Win on mandate is mixed victory for health insurers

Washington — As soon as the Supreme Court upheld the Affordable Care Act, the nation’s health insurers called for changes in the law.

“The law expands coverage to millions of Americans, a goal health plans have long supported, but major provisions… will have the unintended consequences of raising costs and disrupting coverage unless they are addressed,” said Karen Ignagni, president of the American Health Insurance Group.

AHIP, a trade association that represents Connecticut’s insurers, said it would work with policy makers “on both sides of the aisle” to amend the health care law.

A key change insurers want is the end of the “premium tax,” a levy that will be imposed on insurance policies beginning in 2012. AHIP estimated the tax, which would be passed along to policyholders, would increase premiums by 2 percent the first year it is imposed and up to nearly 4 percent 10 years later.

“(This is) going to add to the cost of health care coverage — the exact opposite of what health care reform was supposed to accomplish,” said AHIP spokesman Robert Zirklebach.

President Obama won the grudging support from insurers for the health care law by rejecting the idea of a “public option” or a government-run health plan that would compete with insurers. Another part of the deal was the imposition of an individual mandate, a requirement that all Americans buy health insurance coverage if they don’t receive it from their employer or the government.

This mandate was at the heart of the challenge to the ACA before the Supreme Court. Insurers were concerned the high court would reject the mandate, which would bring in lots of new customers, and keep the law’s costly reforms intact.

But the Supreme Court, in effect, upheld the constitutionality of the mandate and most of the law.

Still the industry is unsure of the law’s economic impact. When fully implemented, the ACA will forbid insurers from rejecting those with pre-existing health conditions and end maximum limits on coverage.

Another costly provision will require insurers to use “community rating,” or offer health insurance policies within a given territory at the same price to all people regardless of their age or health condition.

Peter Kochenburger, the executive director of the University of Connecticut’s Insurance Law Center, said the effect of the ACA on Connecticut’s insurers is uncertain.

“The intent of this law was to maintain and bolster the private insurance market,” he said. “In theory it should work, but we’ll see.”

He pointed to the balance that will need to be achieved between the cost of the coverage requirements and money from new policyholders.

“It’s a push and pull,” he said. “Will companies be able to survive in some markets? It’s too early to tell.”

Health care stocks fall

Meanwhile, health care stocks plunged Thursday. Aetna, Cigna and Wellpoint were among the biggest losers with losses close to, or above, 3 percent.

Hartford-based Aetna said it would continue to obey the law and implement reforms. But it also called for changes.

“We know that much more must be done to fix the problems that remain in our health care system,” the Aetna statement said.

Some hope the ACA will cause an economic sprint for the state’s insurance companies, which collectively employ almost 40,000 people.

“Insurers know with some certainty that a large number of people will be getting insurance. That means new business for them and new jobs,” said Mickey Herbert, the recently retired chief executive of ConnectiCare insurance.

“Connecticut is disproportionately affected favorably by this insurance mandate since we have so many insurance companies here,” Herbert said.

In addition to Aetna, Cigna and United Healthcare also have large operations in Connecticut.

Keith Stover, a lobbyist for the Connecticut Association of Health Plans, said the impact of the ACA on the state’s insurers will not be known immediately. But the court ruling gives them the go-ahead to move forward on changes.

“This ruling creates some certainty for us. There’s a great value to having that certainty,” Stover said.

“We’ve spent countless hours implementing and preparing for [the required reforms]… We weren’t waiting around saying ‘Hmm, I’ll wait until the Supreme Court rules to do this stuff.’ ”

 

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