Obama spells out rules for health insurers to cover sick

UnitedHealth Group Inc. and other health insurers would be able to vary their premiums based only on age, tobacco use, family size or geography under proposed U.S. rules meant to protect people with pre-existing illnesses.

In addition, the Department of Health and Human Services outlined conditions and services insurers must cover, and laid out rules to let companies expand employee wellness programs, according to proposed regulations posted online today (Nov. 20). The rules also include a concession to pharmaceutical companies that may force health plans to offer a wider variety of branded drugs.

The proposals mark the Obama administration’s move to begin formalizing core provisions of the 2010 Affordable Care Act. The first rule targets 50 million to 129 million Americans who have conditions such as diabetes and cancer that insurers have cited to deny coverage or increase premiums, the department said in its filing. That practice would have to end in 2014.

The ban on medical underwriting “is of course intensely important to cancer patients and survivors who for too long have been charged exorbitant rates or denied care altogether,” said Stephen Finan, senior director of policy at the American Cancer Society’s lobbying arm, the Cancer Action Network.

Insurers will be able vary premiums based on age, and are limited to charging their oldest customers three times as much as their youngest ones. The regulation must go through a public comment period and may change before taking effect.

The second rule requires insurers to cover a broad set of conditions and services, such as emergency room treatments, hospitalization, drugs and pediatric care. The government let states pick benchmark plans for benefit packages matching those requirements, and today published a list of those plans. Most are offered by state Blue Cross and Blue Shield companies.

The government backtracked from an initial proposal made in December that would have let health plans cover as few as one drug per class of medicine, a move opposed by drugmakers and patient-advocacy groups that argued it would limit choices.

The federal government instead proposed that insurers can cover the same number of drugs per class as state benchmark plans, which are typically greater than the single-drug option the Obama administration had considered. The change is a win for pharmaceutical companies, which had lobbied for coverage of more medicines, said Dan Mendelson, CEO of Avalere Health LLC, a Washington-based consulting company.

Benchmark plans in most states, possibly all of them, cover more than one branded drug per class, he said in an interview.

The policy “will significantly broaden access to branded pharmaceuticals for patients who buy their insurance on the exchange,” Mendelson said. It will “make exchange offerings more consistent with employer offerings.”

The cost of exchange plans may increase as a result, he said, although insurers can use management strategies such as higher co-payments for brand drugs to control spending.

Under the government’s wellness proposal, employers can award workers as much as 30% of the cost of their health coverage if they participate in programs such as joining a gym or attending health seminars. The limit now is 20%, according to a news release.

Workers could earn as much as 50% of the cost of their coverage if they participate in tobacco cessation programs, according to the proposed rule.