The establishment of American Health Benefit Exchanges. This provision requires that health insurance exchanges be established in each state. A state may establish its own exchange, subject to HHS approval, or HHS will establish a federally facilitated exchange in that state. The exchanges allow individuals and small group employers (employers with up to 50 or, in some cases, 100, employees) to purchase coverage. State Exchanges may expand access to large groups beginning in 2017. The National Conference of State Legislatures has information about implementation in each state.
Prohibition of pre-existing conditions exclusions. This prohibits group health plans and health insurers from imposing exclusions for pre-existing conditions.
Prohibition of excessive waiting periods. This prohibits group health plans and health insurers from applying a waiting period that exceeds 90 days.
Prohibition on use of health status. Prohibits group health plans and health insurance issuers from establishing rules for eligibility (including continued eligibility) for an individual or dependent based on health status, medical conditions, claims experience, disability – any health-status-related factor as determined by the Secretary of HHS.
Guaranteed availability (guaranteed issue) and guaranteed renewability. Health insurers must accept any individual or employer group that applies for coverage during open or special enrollment periods. Further, they must renew coverage at the option of the individual or group.
Single risk pool. Health insurers in the individual and small group markets must treat the entire market in a state as a single risk pool when setting rates. Under proposed rules, an insurer may vary premiums for a particular plan based only on certain plan-specific factors.
Allowable rating factors. Insurers may vary premiums for individuals based only on specified allowable rating factors, including age, tobacco use, family composition, and geographic rating area.
Pooling and Risk-Sharing
Several of the reforms scheduled for 2014 concern pooling and risk-sharing. Among these are the following:
- Transitional reinsurance program. HHS and the states will establish a $25 billion transitional (2014 through 2016) reinsurance program for the individual market, to be funded by health insurers and group health plans.
- Risk corridors. This provision establishes a risk corridor program for “qualified benefit plans” in the individual or small group market (2014 through 2016) based on the plan’s ratio of allowable costs to a target amount (modeled on the risk corridors under Medicare Part D for regional PPOs).
- Risk-adjustment program. HHS or the states will establish a risk-adjustment process for the individual and small group markets within that state that assesses a charge on issuers whose actuarial risk for a year is less than the average, and pays issuers whose actuarial risk for a year is greater than the average.