IQ expert Jason Beans: Federal health care reform may prompt insurance surgery

Q: As someone who obtains health insurance through my employer, what should I be aware of with the health care reform law? Is there anything I should be worried about?

A: While the health care law does not directly have rules that would “harm” an employee, I am concerned that the law will affect your employer and health insurance carriers in ways that will ultimately force changes in your health care plan.

The first and biggest changes will be significant hits to your wallet. The law contains numerous requirements that increase insurance costs. Some changes that may seem like “perks” end up being the opposite:

• Requiring carriers to cover people with pre-existing conditions without charging too much; there is a cap on how much more the most expensive policy can vary over the least expensive policy. This is part of the new federally funded “high risk” insurance program. It sounds good, but that means the carriers are required to sell policies that will lose them a lot of money. Those costs are really just getting shifted to everyone else in the system.

• Mandating no co-pay for certain treatments. Again, this sounds good, but all insurance does is take the total estimated costs, add in a profit and divide those costs to everyone to spread them out. Those costs are added to everyone’s plan (plus the profit).

• Eliminating lifetime benefit limits. This is a great thing for those people that have serious illnesses, but there are large additional costs added to the system for those who do hit these thresholds, and those huge costs are spread to everyone as increased premiums to cover the risk.

• Allowing children up to age 26 to remain on their parents’ health plan. This could be good, as younger people usually cost less to insure than they pay, but the fear is the people who will use this option are the ones with health issues, which merely adds more weight to employers’ family health care plans.

• Increased taxes. The law includes a number of taxes on health insurers, pharmacy companies, medical suppliers and so on. This will be passed on to consumers. It simply translates to a health care premium increase — ultimately a cost driver for everyone.

In 2010, I estimated that the health care reform law would increase insurance costs by at least 15 percent more than rates would increase without the health care law. From what I’m hearing in the marketplace, my estimate has unfortunately been confirmed (if not low). I’ve now heard of premium increases of 18 percent to 45 percent.

As it is, in this economy, most employers are not making as much profit as they have in the past. So many employers have no way to absorb these added costs without going out of business or letting people go.

This means that most employees will see extremely large increases in their portions of health care costs. If not, they may see big changes in their plans, with reduced coverage or more self-responsibility. These changes may force your employer to shop for new carriers (that may or may not have your current providers in their networks). You also could see a scaling back of your plan benefits to prevent employees from having to pay exorbitant premiums.

Bottom line: There’s no free meal ticket in this world. When you increase benefits and make those who need it most not have to pay for it, someone has to pick up the tab. The costs of these health care “perks” ultimately will trickle back down to everyone. It’s just basic math.

Jason Beans is CEO of Chicago-based Rising Medical Solutions, a medical cost containment/care management company serving the workers’ compensation, group health, auto and liability markets. Beans founded Rising in 1999. Since then, Beans has received a number of honors, including Business Council Advisory Man of the Year and Midwest finalist for Ernst & Young Entrepreneur of the Year. Rising has appeared several times on the Private Company Index’s Top 10 Growth list and Inc. magazine’s Inc. 5000 list.

Beans earned a master’s degree from MIT’s Entrepreneurial Masters Program and a bachelor’s degree in finance from Boston College.

For more information, visit www.risingms.com.

If you have a health insurance question for Jason Beans, please send it to john.egan@bankrate.com.