KC Health Care Reform

April 12, 2010

Why do we keep hearing premiums will increase as a result of health care reform?

Despite what you may have heard, insurance premiums are NOT the primary reason health insurance rates continue to go up. In actuality, rates go up as a result of the increasing costs of health care services and procedures. Unfortunately, health care reform as it stands now does not address the issue of rising costs.

It is the belief of many that premiums will go up as a result of reform because the penalties for those individuals who do not buy insurance once it’s mandated are too low. It will be too easy for younger, healthy people to forego health insurance (because they are willing to gamble on the fact they won’t need it) and just pay the small penalty instead. On the other hand, people who are less healthy, or know they will require health care services, will buy or stay on their health insurance. This creates an issue of “adverse selection” where rates must increase in order to cover the added cost of an unbalanced system where there are fewer healthy people and more sicker people.

When will the short-term reform changes take place?

Short-term changes around health care reform are generally effective for plan years beginning on or after September 23, 2010. Below are some clarifications on certain of these short-term changes:

• Dependent Children: All plans are required to provide coverage to adult children (married or unmarried) until they turn 26 years of age, IF the dependent is not eligible to enroll in another employer-based plan.
• Pre-existing condition limits for children under 19 years old: All plans will cover pre-existing health conditions for a child under the age of 19.
• Preventive Health Services: Preventive services, as defined by federal agencies, will be required to be covered at 100% effective for new plans.
• Emergency Services: Requires equal member cost sharing for emergency services received by non-network providers and prohibits any limitations more restrictive than those imposed by network providers for new plans.

What kind of help will small businesses receive to cover their employees?

Effective in 2010, many small businesses and not-for-profit organizations providing health insurance to their employees will qualify for a special tax credit of up to 35% (25% for tax-exempt organizations). This tax credit is designed to encourage small business to offer or continue to offer health insurance to their employees. There are eligibility criteria that must be met, and that information is available at www.IRS.gov, but in general the tax credit is available to small businesses that pay at least half the cost of single coverage for their employees, employ fewer than 25 employees AND pay wages averaging less than $50,000 per year.

The maximum credit (i.e. 35%) is available for smaller employers, those with ten or fewer employees, paying annual average wages of $25,000 or less per year. In 2014, the tax credit will increase to 50% of premiums paid by eligible small businesses and 35% of premiums paid by eligible tax-exempt organizations.

What about people who can’t get insurance right now?

As part of health care reform, a national high risk pool program is in the process of being created and is expected to be in place this summer. This past week, Secretary Kathleen Sebelius sent out a letter to all States, asking if they would be willing to administer this program along side their current high risk pool for residents of their respective States. This national pool would be available to any individuals who have pre-existing health conditions, and have not been covered under creditable coverage during the prior 6-month period. The State of Kansas has already agreed to this, and it’s anticipated that the State of Missouri will do the same. More information on this national high risk pool program will come out of the office of the Secretary of Health and Human Services.

Does reform affect the Federal Employees Health Benefits program?

In a statement received from the Office of Personnel Management (OPM), it was stated that “while some aspects of this law will not take effect until 2014, there are several major provisions that become effective before that time. Among those is the coverage of a dependent until age 26. The effective date of this provision is the first day of the plan year that is six months following enactment of the law. For the Federal Employees Health Benefits (FEHB) program, that means January 1, 2011. The OPM will take the necessary actions to comply with the new law by this effective date. We will provide additional information on our Web site in the near future about the changes to FEHB plans for the 2011 plan year occurring as a result of reform so that employees and retirees have the information in time for the Open Season, which begins in November.”

Health care reform has passed. What does this mean?

President Obama was successful in passing significant health insurance reform, as he promised during his campaign for president. Most of the more significant changes in his reform bill will impact health insurers and create new requirements for coverage. It’s important to note that some changes are effective within the next six months, while others won’t go into effect for years. Click here to see a full timeline from America’s Health Insurance Plans (AHIP) of effective dates for requirements.

Blue Cross and BlueShield of Kansas City is pleased that, with the passage of the Senate bill and the House’s reconciliation bill, 32 million Americans without health insurance will be covered. We have long supported several of the key elements now part of health care reform, such as universal coverage through guaranteed issue with a mandate, and bans on pre-existing exclusions. These “new rules” are not new at all to our company. This is how we did business from our inception in 1938 until the late 1970s, when we had to change to compete with investor-owned insurance companies who were allowed to choose which customers they wanted to cover.

Do current Blue Cross and Blue Shield of Kansas City members need to do anything now?

No, Blue KC members don’t need to do anything. Your coverage through your employer or your individual plan is secure with Blue KC. There are some short-term changes in the health care reform legislation that will be implemented over the next several months (see Congress’ clarifications). More significant changes you’ve heard about, such as the requirement that everyone have health insurance, and the requirement that insurers accept anyone who applies, will not be implemented until 2014.

Can I keep my Blue Cross and Blue Shield of Kansas City insurance?

