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Now that we have seen implementation of the first stage of the new legislation (coverage for dependents to age 26, no more pre-existing conditions limitations for children under age 19, essential benefits coverage with no cost to the insured, etc.) we need to prepare for the next set of changes.

The second stage of health care reform occurs from 2011 to 2013. This round of changes will include medical loss ratio (MLR) requirements for the insurance companies and development of a new model for distributing coverage (the government sponsored exchanges.)  Scheduled to start January of 2011, this group of modifications is scheduled to be well underway by 2013.

The medical loss ratio requirements under the new legislation will require insurers to limit their “non-claims costs” to 15% of premium revenue in the large group market and 20% in the small group and individual markets.  Non-claims costs include administrative expenses and profit margins, but not taxes.  If insurers do not meet this guideline they will be required to provide an annual rebate to each enrollee (that means writing checks to the individual employees of a firm, not the employer.)

In 2014 and beyond, the third stage of health care reform is scheduled to be implemented.  State insurance health exchanges will be a central focus of this legislation.  The exchanges are designed to allow an estimated 24 million individuals and businesses to compare and purchase affordable health insurance coverage.  Sadly, in none of the legislation has there been any apparent focus on containing costs.  Even if the exchange driven health insurance coverage starts at a more affordable price point, there is no obvious way to see how it can remain so.  It will take tremendous individual commitment to wellness and efficient utilization of resources on all our parts to produce the positive results the legislation was designed to create.