Lawmakers eye insurance with no frills
The Journal Gazette
(FortWayne.com)
Feb. 6, 2005
Lawmakers eye insurance with no frills
By Niki Kelly
After mandating numerous health insurance benefits over the past decade,
lawmakers this year might allow small-business owners to purchase no-frills policies for their employees that don’t include those required services.
The proposal – often called “mandate-light” – is backed by Gov. Mitch Daniels and is included in House Bill 1487, which will receive a hearing Feb.17.
http://www.fortwayne.com/mld/journalgazette/10832440.htm
Indiana House Bill No. 1487
Synopsis: Health benefit mandate option. Allows, under certain circumstances, an accident and sickness insurer or a health maintenance organization to provide a policy or contract without complying with all health benefit mandates.
Sec. 5. Notwithstanding any other law, an insurer may offer to a prospective purchaser a policy of accident and sickness insurance without complying with all health benefit mandates if:
(1) when the offer is made the insurer provides a list of the health benefit mandates with which the offer does not comply; and
(2) the policy offered includes the following:
(A) Newborn coverage required under IC 27-8-5.6.
(B) Diabetes related coverage required under IC 27-8-14.5.
© If the prospective purchaser is described in section 4(2) of this chapter:
(i) breast cancer screening related coverage required under IC
27-8-14;
(ii) prostate cancer screening related coverage required under IC
27-8-14.7; and
(iii) colorectal cancer screening related coverage required under IC 27-8-14.8.
(D) Adopted child coverage required under IC 27-8-5-21.
http://www.in.gov/legislative/bills/2005/IN/IN1487.1.html
Comment: In order to make health insurance affordable for small businesses, Indiana’s governor is supporting a list of mandates that excludes almost all medical care. For the great majority of individuals, the mandates include only screening (but not treatment) for two malignancies (colorectal plus one other sex-specific cancer).
There is one important if unintended benefit of this proposal. It demonstrates the fallacy of targeting health care cost containment exclusively to the insurance premium, a process that is most effective when over 99% of benefits are eliminated. Of course, sponsors of this legislation would contend that that the benefits could be tailored to only those needed.
But 80% of health care services are utilized by only 20% of the population. So those of us who are healthy now, but will later become part of the 20% with greater needs, will have to buy the plan that will cover our specific needs. But which plan do we purchase? The cardiac plan? But which one? The one that covers coronary artery hospital benefits? Surgeon benefits? Or maybe the one that covers less invasive angioplasty with long term drug therapy? Or will we need the coverage that includes the implantable defibrillator? But maybe the problem will be with the aortic valve, requiring a valve replacement instead of angioplasty. Or maybe both? But then what about hypertension and stroke? Or cancer? And which type? And should coverage include surgery? Chemotherapy? Radiation? Hospice?
The obvious point is that coverage needs to be comprehensive. Even though only about one-fifth of us will have need for expensive services, all of us need to have the protection of comprehensive coverage. Since about half of the four-fifths of us who will remain healthy will have financial difficulties meeting their modest health care needs, coverage must meet that contingency as well. That leaves about 10% of health care that does not expose individuals to financial risk. But the administrative complexity of funding that individually is not worth the waste of resources. Let’s just include that 10% in with the other 90% and simply provide comprehensive coverage for everyone.
Or would you really rather have your insurance cover only your cancer screening test, and then be left on your own to figure out how you’re going to pay for treatment? And any other care you may eventually need?
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Subject: qotd: Is regulation of the individual health insurance market the answer?
The Commonwealth Fund
February 2005
Insuring The Healthy Or Insuring The Sick?
The Dilemma Of Regulating The Individual Health Insurance Market
By Nancy C. Turnbull and Nancy M. Kane
From the Executive Summary:
Federal and state policymakers are considering a variety of policy approaches—such as tax credits—to expand health insurance coverage through the individual health insurance market. For these policy approaches to succeed, there must be a well functioning individual health insurance market where reasonably comprehensive coverage is both available and affordable.
The individual market currently is quite small, covering approximately 17 million nonelderly Americans, or about 6.7 percent of the population. This market historically has not worked well for many people seeking coverage, in particular for those who need coverage the most. Policies frequently have been unavailable to people with existing health conditions;premiums have been expensive and usually have risen faster than group insurance rates; and benefits have generally been far more limited than those in group policies.
Key Findings:
- Stricter regulation has made an important difference, but affordability is still a major problem.
- Older or less healthy consumers face a range of problems in the weaker-regulation states.
- State high-risk pools are not an adequate alternative to stricter regulation.
- A few carriers in each state dominate the individual health insurance market, a trend that has strengthened over time. (As of 2002, loss ratios in the individual market in the study states were in the 70 percent to
85 percent range.)
http://www.cmwf.org/usr_doc/71_Turnbull_insuring_healthy_or_sick_findings.pdf
Comment: Current political trends suggest that the individual insurance market will play a much greater role in the future. This study adds to the abundance of health policy literature that confirms that the individual market is highly flawed. It is both inequitable and ineffective in ensuring affordable access to health care.
There are two options. Increase the regulatory oversight of not only the individual market but the group market as well. Regulations must ensure both equity and affordable access to care. Such a highly regulated market would dramatically increase administrative costs and increase overall health care spending in order to cover those without adequate access today.
There is another option. We can throw out the highly flawed private individual and group plans and replace them with a single, administratively efficient program that ensures both equitable funding and affordable health care access. Is there really any choice here?