Three ways Obamacare changed Tuesday

November 20, 2012

If you were searching for some heavy reading to occupy long Thanksgiving travels this week (or, alternatively, assist with sleeping through said travel), look no further than the Department of Health and Human Services.

It came out Tuesday afternoon with some of the most crucial Affordable Care Act regulations, ones that explain how the government will ensure that premiums remain affordable and that health insurers cover the most important medical treatments. 

To call the regulations long would be an understatement: Taken together, the three new regulations weigh in at 333 pages. Largely, they preserve the big provisions that the Affordable Care Act includes: Preventing insurers from denying coverage to those with pre-existing conditions and limiting how much consumers can be expected to pay out of pocket. 

Still, there are a few important changes that the Obama administration made Tuesday. Culled from the 333 pages of federal regulation, here are the three most important changes that happened.

Higher deductibles are a-okay -- in certain plans. One way the health-care law tries to reduce consumers cost is by limiting plan deductibles. In the small group market, this meant that insurers could not set a deductible any higher than $2,000 for an individual. 

That limit created a math problem for the exchanges, where insurers could ofter different levels of benefits. Insurers were supposed to be able to offer "bronze" health-insurance plans: Packages that covered about 60 percent of an individual's medical costs, lowering the upfront costs of premiums for the consumer (silver plans, by comparison, will cover 70 percent, with gold and platinum offering even more generous benefits). 

Insurers griped out this provision: They said it might be impossible, with that relatively small deductible to build an insurance plan that has the consumer paying 40 percent of the bill. Tuesday, the Obama administration essentially agreed. "The concern is, with the maximum deductible for the small group, it might be difficult or impossible for some groups to issue a bronze level plan," says Gary Cohen, acting director of the Center for Consumer Information and Insurance Oversight. Insurers will now be allowed to go above the $2,000 threshold if they cannot "reasonably" build a benefit package at any metal level without doing so. 

Happy birthday! Here's your premium increase. The Affordable Care Act limits how much more older Americans can be charged for health insurance by tethering their rates to those of their younger, generally healthier counterparts. More specifically, the law says that older Americans cannot be charged more than three times as much as young Americans. 

It did not, however, specify, how those different rates would phase in. Would all the 20-somethings pay one rate and then see a big increase on their 30th birthday? No, they won't: Tuesday, the Obama administration announced it would use one-year age bands: Each year, in other words, comes with a slight increase. 

If you really want to wonk out, here's how HHS suggests structuring those increases (the ultimately decision is, however, left to the states):

The idea here was, as Cohen explained, to prevent any steep hikes between one birthday and the next. 

Want to lower your premiums? Try a smoking cessation class. The health-care law also allows insurers to charge tobacco users 1.5 times as much as non-smokers, a higher rate generally meant to cover the higher costs incurred from smoking-related diseases. These new regulations propose one exception to that: It would prohibit insurers from levying the full surcharge if the individual enrolled in a smoking cessation program. "Rather than have the tobacco use surcharge...be strictly a negative financial incentive," the regulation notes. "This approach would encourage tobacco users to pursue tobacco cessation remedies offered under their employers’ wellness programs, enhancing their long-term health and potentially reducing health care costs."

These regulations, it's worth noting, aren't final. They are proposed, with some of the comment periods ending on Dec. 26 (Merry Christmas, HHS!). They do show that, even with the law's future now secured, many tweaks are very alive and well and on the table.

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