Proposed Rules Issued on Health Care Premiums

I’m not pretending to be a policy wonk on health issues, just regurgitating what I read from more informed people. Some key rule proposals under Obamacare have been released.

An important one has to do with premium protection and sets criteria and boundaries within which insurers can adjust premiums. Most importantly is that the insurance is available to all comers who can pay these premiums — no denials for pre-existing conditions or denial of renewals for people who get sick. This requires a broadening of the insurance pool — the entire point of insurance is for the healthy to subsidize the sick. For more sick people, you need more healthy people (or else higher prices among the healthy people). That’s the reason for the mandate.

One of the rules would limit premium variations to 1) age; 2) tobacco use within limits, 3) family size, and 4) geography.

The factors are, with respect to a particular plan or coverage: (1) whether the plan or coverage applies to an individual or family; (2) rating area; (3) age, limited to a variation of 3:1 for adults; and (4) tobacco use, limited to a variation of 1.5:1. All other rating factors are prohibited. Thus, PHS Act section 2701 effectively prohibits several factors currently in use today, such as health status, claims experience, gender, industry, occupation, and duration of coverage, among others. Other factors that might be considered for rating purposes, such as eligibility for tax credits, prior source of coverage, and credit worthiness, also are prohibited.

Proposed rule at p. 22. A footnote says that the variations are multiplicative — for example, an old smoker could have a premium 4.5 times the base rate.

I think this kind of thing is a move in the right direction. Generally, I think we should either let people die if they don’t have enough money or provide universal coverage. A hybrid of those options tends to gravitate toward the worst features of both.

Comments

  1. says

    Here the people who worship at the feet of the free market will complain “but if insurance companies can’t discriminate between healthy and unhealthy people, there’s no *economic incentive* to stay healthy!”. Yes, right. Also: so what. Economic incentives are a very weak force in the arena of health care (as evidence by the fact that poor people disproportionately smoke and wealthy people disproportionately belong to gyms).

    Staying healthy is actually its own incentive, and if you know you won’t go bankrupt by visiting the doctor, it just might incent you to visit the doctor more often.

    • says

      Cost has absolutely been a factor for me in not seeing a doctor. I have had a (relatively) minor issue with my hand for about 3 years. I went to a doctor back when it was worse – he saw me for about a minute and told me I needed to get an MRI. I didn’t want to pay a grand for diagnostics. So, I just kept popping Alleve for about 3 months until it resolved into sort of a background issue. But, I still wonder if it represents an underlying structural issue that could cause big problems later.

      • Bring back the 91% says

        So basically, you want others to pay your “fair share?” I have no idea how much money you make. You have said you work collections, but I’m not sure if your a one lawyer business, or if you work for ten lawyers. The only collections attorney I knew was in business for himself, and he had enough money to pay for private school and drove an older sports car (maybe he purchased used, I don’t know).

        Now that us fiscal conservatives who don’t even make $50K/year have no where to turn in terms of politicians, I’m turning to hard core socialism. I’m with Paul Krugman, bring back the 91% tax rate. We need the tax brackets of the early 60s. Your two working parent family income is $120K/year, you pay at 71% for the $20K. This way, all those small business owners who make good money, but don’t want to pay their “fair share,” are forced to pay it.

        • says

          The incident I mentioned maybe isn’t necessarily on point. It has less to do with insurance and more to do with the economics of health care. I think I saw recently that the wholesale (for lack of a better term at the moment) cost of an MRI is something like $450 for one kind and $800 for a different one – the retail price of those procedures is more like $900 and $1,500.

          If the diagnostics had been available to me at closer to cost and/or if the doctor had given me some reason to believe he was striving for cost-effective treatment, I probably would have dealt with my ailment in a more comprehensive manner. As it is, I deal with minor, lingering discomfort – no big deal – but whatever it is could conceivably result in a more major problem that will then require my high deductible insurance to spread the cost.

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