Individual California Health Insurance Maternity Law

By Dennis Jarvis

Things are about to get interesting again in the California health insurance market for individual and family plans. Although never a dull (or affordable moment), the changes imparted in AB bill 155 and 210 (the first depends on the latter) will bring some of the biggest changes to California health insurance market since reform passed and foretell changes to be enacted nationwide in 2014 through the final health reform roll-out. The bill all centers around maternity coverage which is both very important as a benefit and of course, quite costly as well. Let’s take a look at how the law would impact the marketplace.

Essentially, the bill states that the original law Knox Keene of 1975 required that all individual/family California health insurance plans should cover maternity. In effect, these new bills will implement or clarify this required coverage and mandate maternity coverage for all individual plans aside from a few exceptions (short term, hospital indemnity, medicare related plans, and a few other more narrowly designed plans). The coverage for maternity in the California health insurance marketplace has been interesting if depressing as of late. Immediately following passage of Health Reform, most of the carriers reduced or eliminated the available plans they offered which included coverage for maternity. In fact, there’s really only one plan that makes any sense as of the time of this article which is the Blue Shield 5000 plan. The other alternatives are much more expensive for similar or worse coverage. It’s not entirely clear what about the health reform bill made the exodus from maternity plans so pronounced since most of the mandates affected plans equally but it was clear that most carriers wanted nothing to do with maternity plans in the wake of health reform. Usually this would point to future liabilities from offering plans with the coverage but that doesn’t seem to be the case with AB 155 as we’ll see next.

What’s interesting about the current bills is that they seem to apply to all plans without the division between pre-health reform plans (also called grandfathered) and post-health reform plans which would bear the weight of first wave of new mandated benefits such as 100% preventative, etc. The new maternity plan seems to apply all plans equally regardless of when the effective date was. So what will the net effect be from this bill. In a word…sizeable.

First, every plan will cover maternity unless the carriers find someway to narrow their plan offerings to the hospital indemnity option or other loopholes in the law but will be difficult as the marketplace will expect to have some full-plan offerings. Maternity coverage is even defined in the bill to include the full range of coverage from pre-natal visits (unsure if these fall under preventative 100% but unlikely) to labor and even complications associated with difficult pregnancies. On the surface, this sounds great but there’s always a cost and maternity is very expensive as are all services performed in a facility setting (loosely translated as hospital based care). Here’s the problem. The vast majority of plans sold today do not cover maternity. Just a gut-check estimate from our clientele might put the percentage at 90-95% plus for non-maternity. Those plans are underwritten and priced without the potential expense to maternity which will likely add 15-20% to the cost right off the bat. This is on top of the annual medical inflation which will likely run low double digits or higher. This is a big hit when few people can already afford health insurance as it is. Individual/family insurance has always been cheaper than small group which mandates maternity coverage but you’ll start to see some of that savings go away. It will be interesting to watch the political ramifications of a 15-20% increase on California health insurance premium given the state of the economy. As we stated in the beginning of this article…it’s about to get interesting.

About the Author: Dennis Jarvis is a licensed

California health insurance

broker with extensive knowledge of the Individual and Small Group health market in California.

Individual California health insurance

Source:

isnare.com

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