then what are you going to do. Do you then leave the business or do you
suddenly have to ante up whatever it takes to meet the basics of this
debacle of a bill. I think a lot of companies are going to just leave
the business. it will be too costly to make up the difference and then
you will still be liable to any changes that the feds choose to make in
what must be offered. Right now the feds are just going along to keep
the options open until they can shut them down in 2014 and meanwhile
propagandize that they are letting you keep your current insurance. The
lie will come to light when the full law goes into effect but then it
will be too late.
Insurer Cuts Health Plans as New Law Takes Hold
By REED ABELSON
Published: September 30, 2010
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The Principal Financial Group announced on Thursday that it planned to
stop selling health insurance, another sign of upheaval emerging among
insurers as the new federal health law starts to take effect.
The company, based in Iowa, provides coverage to about 840,000 people
who receive their insurance through an employer.
Principal's decision closely tracks moves by other insurers that have
indicated in recent weeks that they plan to drop out of certain segments
of the market, like the business of selling child-only policies. State
regulators say some insurance companies are already threatening to leave
particular markets because of the new law. And some regulators in states
like Maine and Iowa have asked the Obama administration to give insurers
more time to comply with some of the new rules.
"What you're seeing is the beginning of some serious math and some
posturing," said Len Nichols, a health economist and policy expert at
George Mason University. While some insurers, like Principal, are
choosing to leave the business rather than make the necessary
investments to stay, others may be simply trying to delay some of the
new rules or overturn them, he said.
McDonald's recently asked federal officials for an exemption to rules
that would ban the kind of health plans many of its restaurant workers
have, because the existing policies sharply limit coverage. The
McDonald's push was first reported by The Wall Street Journal on
Wednesday night. A McDonald's spokeswoman declined to comment on that
report, and the company has denied any intention of dropping coverage
for its employees.
So far, the administration has signaled at least some willingness to
listen. In the case of McDonald's, federal health officials told the
insurer responsible for providing these plans that it would not be
affected by new rules prohibiting annual limits on coverage. The new
waiver will allow McDonald's and other companies to continue offering
such plans, which cap benefits, to their workers.
The administration has already issued dozens of such waivers, as
insurers and companies try to influence proposals for regulations to put
the law in place. As far as giving insurers continued leeway to sell
more restrictive coverage than the legislation intended, administration
officials say they are trying to ensure that people do not lose their
benefits before 2014, when the law is fully in effect.
"It's the best some people can do right now, and we don't want to
disrupt it," said Nancy-Ann DeParle, who heads the Office of Health
Reform at the White House. She emphasized that the administration had
been working closely with insurers and employers to deal with their
concerns and objections to some of the rules. "I think we're working
together very constructively," she said.
McDonald's, which confirmed that its insurance carrier received a waiver
from the government on annual limits, says it is negotiating with
federal officials and others to determine how best to maintain employee
coverage. Many of its restaurant workers are covered under plans that do
not provide broad protections and limit individual insurance coverage to
a few thousand dollars a year. Such plans are known as mini-med or
limited benefit policies. Medical bills beyond those limits have to be
paid out of pocket by employees.
The company and its franchises "are committed to finding a solution
whereby we can continue to provide health care options," said Danya
Proud, McDonald's spokeswoman.
At the Principal Financial Group, the company's decision reflected its
assessment of its ability to compete in the environment created by the
new law. "Now scale really matters," said Daniel J. Houston, a senior
executive at Principal, which is headquartered in Des Moines. "We don't
have a significant concentration in any one market."
Because Principal Financial is primarily in the business of asset
management, it decided not to make the investments needed to remain
competitive as a health insurer, Mr. Houston said. The company, which
focused on plans sold to small businesses for their employees, does not
participate in other markets, like selling policies to individuals or
for people enrolled in Medicare or Medicaid.
Other aspects of the health care regulations are worrying some state
insurance commissioners, who fear that insurers are going to stop
selling policies in some areas of coverage. For example, in the case of
child-only policies, the new rules require insurers to offer coverage to
even those children who are seriously ill, leading some insurers to balk
at the idea that they will be forced to cover too many sick children.
Aetna, Cigna and WellPoint, among others, have said they will stop
selling new policies in some states.
"Disruption in our marketplaces is a concern for insurance
commissioners," said Jane L. Cline, the president of the National
Association of Insurance Commissioners, who is also a West Virginia
regulator.
In the case of Principal Financial, UnitedHealth Group's insurance plans
have agreed to offer coverage to Principal's customers. "They are
clearly going to be a long-term player in this market," Mr. Houston said.
More insurers are likely to follow Principal's lead, especially as they
try to meet the new rules that require plans to spend at least 80 cents
of every dollar they collect in premiums on the welfare of their
customers. Many of the big insurers have been lobbying federal officials
to forestall or drastically alter those rules.
"It's just going to drive the little guys out," said Robert Laszewski, a
health policy consultant in Alexandria, Va. Smaller players like
Principal in states like Iowa, Missouri and elsewhere will not be able
to compete because they do not have the resources and economies of scale
of players like UnitedHealth, which is among the nation's largest health
insurers.
Mr. Laszewski is worried that the ensuing concentration is likely to
lead to higher prices because large players will no longer face the
competition from the smaller plans. "It's just the UnitedHealthcare full
employment act," he said.
A version of this article appeared in print on October 1, 2010, on page
B1 of the New York edition.
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