Health Overhaul to Make Insurers Label Plans Like Cereal Boxes

Health insurers will have to provide descriptive labels similar to those found on food products under a consumer-information provision in the 2010 health overhaul the U.S. began rolling out today.

The draft rules will make insurers such as Indianapolis- based WellPoint Inc. (WLP), the largest U.S. health insurer by enrollment, detail coverage costs, deductibles and payments for common services, including delivering a baby. The new plan descriptions will be in the form of an eight-page summary available in March 2012, according to the draft rules.

“We’re making it easier for consumers to find the health plan that’s right for them,” said Donald Berwick, the head of the U.S. Centers for Medicare and Medicaid Services, on a conference call with reporters. “This will create a more competitive market where insurers are motivated to improve their products.”

Berwick’s agency is implementing the 2010 law that calls for labeling similar to that used by food companies. The Congressional Budget Office estimates the law will let 23 million uninsured people buy health coverage from private plans by 2017.

Consumer protections in the health-care law are designed to force insurers to compete based on price and service and to not exclude sicker, more costly patients, Health and Human Services Secretary Kathleen Sebelius has said. The rules were announced in a statement today from the Health and Human Services Department in Washington.

Start Date Concern

WellPoint was reviewing the rules and deferred immediate comment to America’s Health Insurance Plans, the industry’s Washington-based lobbying group, said Kristin Binns, a spokeswoman for the company.

The insurance industry called the new rules an administrative headache that would be difficult to implement. Plans will have to provide the new descriptions by March 23, 2012, a date Robert Zirkelbach, spokesman for America’s Health Insurance Plans, said was too soon.

“Some health plans could be required to create tens of thousands of different versions of this new document, which would add administrative costs without meaningfully helping employees,” Zirkelbach said in an e-mail.

The government estimates the costs to the industry to be $73 million a year in 2012, decreasing to $58 million annually in 2013. The spending will come from updating computer systems and printing and sending out notices, the government said.

To contact the reporter on this story: Drew Armstrong in Washington at darmstrong17@bloomberg.net;

To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net.