Health Reform = Fewer Plan Design Choices!
Despite the high heat and humidity, it seems that each new summer week brings us news of big changes in the health care marketplace resulting from federal health reform. Quickly, the true results of “reform” are becoming clear: more costs, big changes for employers and fewer plan design choices for consumers. Despite promises from the politicians that reform would bring us more choice and lower costs……..it is clear that the chickens are quickly coming home to roost. Consumers will have fewer choices and even fewer tax favored ways to pay for these choices.
In the small group sector, we learned on Friday that in our region Aetna small group will reduce their portfolio offering in the third quarter from about 30 plans to a total of 14. Two of these plans are state mandated plans which rarely get used. Previously, 8 HSA eligible plan designs were offered in the portfolio and now Aetna will offer 3. One of these designs can be written as either plan or calendar year deductible…technically bringing the HSA offering number to 4 designs. No 100% plan designs will be offered and plans will use co pays after the deductible. Among traditional plan design offerings, the richest plan will have a $2000 deductible. The out of network reimbursement will now use a percentage of Medicare. The relativity spread in the portfolio will be roughly 48% down from roughly 60%. For most groups, the likely plan selection goes from a $2500 deductible to a $3500 deductible. These changes are being forced upon carriers who are doing their best to appropriately react to reform mandates.
Obviously Aetna, and I suspect other carriers, are reacting to federal health care reform requirements. Carriers are having to remove out of network lifetime maximums…… a feature that consumers have not had any interest in. Regardless, the removal of the lifetime maximum costs upwards of 3% with some carriers. The consumer gets to pay for a benefit that they had no desire to have. Indirectly, reductions in out of network reimbursement rates become the solution to paying for new mandated coverages.
Carriers are struggling with new MLR requirements. Consumers get to have fewer plan design choices and have even fewer ways of paying for exposure. One of the reform initiatives limits the amount that consumers can put away on a tax favored basis into flexible spending accounts. With average deductibles increasing by as much as $1,000, consumers will not be able to prudently cover outstanding deductible exposure via their FSA elections.
We’ll continue to monitor the fast and furious reactions that are occurring because of the artifice of national health reform. It is clear that the financial burden for reform will rest squarely on the shoulders of stressed out employers and workers. Does anyone know how this will help the country to create more jobs?
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