HHS releases health law rules requiring pre-existing conditions coverage

The Obama administration issued new rules Tuesday that require insurance companies to cover people with preexisting medical conditions — one of the most popular provisions of President Obama’s healthcare law.

The Health and Human Services Department also began to implement other popular, but expensive, parts of the Affordable Care Act.

Regulations released Tuesday will prohibit insurers from charging women a higher premium than men, and will require plans in every state to cover certain services.

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The regulations still leave key questions unanswered, including the structure of a federally run insurance exchange in the roughly 30 states that won’t set up their own. HHS officials said more information on the federal exchange will be coming soon.

“I’m confident states will have what they need to move forward,” HHS Secretary Kathleen Sebelius told reporters Tuesday.

While the new rules don’t answer some questions for states, they do provide much-needed specifics for insurance companies that must prepare for new mandates set to take effect in 2014.

“We welcome the release of the proposed regulations on exchanges, essential health benefits and insurance reforms, which are critical to implementing the healthcare reform law,” the Blue Cross Blue Shield Association said in a statement. “With open enrollment less than a year away, having final rules is critical.”

The new regulations also put a finer point on some of the most politically popular elements of Obama’s signature healthcare law. The proposed rules implement the health law’s ban on denying coverage to people with preexisting conditions and also require insurers to renew those customers’ coverage.

HHS also began putting in place new limits on how much insurers can vary their premiums — for example, allowing them to charge older patients only three times more than younger customers. The law prohibits insurers from varying premiums at all based on some factors, including gender.

The regulations also bar insurers from charging sick customers a higher premium. Everyone who buys insurance through a newly created exchange, rather than getting it through an employer, will be combined into one large risk pool, meaning insurance companies can spread out their risks more broadly.

They're some of the most politically popular elements of the Affordable Care Act — Obama often touts the requirement to cover people with preexisting conditions — but also the policies that will have the biggest effect on premiums. 



Covering people with preexisting conditions is expensive, and the law seeks to bring younger, healthier people into the system to offset the additional costs of covering sick people.

HHS took steps in crafting the regulations to minimize the potential shock to customers’ premiums. For example, in the policy governing rate increases based on age, HHS said rates should increase slightly every year, rather than building in larger price jumps every five years.

“It basically spreads out the increase … more smoothly,” said Gary Cohen, director of the Center for Consumer Information and Insurance Oversight, which is handling the bulk of the implementation work.

Insurers wanted HHS to phase in the age-rating policy, but Cohen said that simply wasn’t possible the way the law is written.

Another regulation released Tuesday begins to flesh out the definition of “essential benefits” — the services that individual insurance plans will have to cover, beginning in 2014. The ACA lays out 10 categories of essential benefits, and HHS had previously said it intends to let states fill in the details, rather than setting federal standards.

With Tuesday's regulations, HHS is beginning to formally fill in the details of how that would work.

States will choose a “benchmark” plan comparable to what the average employer in their state provides. Whatever the benchmark plan in each state offers in each of the 10 benefits categories will become the standard for plans sold to individuals.

The essential benefits regulation offers another critical concession designed to soften the impact on premiums. Some insurers worried that with too many benefit mandates, they wouldn’t be able to offer low-cost policies spelled out in the ACA. In the regulations released Tuesday, HHS said it will allow plans to charge a higher deductible in order to meet the technical standards for a low-cost policy.

“Otherwise, the math doesn’t work,” Cohen said.

This story was posted at 11:37 a.m. and updated at 2 p.m.