Fall Out!

The 9/23/2010 date has come and all newly issued plans after (essentially October 1st 2010 plans) now offer unlimited preventative care, inability to deny coverage to children under 19 with pre-existing conditions, and all caps to benefit amounts have been removed. Clearly old plans or grandfathered plans don't have to change, but they do complicate the landscape for insurers and agents as we now need to keep track of the effective dates to understand what types of plans we're dealing with.

The Patient Protection and Affordability Act was sold to us as a way to make health insurance available and affordable to all of those in the US. What we were led to believe was that there would be more plan choice, more benefits, more competition, and affordability! Unfortunately, what we are seeing is that the promises made are not being kept and that the product results in higher prices and less choice. In particular, I want to point out the impact resulting from the Health Reform Act. This weekend, Principal Financial released a statement that it is now getting out of the business of group health benefits.

As a health broker, our firm has a few groups that are placed with Principal and so this does directly affect several of our clients. Principal has arranged with United Health Care (who else?) to take over these plans. Principal stated that as a small insurer with 840,000 insureds that it would be too costly to make the significant changes to remain in the business of health insurance. It is also important to note that the firm taking over the plans often has the highest priced quotes of all carriers. It isn't an accident that UHC would be acquiring this block of business.

We need to be paying attention to these events and be aware of this as more insurers make this type of decision. Principal's comments essentially say that they don't have the size and scale to be able to compete in this market place. The concern I have is that we'll end up with only one or two insurers in every market rather than many carriers with their own unique products, capabilities, and value.

I look at this release and am disappointed as I believe that this is just a first step in consolidation of the industry and and concentration of power in the hands of a few companies. The "federalization" of the health insurance market has already shown us that there are consequences to the growing involvement of the "invisible hand" and those consequences limit accessibility and choice.

Jason Bohmann
Texas Health Design