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Health Insurers Will Keep Certain Reform Elements, Regardless of Court Action

Wednesday, June 20, 2012
Three Insurers to Keep Certain Reform-Related Provisions


  • Key Development: UnitedHealthcare, Aetna, and Humana will abide by some provisions of health reform law, regardless of how U.S. Supreme Court rules.

  • Not Included: None of the insurers is providing coverage of children with pre-existing conditions.


By Sara Hansard

Three major health insurers announced June 11 they will continue abiding by some of the requirements of the health care reform law, regardless of how the U.S. Supreme Court rules.

UnitedHealthcare, the largest health insurer in the United States, and Humana Inc. say they will continue five health insurance reform provisions that are already in effect. Aetna Inc. pledged to keep at least three of the provisions in effect.

United made its announcement before Aetna and Humana.

“The protections we are voluntarily extending are good for people's health, promote broader access to quality care, and contribute to helping control rising health care costs,” Stephen Hemsley, president and chief executive officer of UnitedHealth Group Inc., said in a release. UnitedHealth Group is the parent company of UnitedHealthcare. “These provisions are compatible with our mission and continue our operating practices,” he said.

Provisions Being Extended.
The provisions being extended by UnitedHealthcare and Humana are:

  • Preventive health care services without copayments. UnitedHealthcare said it “will continue to offer a spectrum of preventive health care services such as those tailored to preventive health care needs,” including annual preventive medical visits, screening for high blood pressure and diabetes, and standard recommended immunizations.

  • Dependent coverage up to age 26, which UnitedHealthcare was the first to provide. The coverage will be offered on parents' plans, regardless of young adults' eligibility for other insurance coverage, whether they are in school, or whether they are married.

  • Elimination of lifetime coverage limits.

  • No rescissions of health coverage, except in cases of fraud or intentional misrepresentation of material facts.

  • Provision of what Humana called “a clear and simple process for appeals claims decisions,” as well as the option to have cases reviewed by independent review organizations.


Aetna said in its statement that it intends to “keep provisions such as coverage for dependents to age 26, 100 percent coverage for certain preventive care, and access to appeals through independent third parties in our benefit plans, regardless of how the Supreme Court rules.” Company spokesman Matt Wiggin said more provisions may be kept, but the company will wait until the Supreme Court's ruling on the health reform law to make further announcements.

Aetna added that although PPACA “has propelled interest in exploring new ways to deliver care, we believe that our work collaborating with providers, such as accountable care organizations, is key to building a more effective health care system.”

The health insurers' actions come as the health care industry is awaiting the Supreme Court's decision, expected in late June, on the challenges by 26 states to the constitutionality of the Patient Protection and Affordable Care Act, including its mandate to buy health insurance or pay a penalty.

The Blue Cross and Blue Shield Association (BCBSA) June 11 issued the following statement regarding the pending U.S. Supreme Court decision: "While we cannot speculate on how the Supreme Court might rule, Blue Cross and Blue Shield companies remain firmly committed to providing stable coverage to our members that meets their health care needs. BCBSA is encouraging its 38 local Blue Cross and Blue Shield Companies to offer their customers the broadest set of protections possible at an affordable price. Plans will be responsive to their members and the communities they serve."

Experience With Child-Only Policies.
UnitedHealthcare and the other two insurers did not include in their lists of what will stay covered a PPACA regulation issued in 2010 that requires that children up to 19 with pre-existing conditions be extended coverage. “UnitedHealthcare recognizes the value of coverage for children up to age 19 with pre-existing conditions,” the company said in the release. “One company acting alone cannot take that step, so UnitedHealthcare is committed to working with all other participants in the health care system to sustain that coverage.”


“Leading the pack on voluntarily extending those coverage benefits, regardless of whether [PPACA] requires them, is an opportunity to garner good will.” --David Windley, Jefferies & Co. health care analyst

After the Department of Health and Human Services issued the 2010 regulation banning insurers from refusing to cover children with pre-existing conditions, many insurers stopped issuing new child-only policies due to fears that it would lead to people waiting until their children were sick before they bought coverage, a phenomenon known as “adverse selection” (see previous article).

