Obama officials tweak rules for health insurers

November 20, 2012

The Obama administration proposed new rules Tuesday that would loosen some of the 2010 health-care law’s mandates on insurers while tightening others.

Certain health plans, for instance, would be able to charge customers higher deductibles than originally allowed under the legislation. But all plans would be required to cover a larger selection of drugs than under an earlier approach outlined by the administration.

Similarly, the law permits insurers to set their premiums for tobacco users 1.5 times higher than those for non-smokers. But insurers wouldn’t be allowed to impose the surcharge on smokers enrolled in smoking-cessation programs.

The changes were included in the fine print of three regulations the Department of Health and Human Services proposed to flesh out key parts of the statute. For the most part, the regulations — which will be open for comment until Dec. 26 — would simply codify mandates in the law or in earlier administration guidance.

Those policies include a prohibition on insurers denying coverage to people with preexisting medical conditions. They also limit how much plans can vary rates based on, for example, a person’s age. Most provisions will take effect in 2014.

What the health-care law means to you

But Tuesday’s proposals also included a few significant tweaks.

The suggestion to grant insurers greater flexibility in setting deductibles, for example, reflected concerns that health plans would have a hard time meeting the law’s original requirements.

Specifically, the legislation prohibits plans sold to small businesses from setting deductibles higher than $2,000 for individuals and $4,000 for families. But the law also limits how big a share of total health-care expenses must be paid out of pocket by individuals or families, including through co-pays and co-insurance.

Insurers have complained that it could prove impossible to design a package of benefits that meets that requirements while keeping the deductible below $2,000.

Administration officials agreed. So the proposed new rule would exempt insurers from the deductible limit if that’s necessary to achieve the plan’s overall cost-sharing target.

Karen Ignagni, president and chief executive of America’s Health Insurance Plans, a trade group, said in a statement Tuesday that the “additional flexibility” is a “positive step.” But she added that “we remain concerned that many families and small businesses will be required to purchase coverage that is more costly than they have today.”

The proposed rules probably would require health plans to cover a larger number of drugs than the administration originally indicated. The law requires all plans to cover a minimum package of “essential health benefits,” matching those in a benchmark plan chosen by each state.

The administration had left open the possibility that insurers might be able to limit their coverage to only one drug in each class of medication covered by the benchmark plan. That upset consumer advocates.

The regulation proposed Tuesday would specify that plans must cover the same number of drugs per class covered by the benchmark plan.

Stephen Finan of the American Cancer Society’s Cancer Action Network applauded the change. “Most if not all plans that are potentially benchmark plans have this more robust drug coverage,” he said.

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