More on Sec Sebelius’ Testimony

November 1st, 2013 | Healthcare Reform

More incredulity here about the exchange between Sec Sebelius and Cong Dingle. Here is what actually says about grandfathered plans – and it is wholly inconsistent with the testimony.

“What grandfathered plans do and don’t have to cover

Here’s a quick look at the consumer protections that do and don’t apply to grandfathered plans:

All health plans must:

End lifetime limits on coverage
End arbitrary cancellations of health coverage
Cover adult children up to age 26
Provide a Summary of Benefits and Coverage (SBC), a short, easy-to-understand summary of what a plan covers and costs
Hold insurance companies accountable to spend your premiums on health care, not administrative costs and bonuses”

Each of the first three mandatory benefit changes has dramatic cost implications and would lead to cancellation of existing policies that do not conform and their replacement with a new, more expensive policy that does conform. The last one – deliberately misleading in the fashion presented – actually requires insurers in the individual and small group market to spend at least 85% of premiums on medical care. Also a dramatic premium “increaser.” State law regulates when insurers are required to issue policy cancellation notices.

Notwithstanding abuses in some states by insurers, not all of that difference between the mandatory 85% and historical spending was for “administrative costs and bonuses.” Some went as commissions to agents who sold the policies – that is how they make their living; some went to reserves because of the extreme actuarial volatility in the individual market; and administering individual policies is considerably more expensive.

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