How does this bill really affect the plans Americans have now? Will we still have choices or will we end up on a government-controlled plan anyway?
Well, according to page 19 of HR 3200, health insurance that is not “grandfathered” will only be offered as an “Exchange-participating health benefits plan.” The following is an excerpt from page 19 of HR 3200:
In general-individual health insurance that is not grandfathered health insurance coverage under subsection (a) may only be offered on or after the first day of Y1 as an Exchange-participating health benefits plan.
That does not tell us much if we do not know to what “grandfather” or “exchange-participating” refer.
What is a grandfathered plan?
In Sec. 102 “Protecting the choice to keep current coverage” of HR 3200 (starting on page 16), the bill puts three major limitations on grandfathered plans.
1. The plan cannot accept any new enrollees.
In general.-Except as provided in this paragraph, the individual health insurance issuer offering such coverage does not enroll any individual in such coverage if the first effective date of coverage is on or after the first day of Y1. (Excerpt from page 16 of HR 3200)
Obviously, a plan that does not except new enrollees will not last very long. Also, this locks us into whatever health plan we have unless we go to an “exchange participating plan.” If our work insurance is dropped or we change jobs, we will not be able to enroll in another plan, unless it is an exchange-participating benefits plan.
2. The plan cannot change any terms and conditions.
“Limitation on changes in terms or Conditions-Subject to paragraph (3) and except as required by law, the issuer does not change any of its terms or conditions, including benefits and cost-sharing, from those in effect as of the day before the first day of Y1.” (Excerpt from page 16 of HR 3200).
If anything in our health plan changes it will become an exchange participating benefits plan or cease to exist.
3. The plan cannot charge higher premiums to at risk individuals.
The issuer cannot vary the percentage increase in the premium for a risk group of enrollees in specific grandfathered health insurance coverage without changing the premium for all enrollees in the same risk group at the same rate, as specified by the Commissioner. (Excerpt from page 17 of HR 3200)
Ordinarily, insurance companies, regardless of what kind of insurance they’re selling, make money by paying out less money than they take in. They do this by charging higher rates to people that they believe are at a higher risk of needing a payout down the road. Grandfathered plans would have to either charge everyone high rates, including the healthy people, to make up for the unhealthy people, which would allow the public plan to undersell them, or they would go out of business trying to charge everyone the same low rates. This would cause grandfathered plans, those do not become exchange-participating health benefits plans, to go out of business.
These limitations are designed to phase out all grandfathered plans by forcing them to become exchange participating health benefits plans or causing them to go out of business. What does it mean to be an Exchange-participating health benefits plan? Check my blog entry “Insurance Plans You Can Keep”* to find out.
*"Insurance Plans You Can Keep" http://teapartyncwv.weebly.com/2/post/2009/08/insurance-plans-you-can-keep.html
Well, according to page 19 of HR 3200, health insurance that is not “grandfathered” will only be offered as an “Exchange-participating health benefits plan.” The following is an excerpt from page 19 of HR 3200:
In general-individual health insurance that is not grandfathered health insurance coverage under subsection (a) may only be offered on or after the first day of Y1 as an Exchange-participating health benefits plan.
That does not tell us much if we do not know to what “grandfather” or “exchange-participating” refer.
What is a grandfathered plan?
In Sec. 102 “Protecting the choice to keep current coverage” of HR 3200 (starting on page 16), the bill puts three major limitations on grandfathered plans.
1. The plan cannot accept any new enrollees.
In general.-Except as provided in this paragraph, the individual health insurance issuer offering such coverage does not enroll any individual in such coverage if the first effective date of coverage is on or after the first day of Y1. (Excerpt from page 16 of HR 3200)
Obviously, a plan that does not except new enrollees will not last very long. Also, this locks us into whatever health plan we have unless we go to an “exchange participating plan.” If our work insurance is dropped or we change jobs, we will not be able to enroll in another plan, unless it is an exchange-participating benefits plan.
2. The plan cannot change any terms and conditions.
“Limitation on changes in terms or Conditions-Subject to paragraph (3) and except as required by law, the issuer does not change any of its terms or conditions, including benefits and cost-sharing, from those in effect as of the day before the first day of Y1.” (Excerpt from page 16 of HR 3200).
If anything in our health plan changes it will become an exchange participating benefits plan or cease to exist.
3. The plan cannot charge higher premiums to at risk individuals.
The issuer cannot vary the percentage increase in the premium for a risk group of enrollees in specific grandfathered health insurance coverage without changing the premium for all enrollees in the same risk group at the same rate, as specified by the Commissioner. (Excerpt from page 17 of HR 3200)
Ordinarily, insurance companies, regardless of what kind of insurance they’re selling, make money by paying out less money than they take in. They do this by charging higher rates to people that they believe are at a higher risk of needing a payout down the road. Grandfathered plans would have to either charge everyone high rates, including the healthy people, to make up for the unhealthy people, which would allow the public plan to undersell them, or they would go out of business trying to charge everyone the same low rates. This would cause grandfathered plans, those do not become exchange-participating health benefits plans, to go out of business.
These limitations are designed to phase out all grandfathered plans by forcing them to become exchange participating health benefits plans or causing them to go out of business. What does it mean to be an Exchange-participating health benefits plan? Check my blog entry “Insurance Plans You Can Keep”* to find out.
*"Insurance Plans You Can Keep" http://teapartyncwv.weebly.com/2/post/2009/08/insurance-plans-you-can-keep.html
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