The District’s implementation of Obamacare reached another milestone last week, with news that federal health reform will offer individuals and small businesses higher quality health insurance without increasing costs next year. On Friday, DC officials announced that the rates proposed by insurers for plans offered to individuals and small businesses through the city’s Health Benefit Exchange will generally be similar to current prices. The news countered the argument made by some in the insurance industry that federal health reform would induce a “rate shock,” making plans unaffordable.
The District’s Exchange opens on October 1 and will begin offering coverage to individuals and small businesses beginning in January 2014. Health care plans sold through the Exchange will have to meet a number of quality standards and consumer protections, including national regulations and District-specific protections meant to address local needs.
The District’s quality standards will benefits consumers in several ways. For the first time, insurers will have to cover mental health and substance abuse services in parity with physical health treatment, meaning no limitations on the number of days or visits that services can be received. As well, plans will have to cover “habilitative services,” such as treatment for autism. Finally, health plans will have to collect and report on the number and types of doctors they provide in their networks and submit plans on how to improve those networks. Based on these data, the District will set and enforce minimum provider standards.
While the absence of rate shock is a victory for consumers, the transparency of a fully unified market will be needed in future years to keep downward pressure on rates. By the end of 2015, all individual and small business plans will have to compete through the Exchange’s online portal, allowing consumers to compare prices side-by-side. This price transparency will be critical to keeping prices as low as possible.
The rates submitted for 2014 still need to go through a review process to see if any increases are justifiable based on the costs of doing business. Rate review will be another important mechanism for helping consumers avoid large rate hikes. Legislation that will likely go before DC Council in the fall could include language that strengthens the ability of regulators to prevent unjustifiable rate increases. The competition and transparency of premium rates, along with a robust oversight process, will allow consumers to receive better quality benefits at the best possible prices.
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