Health insurance plans must disclose how much goes to patient care
A few days after we published our last update on this promise, a reader pointed out to us via email that there is another provision in the health care law that strikes even more at the core of President Obama's campaign pledge.
Under section 2718, health insurance providers are required to report how much they spend on payments for clinical coverage, activities that improve health care quality, and "all other non-claims costs." The provider must also include an explanation of the nature of these costs. The law mandates that the information be available on the Department of Health and Human Services website.
Starting in 2011, companies that provide insurance for the small group and individual market must issue rebates if they do not spend at least 80 percent of the premium revenue on medical care. For the large group market, the threshold is 85 percent. The rebate amount is based on the premium revenue and by how much the provider falls short of the prescribed thresholds.
We wanted to point out this additional proof that President Obama kept his promise. The rating remains unchanged.
New health care law includes disclosure requirement
Back in November 2009, we reported on the status of President Obama's efforts to require health insurance companies to disclose information on patient care to justify any price increases. At the time, we rated the promise In the Works, since one of the health care reform bills that Congress was considering would have instituted such a disclosure requirement.
On March 23, 2010, Obama signed the Patient Protection and Affordable Care Act into law. For purposes of this promise, Sections 2749 and 1302 are key. Section 2749 calls on the "Secretary, in conjunction with States" to "establish a process for the annual review [...] of unreasonable increases in premiums for health insurance coverage." It also requires health insurance issuers "to submit to the Secretary and the relevant State a justification for an unreasonable premium increase prior to the implementation of the increase. Such issuers shall prominently post such information on their Internet websites."
Section 1302 requires the disclosure of the actuarial value of the plans in the health care exchange. (Actuarial value is an estimate of what percentage of medical expenses a health care plan will pay.) The bill creates names for various levels of coverage. A Bronze-level plan, for example, must provide "a level of coverage that is designed to provide benefits that are actuarially equivalent to 60 percent of the full actuarial value." In short, there are now minimum floors for how much of the premium must go to patient care.
State and federal government now have the power to find out what health insurers are spending on patient care.
U.S. Government Printing Office, final text of H.R. 3590, accessed May 17, 2010
Congressional Research Service, Setting and Valuing Health Insurance Benefits, by Chris L. Peterson, April 6, 2009.
Social Security Administration, SSA Legislative Bulletin: President Signs H.R. 3590, March 24, 2010
E-mail interview, Sara Collins, The Commonwealth Fund, June 18, 2010.
Health care reform bill requires disclosure for health insurers
Under Democratic plans for health care reform, the government would have broad powers to require health insurance companies to disclose information on patient care to justify any price increases.
The bill that passed the full House on Nov. 7, 2009, gives a Health Choices Commissioner the power to "deny excessive premiums and premium increases," and it says insurers must report "such information as the Commissioner may specify" and "provide for affordable premiums."
This proposed new authority gives the commissioner the power to find out what health insurers are spending on patient care. So we rate this promise In the Works.
U.S. House of Representatives Energy and Commerce Committee, HR 3962 - the Affordable Health Care For America Act
U.S. House of Representatives Ways and Means Committee, HR 3962 - Section by Section
Kaiser Family Foundation, Analysis of Affordable Health Care for America Act (H.R. 3962) , accessed Nov. 4, 2009