kind of fee-for-service plan would be considered major medical and therefore prohibited if it didn't meet the minimum benefits outlined in PPACA. I thought that's why limited benefit plans were running into trouble. I also thought that's why indemnity (or scheduled benefit) plans that weren't "fee-for-service" were able to continue after 1/1/2014.

Maybe I'm wrong in my understanding of this issue in the law. Trust me, what I wrote above is just my general understanding. Maybe someone on this forum has a clear, factual answer and/or documentation about this issue.

But either way, finding a loophole and creating a product for a HUGE market is outstanding. There's another thread on this board where I commented that an insurer would be smart to design a scheduled-benefit type of plan that's NOT limited benefit, but that is fair in the schedule it uses. If it kept pace with medical inflation, and if it started with a schedule that's similar to today's PPO provider contracts, it could blow away the "major medical" competition, exchange business for those who are minimally subsidized, small group business, and limited benefit business.

The only shame would be that exchange business would suffer adverse selection, those premiums would SPIKE, taxes would spike to support it, and root drivers of health care costs wouldn't be addressed at all meaning we will have the same problem that we have today, just at higher premiums and higher taxes. Other unintended consequences would be that today's big insurers would be known as less-desirable exchange business - shall we say "substandard business" like in P&C - and today's medium-sized insurers would seize a huge market share. I can say one thing, though. If it were "scheduled benefit", and there was transparency in medical billing, it would motivate the owner of these policies to act like frugal consumers. And, if tax-funded exchange business is insuring those with lower incomes & medical conditions, then hospitals wouldn't need to cost shift so much.

All in all, a very, very interesting idea. Please, someone join in and explain to us what kind of product an insurer would have to design to avoid PPACA's benefits requirements for "major medical plans".

 

[0b1kanobee]

Ann, I thought this was the theory behind Assurant's Health Access plans? (what you stated above)

 

[somarco]

Some carriers are of the belief indemnity mini-meds will still be viable after 2014 if marketed as SUPPLEMENTAL products. Essentially offering them in the same vein as cancer, CI, HIP, etc plans.

The growth market, if there is one, will be for ancillary plans, either individually or in the workplace.

My understanding is, you are correct, that a carrier cannot offer a major med plan outside the exchange unless they also have products in the exchange.

Personally, I see 3 players in the exchange/major med business come 2014. Blue, UHC and possibly Aetna or Humana.

Aetna and Humana are only marketing in 30 or so states with some overlapping but I don't think there will be enough for Aetna and Humana to share a state, even a populous one.

Both carriers are large, diverse and well financed but neither offer major med in NY so why would they fight for market share in a less populous state under GI and community rating rules?

In some areas HMO's like KP will continue to operate but they are not state wide and will confine themselves to regional areas. KP is well positioned in Atlanta to survive Obamacare and I assume the same is true in most of the other parts of the country where they have network plans.

 

[Yagents]

Want a solution?.....I have 2 words......HI DEF

 

[SportsNut]

I must say that this thread is an interesting read. [if I only understood it all]. It seems that many of you have a very good handle on where we are heading 1/1/14. It also appears that there will be quite a demand for supplemental coverage since the OOP for PPACA since there is considerable exposure for this wacky, wonderful world of PPACA plans.