HHS and Contract Law

At its most basic, individual health insurance is a contract between the insurance company and the individual being insured. While the ObamaCare roll out has been a series of ‘administrative’ changes to the letter of the ACA legislation; the latest HHS ‘suggestions’ to insurance carriers threaten the very nature of the insurance contract itself.

Basically, HHS has suggested that:

  • insurers give enrollees additional time to pay their first month’s premium while still providing coverage effective January 1;
  • insurers treat out-of-network providers as in-network during the initial month of coverage; and
  • insurers refill prescriptions based on previous policies.

Avik Roy in his look at these suggestions thinks that insurers being asked to provide coverage without paid premium is a form of taking that sets a dangerous precedent, especially with the threat by HHS to not allow carriers to continue in the exchanges if they aren’t flexible. I find it is the other two that are the most bothersome.

Is There An HHS Estoppel Defense?

In health insurance law there is a history of insurance companies being forced to provide coverage for items that were not covered under the terms of the initial health insurance contract if the insurance company initially and repeatedly paid for the item. The insurance company was estopped from enforcing the contract because they had set an expectation in the mind of the insured that the item was covered and for the duration of the contract had to cover the item as if it was covered. Will a ‘suggestion’ from HHS be  a legal defense?

In addition, there is just the basic administrative nightmare, how will an insurance company know what the previous carrier network and prescription coverage was? Once again HHS shows it firm grasp on how health insurance works.