Health insurers adopt some new rules early
Friday, April 30, 2010
After being criticized as obstructionists during the long health-care debate, insurance companies now are implementing some popular provisions even sooner than the law demands.
Major insurers said this week that they will soon end the practice known as rescission, which involves going back and scrutinizing the applications of people who develop costly illnesses and dropping their coverage based on even minor or innocent misstatements.
In addition, dozens of health plans will allow dependents up to age 26 to stay on their parents' plans by this spring, months ahead of the September deadline -- a step that will be especially helpful to many families with students graduating from college.
Those promises follow an industry pledge not to exploit a potential loophole in a requirement that insurers cover children with preexisting conditions.
"Our focus right now is on implementing these reforms in a way that's going to minimize disruption and provide greater peace of mind for the more than 200 million people we serve," Robert Zirkelbach, a spokesman for the industry group America's Health Insurance Plans, said Thursday.
In each case, the industry's concessions were requested by the Obama administration or members of Congress. By quickly complying, insurers could repair their battered image and build goodwill with the administration, which drove the legislation to passage this year largely by going on the offensive against insurers.
For all concerned, the health-care battle is not yet over. Government officials must now translate the new legislation into more detailed regulations, and the industry's fortunes could rise or fall based on the eventual fine print. Meanwhile, candidates for House and Senate seats will be debating the legislation's merits.
The administration and congressional Democrats could benefit politically if voters see favorable results from the new law before they go to the polls in November.
Many Americans will find themselves unable to take advantage of the insurers' offer to extend family coverage for young adults this spring. The federal government told its workers last week that it is legally prohibited from granting that option until Jan. 1, 2011.
"Though we are eager to provide coverage to young adults prior to Jan. 1, the current law governing the FEHB [Federal Employees Health Benefits] Program specifically prohibits us from doing so," the Office of Personnel Management said. "We are working diligently with the Congress to address this matter."
Families covered by private-sector employers may have to wait, too. At big companies, it is often the employer rather than the insurer calling the shots; many large employers pay medical claims out of their own coffers and simply enlist insurers to administer the coverage.
Officials at two organizations for large employers, the National Business Group on Health and the ERISA Industry Committee, said Thursday that they did not know of any member companies offering to expand coverage for young adults ahead of schedule.
"Every employer I know is still trying to figure out what to do with this provision," said Steven Wojcik, vice president for public policy at the National Business Group on Health. "They're waiting, not sure how to react."
Employers are reluctant to make a short-term change before they know the long-term rules, said Gretchen Young, senior vice president for health policy at the ERISA Industry Committee, which takes its name from a federal law.
Employers are trying to figure out how to implement the provision, not just when. Questions include whether they will charge families additional premiums to let young adults stay on or rejoin their health plans. The law does not prohibit them from doing so.
The Internal Revenue Service removed one impediment for employers this week when it clarified that employees can take advantage of expanded coverage for dependents on a tax-free basis.
Spokesmen for some insurance companies interviewed Thursday said they did not know details of how their coverage for young adults will work, including whether it will involve extra premiums and whether the dependents' medical status will affect premium costs.
The White House posted a list of dozens of insurers that will offer the early coverage, including WellPoint, Cigna, Aetna, United HealthCare, Humana, Kaiser Permanente, and BlueCross and BlueShield plans. The offer could spare insurers the headaches of dropping people this spring only to restore them a few months later. The fact that young people tend to be healthier could mitigate costs.
WellPoint said earlier this month that, beginning June 1, its health plans will automatically keep dependents up to age 26 on their parents' policies in the individual market and in group health plans where the employers buy insurance. Employers that use WellPoint in a strictly administrative role will have the option of not offering extended coverage, WellPoint said.
Secretary of Health and Human Services Kathleen Sebelius asked WellPoint to end rescissions after a news report accused it of targeting women with breast cancer. WellPoint disputed the article but agreed to the request.
Congressional Democrats asked other companies to do the same.
Karen Ignagni, president of America's Health Insurance Plans, replied Wednesday that her group is committed to implementing the new standard for rescissions in May. Insurers are still permitted to revoke policies if the applicant made a fraudulent or intentional misrepresentation.
"It's heartening to see that the insurance companies who employed these terrible practices -- and fought reform -- are coming around doing the right thing by instituting the ban right away," Nancy-Ann DeParle, director of the White House Office of Health Reform, said in a statement. "We'll be watching closely and holding them to their word."