NY Times Health care reform: first steps

1. NY TimesHealth care reform: first steps 09/23/2010

2. Under the new law, insurers that offer child-only policies must start covering all children, even the seriously ill • Insurers must also begin offering free preventive services, • their premiums must start passing muster with federal and state regulators by the end of the year. • Companies are choosing to avoid some of the rules by no longer offering certain policies. • Aetna, WellPoint and Cigna, for example, have announced that they would stop selling new child-only policies, at least in some states. • Ahead of the regulatory review, some also raised premiums this year.

3. In 2014, when insurers will have to offer coverage to everyone and begin selling their plans on state-run exchanges. • Adjusting to the new terrain could push some insurers out of business, health care analysts say. • insurers will no longer be able to pick and choose enrollees to avoid covering people who are likely to run up high medical bills, and many of the markets where they operate will become much less profitable. • “A lot of health plans will struggle and fail,” said Jeff Fusile, a health care partner at PricewaterhouseCoopers.

4. The challenge for the industry as a whole will be to demonstrate an ability to oversee patient care and work closely with hospitals and doctors to find ways to improve the quality of care while trying to contain costs. • To that end, insurers are making big investments in technology systems and new areas of expertise. • Blue Shield says it has already increased its efforts to address the cost and quality of care by exploring new ways to pay doctors and hospitals. • “We’re going to do a lot more innovation and experimentation, failing and succeeding, than we’ve ever been doing before,” Mr. Bodaken said. • Like many of its competitors, Blue Shield is also upgrading its technology systems. The plan is spending several hundred million dollars on the effort, and both the new and old systems must be reprogrammed at the same time to reflect the new rules.

5. Even those insurers that were critical of the legislation have little choice but to comply. • Several have chosen to avoid the new rules by ceasing to offer certain policies. • In the case of the child-only policies, insurers say the new rules could require them to cover too many sick children and too few healthy ones. • Aetna, for one, says it would be willing to work with government officials to find ways to keep offering the coverage. “With the right regulatory environment, we would be able to keep plans affordable and continue to offer them” • The Obama administration says that it is willing to work with the insurers, but added that the companies had already promised to continue offering the policies. • “Insurance companies have pledged to offer coverage to children with pre-existing conditions, and we expect them to honor that commitment”

6. One of the most critical changes in the coming months will be the final rules dictating how insurers spend their premiums. • The federal legislation says that at least 80 cents of every dollar collected in premiums must be spent on the welfare of patients, but the regulations spelling out what qualifies are still being worked out. • Some insurers are acting quickly to make cuts to lower their overhead expenses in anticipation of the new regulations on spending. • Brokers may see their commissions, which are paid for by the insurers, sharply reduced or eliminated as one potential source of savings. • The legislation also requires insurers to have their premiums vetted, in some fashion, by regulators at the state and federal levels. • Given the amount of controversy over the double-digit increases some plans have already requested, insurers are readying themselves for a long and potentially fraught process.

7. Blue Shield recently filed rate increases of less than 2 percent, on average, for all of its policies, and a little more than 4 percent in the individual market, largely to address the expanded benefits under the new federal law. • The timetable to enact the new rules under the health care law is aggressive, and administration officials say they will enforce it.