Final Rule Sets Insurance Market Reforms

By Joe Touschner

In addition to providing authority to expand Medicaid and establish health insurance marketplaces, the Affordable Care Act works to improve health care coverage by introducing key reforms to how private health plans are offered and sold, mostly in the individual and small group markets.  A recent final rule from HHS clarifies a number of these reforms that will go into effect next year.

One part of the rule that’s received a lot of attention is the provision limiting age rating factors to 3-to-1, meaning older adults can be charged no more than three times the premium of younger adults.  But the age rating rules also contain an important protection for kids—it says all those under age 21 must receive the same age rating.  This means that families won’t have to pay inordinately more when they have a newborn—instead any higher costs for caring for newborns will be spread broadly across the risk pool.

Another important protection for children, and one that CCF recommended that HHS adopt, is that surcharges for tobacco use will only apply to those legally eligible to purchase tobacco products.  Since kids can’t legally buy tobacco, it would be awkward, unreliable, and invasive of families’ privacy to ask them to report tobacco use by their kids when applying for health insurance.

One provision we were disappointed to find missing in the final rule is a requirement that insurers offer family coverage products.  Families should still be able to find policies to cover all their members since single adult plans can be purchased in addition to the child-only plans that are required.  But we had suggested that families should be able to buy a plan that covers everyone together if they choose.

These rules, along with provisions like the essential health benefits and rate review, should help make the individual and small group health insurance markets more manageable for families who get coverage there.