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Health Insurance Plans and Promises That Can’t Be Kept

Despite repeated promises that people could keep their health insurance plans, the administration released health care reform regulations on June 14th that says otherwise.

The regulations, released by U.S. Departments of Health and Human Services, Labor, and Treasury, stipulated the changes that health insurance plans must adhere to by Sept. 23, 2010.  Insurance plans in existence before Mar 23, 2010 will be grandfathered into a status that exempts them from requirements beyond these.  However, plans that increase premiums, co-payments or cut benefits will forfeit their grandfather status and be subject to additional standards.

New requirements state that all health insurance plans must have no limit on lifetime coverage or recession of coverage because of illness or unintentional application errors.  In addition, all plans must extend coverage to members’ children up to 26 years of age.   All employer-based insurance must not exclude coverage for children with a pre-existing condition or set annual dollar limits on coverage below government standards.

This sounds good but here’s the problem: All insurance companies, profit or non-profit, must make enough money to cover their expenses and stay in business.  Big employer-based plans with large risk pools have more wiggle room than smaller plans but there’s a limit to how many additional benefits any company can offer before they must raise rates or go out of business.  This means that a number of insurance plans will lose their grandfather status and thus be subject to additional stipulations, raising costs still further.    People may not need the benefits their insurance plan is being forced to cover.  For example, they may not have children but now will have to pay for that coverage regardless.

According to the administration’s own regulation document, it is estimated that up to 42% of small employer plans will lose their grandfather status because of higher rates in 2011, 80% in 2013.  Up to 69%  of all insurance plans will lose their grandfather status by 2013.  The promise that under the new health care legislation we will be able to keep our insurance plan was an empty one.

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