Individual health plans failing to meet ACA benefit standards

Many individual health plans already cover much of what will be required when the Affordable Care Act’s so-called essential health benefits kicks in at the start of 2014. However, few meet all the requirements.

That was the conclusion of HealthPocket, a Sunnyvale, Calif.-based company that provides free consumer resources to compare and contrast individual health plans. The company said that of 11,100 individual plans it studied, less than 2% covered all items required for individual and small group plans under the ACA (link).

The data were drawn March 3 — about a week after the Dept. of Health and Human Services issued its final rule on essential health benefits — from insurance records made public by HHS and included plans that covered individuals or families of individuals younger than 65.

Employer-based Medicare and Medicaid plans were not included in the study. The essential health benefits rule covers only individual and small-group plans, essentially requiring them to have benefits equivalent to what HHS calls a “typical employer plan.”

Almost all individual plans studied by HealthPocket had coverage for hospitalization, emergency care and ambulatory services, including visits to a primary care physician or specialist. On average, the plans covered 76% of what will be required under 11 general essential benefits categories.

What’s missing in coverage

The reason so few plans meet all of the requirements had to do with categories that individual plans consistently do not cover, according to HealthPocket. For example, only 24% of plans included dental and vision checkups for children, 34% provided maternity and newborn care, 54% covered substance abuse services, including behavioral health coverage, and 61% had mental health coverage.

HealthPocket’s totals include individual insurance offered under “limited insurance” or “mini-med” programs, in which, for a lower price, people get coverage that is more restrictive compared with most insurance plans. Those kinds of plans will be eliminated by the ACA in 2014, with new prohibitions on insurers imposing annual monetary limits on essential medical care or on overall spending.

Massachusetts, at 94%, had individual plans with the highest average of essential health benefits covered, according to the HealthPocket report. The lowest rate was Alaska, at 66%. While the ACA offers a floor for essential health benefits, in some states the requirement could be more stringent depending on their regulatory environment.

HealthPocket said it put together the report to get a sense of how far plans had to go to meet ACA requirements for 2014. Its report surmised that the need for so many plans to expand coverage could result in price hikes that year, though it didn’t estimate how much those could be.

Insurance companies have said they expect sizable rate increases in 2014. At a December 2012 investors conference, Aetna CEO Mark Bertolini predicted a “rate shock” of 20% to 50%, depending on the state, for individual insurance in order to meet ACA requirements.

The trade group America’s Health Insurance Plans estimates rate hikes ranging from 0.1% in Rhode Island to 33% in Maine, reflecting adjustments to individual coverage once essential health benefits are required.

The ACA requires regulators to review any request for a rate increase of 10% or more, with the requirements and regulators’ evaluations posted on the federal website healthcare.gov (link). However, the ACA does not limit rate increases, and states vary on whether regulators may deny such requests. In California, where regulators do not have that power, multiple insurers, including Aetna, have recently filed for rate increases of 20% or more on individual insurance plans in anticipation of ACA rules.