It has been three years since the passage of the Patient Protection and Affordable Care Act (ACA), and full implementation of the federal health care reform law is now less than eight months away.
From nearly the moment of its passage at the federal level, California has been leading other states in working toward its Jan. 1, 2014, implementation, despite the fact that federal regulations providing guidance to states on key implementation details have not all been finalized. There is much we do not yet know about how health care reform will be implemented in California and what impact it will have on our health and dental insurance systems, and our health and dental care delivery systems.
There has been much speculation about the impact on health insurance rates, with some speculating that rates in the individual market (as opposed to employer-provided insurance) could see significant increases. Some believe health plans will raise rates in certain markets in order to accommodate for any losses they may accrue while trying to compete in the newly emerging markets where the cost of the product will be a tremendous determinant of purchase choice. While health insurers have been reluctant to discuss the impact the ACA might have on their rates once the law goes into effect, The Wall Street Journal recentlyreported that one insurer announced at its annual investor conference that rates in some markets could go up by as much as 100 percent.
However, in these debates, others point to provisions in the ACA that are specifically designed to curtail these large rate increases, should they occur. First, each health plan must justify proposed rate increases for health insurance products. According to the Center for Consumer Information and Insurance Oversight, the new law requires that independent experts and regulators review proposed rate increases to make sure they are reasonable.
Second, they point to the medical loss ratio (MLR) provisions of the ACA, which require health plans to allocate at least 80 percent of the premium revenue to actual patient care. If revenues exceed the 80 percent threshold, each plan must provide rebates to their consumers. This section of the ACA has already been implemented, and last year, the U.S. Department of Health and Human Services reported that health plans paid out in MLR rebates $1.1 billion to 12.8 million participants.
One recently published study commissioned by the California Exchange predicted that low-income people who cannot afford insurance today are going to benefit the most, and most middle-income consumers will also see lower rates. It stated that families at higher income levels (more than about $90,000 a year) are likely to pay more for their coverage. But how much more is still unknown.
How this battle between health insurance companies and state and federal regulators will resolve itself remains to be seen, and it may be many months or even years into the implementation before any of us have a definitive answer.
We do know that we will see some changes in California’s dental benefits system. Because children’s dental benefits were included as one of the Essential Health Benefits, we know that more children in California will have access to dental benefit plans. What we don’t know, however, is exactly how many. Some estimate it to be more than 1 million children, but no one really knows for sure and there are too many variables still unknown (including the actual cost to consumers) to have reliable data. We also know that the California Exchange has chosen, in response to CDA advocacy, to exceed the benefits that federal law requires be offered and will include adult dental benefits for optional purchase — providing a new opportunity for working adults to access private dental insurance. The real impact of this potential influx of newly insured on rates and access to dental care is unknown.
As Jan. 1, 2014, approaches, there are many milestones for plans, the Exchange, providers and beneficiaries in the next few months. Health and dental plans have just submitted bids to the Exchange if they hope to sell products there. Over the next few months, the Department of Managed Health Care will be conducting oversight of the proposed products and will be conducting a review of the reasonableness of the rates included in those bids. By June 30, the plans and the Exchange must sign contracts for the sale of the products, which is when we can finally get a look at the details of the products for sale. And by Oct. 1, open enrollment is set to begin, and individuals and families can begin purchasing coverage, with that coverage set to begin Jan. 1, 2014. It is going to be a very busy 250 days.
CDA remains actively engaged in all the implementation details and policy debates acting on your behalf as our state moves to implement this law.
For more information, please contact Nicette Short at CDA at firstname.lastname@example.org or 916.554.4970.