Posted 9/6/2010 12:00 am
Updated 2 years ago
The first wave of expanded health insurance benefits is starting to show up now under the health care reform that Congress approved in March.
Health insurance companies, though, are expecting to receive more in premiums, but not necessarily an increase in profits, because of the reforms, which will be fully implemented in 2014.
Some early provisions have already been implemented. Insurance companies can no longer deny coverage to children under the age of 19, said Michael Stock, president and CEO of QualChoice of Arkansas Inc.
"You have to take everyone no matter what their medial condition," Stock said. "So that will result in some pretty high premiums on those individual contracts where you might have a young person that's got a significant medical condition."
And for group policies, dependants up to age 26 are now covered, he said.
"That's having a slight impact on premiums," Stock said.
Starting Sept. 24, a lifetime cap of $5 million for benefits is gone. "So somebody could run up" an unlimited amount in medical bills, he said.
"Each of those is not significant, but you start adding up 1 percent here, 1 percent there; it starts adding up," Stock said.
And beginning in January, the minimum loss ratio goes into effect. For groups with fewer than 100 employees, insurance companies have to spend 80 percent of the premium collected on medical care or send the policy holder a refund. For a group with more than 100 people, the loss ratio is 85 percent.
"That limits how much is left over to cover administration [costs] and profit for the carrier," Stock said.
But if the medical costs exceed the amount of the premium paid, the insurance company is out of luck. "The law allows us to lose and bear the full cost of that, but it limits how big a win can be," Stock said.
In 2009, QualChoice had net income of $2.4 million, down from $2.5 million in 2008.
The insurance changes that will occur in the next year to 18 months are estimated to cause premiums to rise by 2 to 5 percent, said Tom Kane, senior vice president at Stephens Insurance in Little Rock.
Stock said he expects to see premium rise again in 2014 when the mandatory requirement for people to have health insurance goes into effect.
He said he thinks that "many people" will decided not to buy health insurance until they need medical care.
In the meantime, "we have been spending hours and hours and hours ... reading through [the health care reform legislation], working on implementation plans, making modifications to our systems," Stock said.
In Arkansas, nine of the top 10 health insurance companies reported collecting higher premium in 2009 than in 2008.
The top four positions on this year's Arkansas Business list of the largest health insurance companies remained the same.
Once again Arkansas Blue Cross & Blue Shield was the largest health insurance company in the state based on its Arkansas premium, which was more than $1 billion for the second consecutive year. ABCBS' premium includes $218.1 million from the Federal Employees Health Benefits Program.
QualChoice moved into the No. 5 position this year on the strength of its Arkansas premium rising 24.4 percent to $126.7 million in 2009. Stock attributes the premium growth partly to QualChoice opening its Springdale office in December 2008.
Even though Delta Dental of Arkansas' premium was up slightly in 2009 to $73.7 million, it fell in the rankings to No. 8. It had been No. 7 on last year's list with $70.7 million in Arkansas premium.
Wellcare Prescription Insurance of Tampa, Fla., shot up to the No. 7 position on this year's list with $77.8 million in Arkansas premium. In 2007, it reported premium of only $11.7 million.
The only insurance company ranked on the list that saw its Arkansas premium decline was Care Improvement Plus of Baltimore. Care Improvement Plus is a Medicare-only offering and doesn't write group or commercial insurance. Its premium in Arkansas dropped from $122.8 million in 2008 to $105.3 million in 2009.