UnitedHealthcare covers more than 38 million people and has the largest revenue of any health insurer in the country, company spokesman Matt Stearns told BNA. The coverage provisions, which have been put into effect under PPACA, will directly affect the company's 9 million fully insured customers, he said. Humana also said its coverage extensions apply to its fully-insured commercial health insurance policies.

The coverage provisions also “will be made available to our self-insured clients,” Stearns said. “Whether they choose to offer them to their clients is up to them,” he said.

Stearns said it is difficult to determine how much the provisions will add to premiums, since “so many different factors go into determining premiums.” The company does not anticipate that the coverage provisions will affect its earnings, he said.

“It's become fairly well known that certain portions of the law are pretty popular,” David Windley, a senior health care analyst in the Nashville, Tenn., office of New York investment bank Jefferies & Co. Inc. told BNA. “United is saying things like coverage [of young adults up to age 26] is not that onerous, and turned out to be not as much of a drag on profitability as many people in the industry and in the market were expecting it to be,” he said.

Company Garnering Good Will.
“Leading the pack on voluntarily extending those coverage benefits, regardless of whether [PPACA] requires them, is an opportunity to garner good will,” Windley said. “It will be case by case” whether other insurers will also extend provisions of PPACA already in effect, he predicted.

The Commonwealth Fund, a health care research organization based in New York, released a study June 8 that found that in 2011, 13.7 million adults ages 19 to 25 stayed on or joined parents' health plans, including 6.6 million who would likely not have been able to do so before PPACA's passage. That study's title is Young, Uninsured, and in Debt: Why Young Adults Lack Health Insurance and How the Affordable Care Act Is Helping.

Washington and Lee University law professor Timothy Jost, a consumer representative to the National Association of Insurance Commissioners, told BNA that many insurers had begun young-adult coverage and abolished rescissions before regulations requiring them took effect, and that most insurers are subject to regulations governing internal and external appeals under state laws.

“One of the things this demonstrates is that these reforms aren't breaking the bank,” Jost said. “They are affordable and they are good business practices,” he said. “I'm very pleased that they're doing this. I hope others will follow suit.”

Company Can Predict Costs.
UnitedHealthcare can continue the provisions because “now they have enough history to look at the costs and see whether they can do this,” Peter Kongstvedt, principal of health care consulting company P.R. Kongstvedt Co. LLC of McLean, Va., told BNA. “They can predict the costs,” he said.

When the provisions were put into effect after PPACA was enacted in 2010, some health insurers added small surcharges, “but a lot didn't,” Kongstvedt said.

Regardless of whether the Supreme Court decides that the individual mandate or Medicaid expansion provisions are constitutional, “That doesn't mean the rest of [PPACA] would go,” Kongstvedt said. Many other provisions of the law “may still be in effect anyway. They're getting out in front of it,” he said.

Consumers Union issued a statement saying that UnitedHealthcare's move was “encouraging but doesn't tackle critical elements of consumer protection,” including coverage for individuals with pre-existing conditions, ensuring that consumers are not discriminated against due to gender or health condition, or the “medical loss ratio” provision requiring insurers to spend at least 80 percent of premiums on medical claims or quality improvements.

Risa Lavizzo-Mourey, president and chief executive officer of the Robert Wood Johnson Foundation, said in a statement, “We applaud UnitedHealth, Humana and Aetna for their determination to not be held hostage by the political and judicial process and for their leadership in ensuring Americans have access to the health care they need. We encourage others to follow suit.”

By Sara Hansard


Information on Young, Uninsured, and in Debt: Why Young Adults Lack Health Insurance and How the Affordable Care Act Is Helping is at http://www.commonwealthfund.org/Publications/Issue-Briefs/2012/Jun/Young-Adults-2012.aspx.

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