The health insurance plans, they are a-changing

Health insurance plans will have to beef up on benefits if they want to stay in business under Obamacare, according to a new study out Wednesday afternoon from Health Affairs.

The health overhaul law mandates a wave of new requirements all intended to make health insurance more robust. It requires health plans to cover a set of “essential health benefits,” a comprehensive package of benefits outlined in the law. Health plans are also required to foot the bill for, on average, at least 60 percent of subscribers’ health expenses. In the individual market, insurers must also cap annual out-of-pocket expenses at $6,050 for individuals and $12,100 for families.

The University of Chicago’s Jon Gabel lead a team of researchers in examining how many health insurance plans in the individual market meet those requirements right now. He found that most didn’t: 51 percent will not be able to sell on the new health insurance exchanges without increasing their benefits. A lot of that had to do with individual market plans not offering maternity coverage, one of the more costly benefits -- and one that plans must pay for under the Affordable Care Act.

Assuming these health plans want to stay in business — boost their benefits -- what will that mean for the individual market? Most obviously, health insurance will become more robust. “The provisions of the Affordable Care Act will not only extend new coverage to millions of uninsured Americans but vastly improve the coverage of many who are insured but poorly protected by their health plans,”says Commonwealth Fund vice president Sara Collins.

As health insurance benefits become more expansive, that also means they get more expensive: Multiple state analyses estimate that their individual market premiums will rise after the new regulations come into play. Most of that increase, however, is likely due to changes in the demographics of the individual market rather than the additional benefits. As patients with preexisting conditions enter a marketplace they were previously locked out of, their costlier health care needs are expected to push up premiums.