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Changes beginning to emerge in health insurance market

Our October-issue article, "Health Savings Accounts: A Primer" (subscribers' link), notes that consumer-friendly HSAs survived this year's massive health-care overhaul law virtually unscathed. So if your employer is rolling out a Health Savings Account/High-Deductible Health Plan arrangement in 2011, it's likely to be a good deal for you and your fellow workers, while at the same time helping the company hold down insurance costs.

Unfortunately, the news starting to emerge elsewhere on the health insurance front isn't so reassuring. Already some insurance companies have decided — in light of the new law's cost-inducing mandates — to stop issuing child-only policies. And the New York Times reported Friday that the Principal Financial Group, which provides employer-based coverage to more than 800,000 people, has decided to get out of the health insurance business altogether:

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.... State regulators say some insurance companies are already threatening to leave particular markets because of the new law....

[In addition,] 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 [company received a] waiver [that] 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....

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 [the larger] players [in the marketplace].

UnitedHealth Group, one of the nation's largest health insurers, has agreed to take over Principal's health insurance clients.

Update: If you want to find out more about Health Savings Accounts (mentioned in the first paragraph above), listen below to my Monday conversation with host Bob Crittenden on Faith Meeting House, a program produced by Alabama's Faith Radio. (To download an mp3, right click here.)

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