Yesterday, President Obama signed into law the house bill overhauling the United States’ healthcare system. Illinois’ Director of the State’s Department of Insurance will be at the center of overseeing changes that will affect Illinois citizens through the new bill, most of which involve insurance premium rates and eligibility.
One of the first changes that will affect Illinois residents is that the U.S. Department of Health and Human Services now has the ability to review and challenge any unreasonable health insurance rate increase. For example, the insurance hikes like those proposed by Anthem BlueCross in California this past February of rate increase of up to 39% would definitely raise a red flag under the new Healthcare Reform Act.
While Illinois did require insurance companies to report any increases to premiums within the local market, the Illinois Department of Insurance did not have the authority to approve or deny rate changes. Likewise, in small-employer markets the Department of Insurance did not have any authority to authorize rate changes, nor was it automatically given any information about rate increases or premiums charged to individual companies. But now, with the new healthcare laws, Illinois’ Department of Insurance will receive reports on rate increases and promises to examine and challenge any unreasonable insurance rate increase.
Perhaps the Illinois residents who will be most affected by the new healthcare reform are those with pre-existing conditions. Insurance companies have been notorious for denying claims and fraudulently cancelling coverage for plan subscribers with pre-existing medical conditions. Also affected were elderly Illinois residents whose claims under long-term care plans were being denied.
One of the ways the new healthcare reform seeks to address these problems is by expanding the “high-risk pools”, also known as the Illinois Comprehensive Health Insurance Program (ICHIP). These pools are set up to cover Illinois residents with chronic illnesses or disabilities who typically cannot get insurance any other way.
Currently, the ICHIP is very expensive and its premiums run from $12,000 to $16,000 annually. The funding for ICHIP has traditionally been with two-thirds being paid by premiums and one-third from general revenue funds. However, the new healthcare reform has shifted the burden off enrollees so that they can only be responsible for up to 35% of the program’s costs.
This represents over a 30% reduction in costs for the enrollee. The Illinois Department of Insurance predicts that the changes to the ICHIP will take between 15 and 45 days to implement and could vary due to expectations that a large number of Illinois residents will sign up for this program.
In addition to addressing the high costs of health insurance to those with prior medical conditions, the new healthcare bill addresses prior instances of rescission on behalf. In the insurance industry, rescission refers to when an insurance company retroactively cancels a health-insurance policy after the policyholder gets ill and files a large medical claim. Supposedly rescission was meant to stop enrollee fraud for misrepresenting prior health history. However, insurance companies were found to be using rescission to revoke policies and avoid paying out on large medical claims.
Under the new bill insurance companies will be barred from using rescission unless there has been fraud on behalf of the enrollee. Furthermore, all rescission must occur within 2 years from when the policy is first issued. This provision is particularly important to Illinois residents; Illinois cases of rescission are among the highest in the country, with only California and Texas having more. Therefore, the change in recession laws means a significant improvement in the quality of insurance for Illinois families.
Another benefit for patients with prior medical conditions and those who require costly medical care is the removal of lifetime dollar limits on insurance coverage. Previously patients with long term illness were limited in their coverage and could essentially use up all of their available coverage before their treatment was finished. This is no longer the case under the new bill.
The new healthcare bill doesn’t just affect patients with pre-existing conditions, it also helps those Illinois residents with no insurance. Starting on January 1, 2014, all states nationwide, including Illinois, will enact health insurance exchanges that will offer standardized insurance coverage to uninsured residents and small businesses. The benefit of these plans is that no one can be turned away due to a prior medical condition.
Because of these provisions that make it easier for Americans to get health insurance, the bill carries a new requirement that all individuals must have health insurance or face a fine by the IRS. And while employers are not technically required to offer health insurance to their employees, those companies with 50 employees or more could also be fined if one of their employees receives government-subsidized coverage.
The goal of the new bill is that all Americans, including Illinois residents, have affordable healthcare coverage. While this widespread reform will surely have some kinks that need to be worked out, the hope is that the final result will be better healthcare for more people.
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