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updated: 6/11/2012 7:07 AM

UnitedHealth to keep some benefits even if health law rejected

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Bloomberg News

UnitedHealth Group Inc. said it will offer some benefits and consumer protections created by the U.S. health-care overhaul even if the law is struck down by the Supreme Court. The exception: Those involving people with pre- existing illnesses.

Customers of the largest U.S. health insurer can keep children on their plans until age 26, get free preventive care and won't face lifetime benefit limits, no matter how the court rules, the company said yesterday in a statement. The insurer also won't rescind policies except for cases of fraud, it said, and will retain a simplified appeals process for denials.

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At the same time, the Minnetonka, Minnesota-based insurer said it can't cover children with pre-existing illnesses unless other insurers also agree to cover them, and that it would work with "all other participants in the health-care system" on the issue. The statement didn't address adults with pre-existing conditions at all. Other insurers will probably follow UnitedHealth's lead, said Les Funtleyder, a portfolio manager with Miller Tabak in New York.

"As United goes, so goes the world," said Funtleyder, whose Healthcare Transformation Fund owns UnitedHealth shares. "The reason insurance companies didn't do it in the first place -- they can price for all of these things -- is because they were afraid of competition."

The Supreme Court is weighing whether a provision in the overhaul mandating that most Americans be insured is constitutional and, if not, whether to strike down the entire law or just that part of it. The law, supported by President Barack Obama, was passed without Republican Party support.

Three spokespeople for the U.S. Department of Health and Human Services didn't immediately respond to e-mails seeking comment on the UnitedHealth statement. Nick Papas, a White House spokesman, also didn't immediately answer an e-mail.

'Couple of Dollars'

The benefits and protections UnitedHealth would preserve probably don't cost much or add more than "a couple of dollars" to premiums, Funtleyder said in a telephone interview. UnitedHealth had about 25.9 million people in its commercial plans in 2011, according to data compiled by Bloomberg.

The company said it won't change its 2012 earnings forecast because of the announcement. The cost of single benefits such as free preventive care can't be easily isolated from the variables that determine premiums, Matt Stearns, a UnitedHealth spokesman, said by telephone.

The requirement that insurers allow families to keep children in their plans until age 26 expanded insurance coverage to about 2.5 million people in 2011 while increasing premiums less than 1 percent, the government estimates.

Popular Provision

The provision is among the most popular parts of the law, polls show, and the nonprofit Commonwealth Fund in New York estimated last week that about 6.6 million young adults are on their parents' plans because of it.

The government has estimated that prohibiting lifetime limits on benefits also adds less than 1 percent to premiums.

"The protections we are voluntarily extending are good for people's health, promote broader access to quality care and contribute to helping control rising health care costs," Chief Executive Officer Stephen J. Hemsley said in the statement.

Ron Pollack, executive director of Families USA, a consumer advocacy group in Washington that backs the health-care law, called the statement a "very positive development."

"This in no way changes the importance of making sure the Affordable Care Act is fully implemented," Pollack said in a telephone interview. He said he hopes other insurers don't "undermine" UnitedHealth's position by offering plans with lower premiums that don't guarantee the same protections.

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