PNHP

Failing grades for individual health insurance market

Failing Grades: State Consumer Protections in the Individual Health Insurance Market

Families USA
June 2008
Key Findings

  • Only five states prohibit all insurance companies from cherry-picking the healthiest consumers and excluding everyone else.
  • In 35 states and the District of Columbia, there are no limits on how much insurers can vary premiums based on health status. An additional six states have limits that still allow dramatic variations in premiums.
  • In 21 states and the District of Columbia, insurers can exclude coverage for pre-existing conditions for more than one year. In eight of those states and the District of Columbia, insurers can exclude coverage for pre-existing conditions for the duration of an individual’s policy.
  • In 20 states and the District of Columbia, insurers can set and raise premiums without adequate oversight.
  • In 45 states and the District of Columbia, insurers can spend less than 75 cents of every premium dollar on medical services.
  • Insurers in 29 states and the District of Columbia are allowed to look at a policyholder’s medical history and perform medical underwriting months, or even years, after they issued the policy.
  • In 44 states and the District of Columbia, insurers can revoke an individual’s health insurance policy without advance review by the state.

http://www.familiesusa.org/assets/pdfs/failing-grades.pdf

Most of the politicians are telling us that national health insurance is not politically feasible. They tell us that we should not abandon what is already working well for us: the private insurance industry. They tell us that they would improve the private insurance market so that health plans would become affordable for all of us while still providing us with the protection that we need.
Looking at this Families USA report card of private plans in the individual market, it is clear that the private insurance utopia that they envision does not exist. Because of the lax regulatory requirements in far too many states, the insurers have been able to dodge their responsibility to cover everyone regardless of their health care needs.
So what kind of improvement in the insurance market are the politicians proposing?
Sen. McCain would further relax the regulatory oversight which would result in some insurance products with lower premiums, but at the cost of reducing even further the inadequate consumer protections we have. Being able to afford health insurance is of almost no value if it makes health care itself even less affordable.
Sen. Obama would close many of the insurance loopholes noted in this report by increasing the regulatory oversight of this industry. What would happen to insurance premiums if you required the plans to include everyone regardless of needs, and required them to provide benefits comprehensive enough to prevent financial hardship? Sen. Obama certainly knows, and this is why he says that we cannot require each individual to purchase insurance until he has made the plans affordable. Merely wishing that you could make comprehensive private plans affordable will never make it happen.
Numerous simulations and the experience of other nations have proven that using private health plans to provide reasonably comprehensive coverage for everyone is by far the most expensive method of financing health care. Looking at the Families USA report card, you can imagine how expensive it would be to bring our coverage up to a passing grade level. A single payer national health program would be less expensive and much more efficient. Why would a more expensive model that isn’t working for us be considered to be more feasible than a less expensive model that would?

Failing grades for individual health insurance market

Failing Grades: State Consumer Protections in the Individual Health Insurance Market

Families USA
June 2008

Key Findings

* Only five states prohibit all insurance companies from cherry-picking the healthiest consumers and excluding everyone else.

* In 35 states and the District of Columbia, there are no limits on how much insurers can vary premiums based on health status. An additional six states have limits that still allow dramatic variations in premiums.

* In 21 states and the District of Columbia, insurers can exclude coverage for pre-existing conditions for more than one year. In eight of those states and the District of Columbia, insurers can exclude coverage for pre-existing conditions for the duration of an individual’s policy.

* In 20 states and the District of Columbia, insurers can set and raise premiums without adequate oversight.

* In 45 states and the District of Columbia, insurers can spend less than 75 cents of every premium dollar on medical services.

* Insurers in 29 states and the District of Columbia are allowed to look at a policyholder’s medical history and perform medical underwriting months, or even years, after they issued the policy.

* In 44 states and the District of Columbia, insurers can revoke an individual’s health insurance policy without advance review by the state.

http://www.familiesusa.org/assets/pdfs/failing-grades.pdf

Comment:

By Don McCanne, MD

Most of the politicians are telling us that national health insurance is not politically feasible. They tell us that we should not abandon what is already working well for us: the private insurance industry. They tell us that they would improve the private insurance market so that health plans would become affordable for all of us while still providing us with the protection that we need.

Looking at this Families USA report card of private plans in the individual market, it is clear that the private insurance utopia that they envision does not exist. Because of the lax regulatory requirements in far too many states, the insurers have been able to dodge their responsibility to cover everyone regardless of their health care needs.

So what kind of improvement in the insurance market are the politicians proposing?

Sen. McCain would further relax the regulatory oversight which would result in some insurance products with lower premiums, but at the cost of reducing even further the inadequate consumer protections we have. Being able to afford health insurance is of almost no value if it makes health care itself even less affordable.

Sen. Obama would close many of the insurance loopholes noted in this report by increasing the regulatory oversight of this industry. What would happen to insurance premiums if you required the plans to include everyone regardless of needs, and required them to provide benefits comprehensive enough to prevent financial hardship? Sen. Obama certainly knows, and this is why he says that we cannot require each individual to purchase insurance until he has made the plans affordable. Merely wishing that you could make comprehensive private plans affordable will never make it happen.

Numerous simulations and the experience of other nations have proven that using private health plans to provide reasonably comprehensive coverage for everyone is by far the most expensive method of financing health care. Looking at the Families USA report card, you can imagine how expensive it would be to bring our coverage up to a passing grade level. A single payer national health program would be less expensive and much more efficient. Why would a more expensive model that isn’t working for us be considered to be more feasible than a less expensive model that would?