Lower Prices For High-Risk Coverage
How low can they go? Experts agreed that pricey premiums for the new pre-existing condition insurance plans created under the health care overhaul were partly to blame for anemic enrollment in the plans, which reached just after several months, compared with potentially hundreds of thousands that had been projected.
Starting July 1, the Obama administration premiums by up to 40 percent in 17 states and the District of Columbia where it runs the new and encouraged other states to follow suit. The because federal officials now have state-specific data that allowed them to more accurately peg the premiums to the rates for individual plans in the state, as the law requires, says Steven Larsen, director of the Center for Consumer Information and Insurance Oversight at the Department of Health and Human Services.
Another provision of the health reform law could help make the planswhich are aimed at people with medical conditions who cant get coverage on the private individual marketeven more affordable.
Under the law, starting in 2012 insurers must spend at least 80 percent of the premiums they collect on medical claims, as opposed to administration or profit, or to consumers for the excess amount collected.
Some insurers are already to meet the new medical loss ratio requirements. (Medical claims paid are considered losses in insurance jargon.) If tough economic times continue and people cut back on medical care, experts say other insurers may follow suit. Plans are getting nervous about how big the rebates theyre going to have to pay are, says Timothy Jost, a law professor at Washington and Lee University whos a consumer representative to the National Association of Insurance Commissioners.
If insurers lower premiums in the individual market to meet the laws new MLR requirements, that could be good news for the PCIP programs, whose rates are supposed to be no higher than standard rates in a states individual market.
Talk about further reductions can wait for another day. Its possible, that the medical loss ratio requirements might further depress premiums in the PCIPs, says Larsen. However, I wouldnt care to speculate about that.
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