I was unsure if the new law's mandate for coverage on people wiht pre-existing conditions allowed large price increases for these people (in which case its almost useless), or whether it imposed price controls (in which case it could be rather harmful) it seems it goes the price control route, but the price controls are not absolutely rigid. They apply for prices to insure some relative to others (which will tend to raise the prices for those who impose less cost on the system), and overall prices are subject to review, which apparently means a decision will be made about each case rather than one set decision applied to everyone. The flexibility of case by case decisions on prices has some advantages over more rigid pre-determined price controls, but it makes for less predictability, and more arbitrary power for the people who review the prices. Personally I think government should have no role in setting prices except maybe in cases where there is a government granted or support monopoly (and I think those monopolies should mostly be eliminated).
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Will the New Law Lower Premiums?
By THE NEW YORK TIMES
Q. Does the legislation do anything to regulate premiums? If not, what’s to stop insurers from simply raising premiums on sick people to unaffordable levels, effectively denying them coverage and defeating the purpose of reform? Chris, New York
A. The legislation specifically stops insurers from doing what you propose in regards to plans sold through individual markets. Starting in 2014, insurers will no longer be able to underwrite on the basis of health, meaning they won’t be able to increase premiums based on pre-existing conditions, said Sara Collins, a vice president at the Commonwealth Fund. This policy applies to children’s pre-existing conditions starting this year...
prescriptions.blogs.nytimes.com
Will the Health Care Legislation Prevent Rate Hikes?
By THE NEW YORK TIMES
Q. Is there anything to limit the insurance companies from extreme rate hikes on individually bought policies, particularly in the immediate future? — AVC, N.M.
A. In 2014, once the state-run insurance exchanges are up and running, people who earn up to 400 percent of the poverty level (or $88,200 for a family of four) would not have to pay more than 9.5 percent of their income on premiums. People with low incomes could pay as little as 3 percent. The government would help subsidize the rest.
But ultimately, premiums will still reflect the medical care costs in your geographic area, according to Sara Collins, vice president for the Affordable Health Insurance Program at the Commonwealth Fund. That said, insurers would have to adhere to new rules.
For one, older people cannot be charged more than three times as much as younger people. The legislation also includes provisions that could help bring down premiums, but it’s still too early to tell how well they would work. For instance, large group plans that spend more than 15 percent of your premiums on items other than medical costs (or more than 20 percent, in the case of individual and small group plans) must provide a rebate to consumers beginning in 2011. Details are still fuzzy.
Moreover, the legislation would immediately create a process for review of increases in health care premiums and would require plans to justify those increases, according to the Kaiser Family Foundation. And once the state-run insurance exchanges are up and running, states would be required to report premium increases and recommend whether any plans should be excluded because of unjustified premium increases, according to Kaiser.
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