By Dena Bunis, CQ HealthBeat Managing Editor
July 11, 2012 -- Led by UnitedHealth Group Inc., three major U.S. insurers recently announced plans to preserve one of the most popular provisions of the health care law no matter how the Supreme Court rules this month.
United, Humana, and Aetna all said they would continue to allow young adults to remain on their parents' policies until they reach age 26, a provision that consistently has performed well in public opinion polls. They also promise to fully cover some preventive care provisions without requiring co-payments and to maintain easy-to-navigate appeals processes for policyholders dissatisfied with a claims determination.
"The protections we are voluntarily extending are good for people's health, promote broader access to quality care and contribute to helping control rising health care costs,'' Stephen J. Hemsley, president and CEO of UnitedHealth Group, said in a statement. "These provisions make sense for the people we serve, and it is important to ensure they know these provisions will continue."
In its statement, Humana said "health plan members should have the peace of mind of knowing the company embraces and will maintain these common-sense provisions that add stability and security to health care coverage."
But one major U.S. insurance company—Cigna—said it will wait to see what the high court does before committing to maintaining any of the consumer protections in the health overhaul law (PL 111-148, PL 111-152).
"Cigna believes in respecting the court's process,'' company officials said in a statement. "We remain focused on our global customer programs, and are prepared to proceed as appropriate on behalf of our customers when the court deliberations reach their conclusion."
However, United, Humana and Aetna said they would not maintain the overhaul's requirement that they insure children up to age 19 with pre-existing conditions. Nor did they say they would maintain the requirement that bans an annual limit on the amount of coverage a policyholder is eligible for, although they did say they don't have lifetime maximums on coverage. They also didn't address any other changes that will not take be required when the law fully takes effect in 2014, such as bans on refusing to insure adults with pre-existing illnesses.
"UnitedHealthcare recognizes the value of coverage for children up to age 19 with pre-existing conditions,'' the insurer said in a statement. "One company acting alone cannot take that step, so UnitedHealthcare is committed to working with all other participants in the health care system to sustain that coverage."
One independent health care industry analyst, who used to work in the business, said the announcement "is really smart politics on the part of UnitedHealthcare." Robert Laszewski added that "one of the criticisms I have long had is that the industry doesn't act proactively."
Laszewski said in an interview before Humana and Aetna announced their decisions, that the numbers work when it comes to the elements United decided to do.
"Here finally is an example of an insurance company sitting down and saying it only cost 3 percent [of premiums] to do these things," he said. "We've already priced it into the product."
And he agreed with the insurer's decision not to unilaterally maintain the coverage for children who have pre-existing conditions unless their competitors do.
"If United were to cover kids with pre-existing conditions and none of the other insurers followed, you'd have a line of parents with sick kids wanting to sign up."
If Laszewski had favorable words for United, he called Cigna's refusal to follow suit "really dumb. I'll bet you any money you want that in one year Cigna goes along with UnitedHealthcare."
Smart politics
Laszewski said this move is smart politics because Republicans and Democrats have already supported keeping such preventive provisions.
Last week, at least one Republican lawmaker predicted this would happen.
"I've talked to insurance companies who say that 'oh yeah that you're right, kids on until 26 is pretty popular and we may just do that on our own.' That may be a marketing strategy—which I think is the way it should be," Rep. Michael C. Burgess, R-Texas, said June 8 during a brief interview.
United made it clear in its statement that the protections are effective immediately and said they "will remain available to current and future customers and members. The company is not establishing any sunset provisions." United spokesman Matt Stearns said there are too many variables involved to say whether keeping these provisions would results in higher premiums.
This decision will affect about 9 million UnitedHealthcare customers in the individual and small-group markets. As for the 27 million self-insured customers for whom United administers their plans, Stearns said these provisions will be offered to those customers and it will be up to the individual companies to decide whether to take them.
Under the health care law, all plans have to include the provisions United, Aetna and Humana have agreed to extend.
Dallas Salisbury, president of the Employee Benefit Research Institute, said if the Supreme Court strikes them down, employers will have to decide whether continuing them fits into their benefit options.
Many employers, he said, are already moving toward high deductible plans, health reimbursement accounts and other vehicles under which employees pay a higher proportion of their health costs.
"If suddenly employers didn't have to provide this benefit that raises costs to everybody but only benefits a small number of employees, an employer may say we'll offer this as an optional benefit fully paid by the employee." Then, Salisbury said, fewer employees would probably take it and that could ultimately affect insurance company pricing.
Along with the fact that these protections are required by the health care law comes favorable tax treatment for the benefit.
For example, because the law mandated that parents could add children up to 26 years old on to their policies, that meant the health benefit was not taxed as income.
While it's not clear what the IRS would do if the benefit were no longer mandated but still offered by insurers, Salisbury said the IRS could go back to historical practice and regard coverage of children who are no longer dependents as extra income and coverage for those children could then be taxed.