Fully Insured Rate Increases Under ACA

We are starting to see projections of the rate increase fully insured group health plan can expect.

30%-50% increases in fully insured premiums under the health care reform laws. These are huge increase that very few small group or large group plan will be able to afford.

These increase are due to different aspect of the law.

1. The Essential Health Benefits (EHB) provision of the Affordable Care Act of 2010 (ACA)
created 10 general categories of benefits:
} Ambulatory patient services
} Emergency services
} Hospitalization
} Laboratory services
} Maternity and newborn care
} Mental health and substance abuse services, including behavioral health treatment
} Prescription drugs
} Rehabilitative and habilitative services and devices
} Preventive and wellness services and chronic disease management
} Pediatric services, including oral and vision care

2.  Deductible caps cannot exceed $2,000 for individual and $4,000 for a family.

The deductible caps will have a huge increase on premiums. Most fully insured plans have a 3x single deductible and now they will have to be moved to 2x single.

3. Reinsurance Fee

The reinsurance fee is a per member per month assessment of approximately $5, which will vary by state. Now this is per member, so a family could be assessed an additional $20 a month in premium.

4. Insurance Fee

Industry sources have estimated that the amount to be collected under this provision will represent 2.3 percent of total premium. The 2.3% will be added in with the health insurance premium.

5. Adjusted Community Rating

Adjusted community rating, guaranteed availability (issue), guaranteed renewability, single risk pool, catastrophic plans and rate review provisions. The insurance industry can no longer underwrite against risk.

These are some of the aspect of the law that are impacting fully insured health insurance premium. The impact is insane!

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