2013 Lege–Health Insurance Reform
In 2014, the Affordable Care Act (a.k.a. ObamaCare) will usher in sweeping and welcome changes to the Texas insurance market. No, I’m not talking about health insurance exchanges, which get lots of attention and will certainly bring welcome change to the market. Although at least one bill that creates a state exchange, S.B. 84, has been pre-filed for the 2013 session, I don’t expect much traction on a state-based insurance exchange against this session. Remember that last session, Rep. Zerwas’ H.B. 636 would have established a Texas-run health insurance exchange but ultimately stalled under veto threat by the Governor.
Instead, what I hope to see are bills that prepare Texas for 2014 market changes to help keep premiums reasonable, encourage competition, and ensure that the Texas Department Insurance (TDI) can protect Texas consumers.
Starting in 2014:
- Insurers can no longer deny coverage based on pre-existing conditions or charge sick people, women, and small businesses more;
- Subsidies will be available to help Texans above the poverty line buy private health coverage in the new exchange;
- New risk adjustment mechanisms kick in. They aim to eliminate incentives for insurers to avoid enrollees in poor health, while keeping any one insurer from bearing more than its fair share of risk from sicker enrollees; and
- Many policies must contain “essential health benefits,” a new floor for coverage.
In light of these sweeping market changes, TDI needs appropriate tools to protect health insurance consumers. First, TDI needs to be able to reject unreasonable rate increases. Insurers will incorporate all of the changes listed above will into health insurance premiums. Consumers will benefit if the experts and actuaries at TDI check that insurers have made reasonable assumptions about costs and savings that come from these changes and have authority to deny excessive rate increases.
Second, TDI needs clear authority to enforce new consumer protections, such as no more pre-existing condition exclusions. Unless Texas updates its Insurance Code to reflect consumer protections that take effect in 2014, conflicting state and federal laws will create confusion for consumers and insurers alike. And if TDI isn’t authorized to enforce new consumer protections, federal regulators may step in.
Both of these needed changes will take legislation, and to prepare for 2014, that legislation needs to pass this session.