Of course you can keep your Blue KC insurance. Blue KC remains committed to providing excellent customer service to its members, along with a broad portfolio of products and programs to meet the insurance and wellness needs of our members.

Can I keep my doctor?

We don’t see any evidence in current reform legislation that people will need to change their doctors. There is some concern, however, that should reimbursement rates for physicians be affected by reform legislation, fewer people will enter the field of medicine, which could impact access to physicians in the long-term.

What changes can we expect to see right now?

The health care reform bill that passed is very complex, and full of moving parts, however, some elements have become clearer. In the next several months, several changes will occur, including the following, and we will be ready to make these changes. You can find more detailed information on all short-term changes here.

• Lifetime limits on coverage will disappear
• Pre-existing condition exclusions on children will be banned
  • March 29, 2010: there appears to be some confusion regarding exactly what this actually means. We are working to confirm whether this means 1) insurers will be required to issue policies on all children that apply, or 2) if a child is accepted, there will be no pre-existing condition exclusions on that child’s policy.
• Health insurers won’t be able to rescind member policies except for fraud or intentional misrepresentation of a material fact. Please note – this is already our policy.
• Dependents will be able to stay on their parent’s health insurance until they are 26 years old
• Preventive services will be covered

What changes will we see in coming years?

Several longer-term changes will be implemented in future years, and we’ll keep you apprised of when these changes will occur:

• Guaranteed issue with a mandate – requires individuals to have insurance and requires health insurers to accept anyone who applies
• No pre-existing condition exclusions for anyone
• Health insurers will only be able to rate on age, tobacco use, contract type and geographic area
• State based insurance exchanges will be implemented for individuals and small group employees
• Medical Loss Ratio requirements will be in place for insurers
• Limits on annual coverage will be prohibited

What did the reconciliation bill do?

We are pleased that the reconciliation bill has passed. This bill fixed some of the more significant issues in the Senate bill, such as providing for a stronger individual mandate to encourage both healthy and sick individuals to buy health insurance.

Are rates going to go up?

There is concern that increased taxes, as mandated through health care reform, on those already insured and on health insurers, along with a weaker than planned mandate, will increase rates for anybody with insurance. In addition, extra fees imposed on insurers will also be passed along to consumers, also raising rates. These anticipated rate increases won’t happen all at once, but will instead occur over time, as the taxes are implemented, and insurers are required to provide insurance to all comers.

When can members add their adult dependents (through age 26) back on their policies?

This will become effective six months after enactment of health care reform, or with October 1, 2010 renewals or new policies.

Blue Cross and Blue Shield of Kansas City rejected my application for coverage. Now that health care reform has passed, how do I go about getting a policy?

The passage of the Senate bill on health care reform last weekend is just the first step in a long process of implementing health care reform in our country. This question refers to the part of reform called “guaranteed issue,” in which health insurers will be required to sell insurance to anyone who applies, without reviewing health conditions. This part of reform won’t be implemented until 2014. Until that time, the White House has promised Americans that, shortly after reform passed, insurance options (like high risk pools) would be implemented for those individuals who can’t get insurance elsewhere. As soon as we have information about how and where these options might be available, we can share it with you.

What is Blue Cross and Blue Shield of Kansas City doing to prepare for health care reform?

For nearly a year, we have been working with internal task forces to make sure we understand how these proposals will affect our members and our business.  With the help of the Blue Cross and Blue Shield Association, we have already modeled the consequences of most reform elements, and we will comply with all requirements. A cross-representational group of senior management has been working since last summer to analyze the impact of potential new requirements on our business and to develop strategies to ensure BCBSKC continues to provide you the coverage you need..

Our newest products, like Blue4U for individuals and AffordaBlue for individuals and small group customers, are designed to provide the benefits at affordable rates. We are also making significant changes to our preventive care coverage and benefit designs to minimize cost barriers to members receiving routine preventive care.  Again, these actions are meant to ensure we are ready for the changes health care reform will bring to us and are consistent with our vision and strategy of being Kansas City’s health and wellness leader.

When will we know more?

Through its legislation, Congress has laid out a multitude of ways it intends to restructure the health insurance industry. What is still uncertain is how this legislation will actually be implemented. In the coming months and years, the Secretary of Health and Human Services (HHS) will issue a series of regulations that will clarify the different elements of reform and move the process forward. This is time-consuming, and until we have a better feel for what the actual regulations will be, it’s difficult to state with great clarity the impact of the legislation.

We’ll continue to analyze the legislation and upcoming regulations and evaluate how they will affect our members and our company. We will keep this FAQ updated in the health reform section of BlueKC.com. Our company stands ready to work with state and federal regulators to make these complex rules work for our customers and our community.

Where can I find more information on health care reform?

Blue Cross and Blue Shield of Kansas City is committed to providing updated information on health care reform to the Kansas City community. This information is available on the company’s Web site, www.BlueKC.com. Click on the Health Care Reform link on the lower left corner of the home page to visit our special section on reform.