Starting next year, all health insurance policies sold in Ohio will be required to cover a broad range of federally mandated benefits, such as substance use disorder and mental health services, which are not commonly available in most health plans today.
As a result, thousands of Ohioans will be forced to purchase health insurance that is more comprehensive, but also more expensive, than coverages now available because health insurance premiums will be tied to the benefits expansion, experts say.
“It’s not the only reason costs will go up, but it’s definitely a big part of the reason,” said John Bowblis, a Miami University economics professor who focuses on health care. “You can’t add benefits without adding to the cost of insurance.”
The health status of those who sign up for coverage will also have an impact on premium rates, Bowblis said, and the poor health condition and lifestyle of many Ohio residents are likely to drive rates higher.
But the core benefits package alone is expected to increase individual health insurance premiums from 20-30 percent, on average, according to a study commissioned by the Ohio Department of Insurance.
The rate increase will primarily affect about 350,000 Ohioans who do not have health insurance coverage and are not eligible for public programs, such as Medicaid and Medicare. They will be required to purchase health insurance or pay a penalty to comply with the individual mandate in the Patient Protection and Affordable Care Act, commonly referred to as Obamacare.
The health care law requires insurers to offer Essential Health Benefits in 10 categories, including hospitalization, ambulatory care, maternity care, prescription drugs and laboratory services.
Today, less than 2 percent of individual and family health plans in the U.S. meet the new federal standards, according to a study this month by HealthPocket, Inc., which found that the average plan in Ohio meets from 80-89 percent of the requirement.
“The larger the gap between the essential health benefits and what’s currently being offered, the greater the potential for premium increases,” said Kev Coleman, head of research and data at HealthPocket, a California-based company that compares and ranks health plans.
Closing the gap between what’s covered and will need to be covered next year will undoubtedly push costs up, Coleman said.
But individuals purchasing plans through on-line Health Insurance Marketplaces — which are suppose to begin selling plans in October — will be eligible for premium and cost-sharing subsidies.
The subsidies will cover a progressively larger share of the cost of health plans for those with household incomes below 400 percent of the federal poverty rate, or $44,680 for an individual and $92,200 for a family of four.
Ohio is among 25 states that opted to allow the government to step in and create its health marketplace. Eighteen states and the District of Columbia elected to run their own, and seven states agreed to operate them as federal-state partnerships.
State awaits details
The health marketplaces are intended to allow consumers to easily find, compare and enroll in health plans. But, so far, details are sparse for the government-run programs, except for general guidelines posted on HealthCare.gov website.
“We are waiting for some information and guidance from the federal government, but we really don’t know exactly what the exchanges will look like in Ohio,” said Donna Conley, co-chair of the Ohio Health Benefits Coalition, a consumer advocacy group. “But it’s going to mean better access to health care. The information that’s going to go up on the site is going to be consumer-friendly and presented in language that people can understand.
“That’s important because insurance is really complex to begin with, and if you’ve never had insurance that can be a real problem,” she said.
Although the federal government will run the health marketplace in Ohio, the state insurance department will continue to regulate and approve most health plans sold in Ohio, including those in the marketplace.
In addition, pending state legislation will authorize the department to train and supervise “health navigators” required under the health care law to help educate consumers about the on-line marketplaces.
“The legislation currently pending will enable the department to take necessary regulatory action in the event that a consumer is harmed by a navigator or someone claiming to be a navigator,” said Ohio Lt. Gov. Mary Taylor. “Just as consumers using a licensed agent can rest assured that agent has been properly trained and certified by the department, consumers that elect to use navigators should have those same protections.”
Under the health care law, insurance plans sold through the on-line marketplaces will be offered in four different levels denoted by precious metals, representing the actuarial value of each plan, or the percentage of the cost of benefits the plans will cover.
For example, the silver plan — expected to be the most popular plan — will have an actuarial value of 70 percent, meaning it will pay for 70 percent of medical spending for covered services, and beneficiaries would pay the remaining 30 percent in the form of deductibles, co-pays, and coinsurance.
The bronze plan would cover 60 percent of medical spending; the gold plan 80 percent; and the platinum plan 90 percent.
Conley said the metal system will allow for greater transparency when it comes to evaluating the cost of health insurance, something that most states fail miserably at, according to a recent report from the nonprofits Health Care Incentives Improvement Institute and the Catalyst for Payment Reform.
The report analyzed state laws requiring such things as the publication of health insurance pricing information on-line, and laws allowing patients to request pricing information before receiving services.
Ohio received a “D” grade on the report card, joining 36 states that received a “D” or worse.
Only Massachusetts, whose 2006 health reform law was the template for Obamacare, and New Hampshire received an “A.”
The Patient Protection and Affordable Care Act, signed into law by President Obama on March 23, 2010, requires most U.S. citizens and legal residents to have health insurance. It requires also each state to offer subsidized insurance plans to its residents through online Health Insurance Marketplaces, which:
- Will require health plans to include a core package of federally mandated essential health benefits.
- Allow individuals and families to purchase coverage with premium and cost-sharing credits for those with income between 133-400 percent of the federal poverty level.
- Impose new regulations on health plans designed to make their cost and services more transparent.
- Offer separate marketplaces for small businesses to purchase coverage.
- Require employers to pay penalties for employees who receive tax credits for health insurance through a marketplace, with exceptions for small employers.