As we move through and have a better understanding of this very complicated health care reform it becomes clearer the disconnect from the white house and real life. This is so complicated and the effects are only going to raise costs.
For Small group health plans there is very little chance they can be grandfathered in. These small group plans are unable to keep their current plan designs and not do more cost shifting. Once these groups have to have plans that have the additional coverages force on them this is only going to raise premium. These are increase that small groups can’t afford. The Reform is giving small groups tax credits but very few groups are going to qualify for those tax credits once you read the small print.
When the health exchanges open in 2014 no one will be able to afford them without tax subsidies. How can you offer such rich benefit plans and think it will bring down premiums?
The launch of the High Risk Pool plans is a perfect example of how these law makers did not use math. Right now the prediction on the high risk pool plans cost is anywhere from $600-$900 a month for single coverage and there is a 3-6 month wait until pre x is covered and you have had to go without coverage for 3-6 months. The White House is clueless on the reality of a high risk pool. First off very few will be able to afford the plan. The other problem is the waiting period for benefits to kick into place. This is another huge example of disconnect.
In my experience $900 a month premium is a very real possibility once the exchange goes into effect. When we look at states like Mass and NY where they are already practicing Guaranteed issue type policies we have big problems there. One is a complete lack of carrier competition. They carriers can not make any money in fact most of them lose money operating in those markets. So you end up with one or two carriers that are charging $2,800 a month for a family plan. I am afraid we are on a fast track to see these kinds of premiums.
The next big issue for this month is Medical Loss Ratio (MLR). This law is going to force the carriers to pay 80%-85% of the premiums towards claims or refund a portion of the premium. We could see private carriers forced out of business on this one. The problem with doing an MLR on a case by case scenario is one group might be health and the other one has huge claims. At the end of the day the carriers is making a profit because the healthy groups help to offset the sick ones. Once again the White House with total disconnect to the industry could destroy the private carriers in a very short time period.
There is no doubt that health care and health insurance is a very complicated problem but I am affraid the healthcare reform package is taking us in the wrong direction.