consumer protections in the private health insurance market ella hushagen families usa updated...
TRANSCRIPT
![Page 1: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/1.jpg)
Consumer Protections in the Private Health Insurance Market
Ella Hushagen
Families USA
www.familiesusa.org
Updated November 9, 2009
![Page 2: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/2.jpg)
Existing regulations
Federal law governs:o Large “self-funded” or “self-insured”
employers. Federal and state governments share:
o Large (over 50) & small (2-50) employers.o Transitions from group coverage.
State law governs:o Individual Health Insurance market.
![Page 3: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/3.jpg)
Where are the gaps?
Individual health insurance:o Accessibility—In all but five states, insurers
can deny coverage.o Adequacy—Insurers exclude coverage for
pre-existing conditions; inadequate benefit packages.
o Affordability—Premiums are higher for people with pre-existing conditions; deductibles & cost-sharing unaffordable; inefficient use of premium $$.
![Page 4: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/4.jpg)
Where are the gaps?
Small business health insurance:o Accessibility—Sole-proprietors/self-
employed do not have access to group coverage.
o Affordability—Premiums may vary by health status & age of employees; inefficient use of premium $$; higher costs shifted to employees.
o Adequacy—To reduce premiums, many states offer stripped-down benefit plans.
![Page 5: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/5.jpg)
Goals of private market reform
Affordable—Premiums and cost-sharing are affordable.
Accessible—People can buy coverage regardless of health.
Accountable—Health insurance companies are accountable to consumers.
Adequate—Benefits are adequate for sick and healthy people.
![Page 6: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/6.jpg)
Regulatory tools to:
Improve access to private market and spread cost of highest-risk individuals.
Restrict premium variation and limit out-of-pocket spending.
Ensure insurance company accountability and efficiency.
Provide adequate benefits.
![Page 7: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/7.jpg)
ACCESS
1) Guaranteed issue
2) High-risk pool
3) Insurer of last resort
4) Strategies to increase group market access
![Page 8: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/8.jpg)
1) Guaranteed issue
Five states require all insurers to accept all applicants, regardless of health.
Pros: Ease and choice for consumers. No medical underwriting reduces administrative overhead.
Cons: Comprehensive policies can get expensive because of adverse selection.
![Page 9: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/9.jpg)
2) High risk pools
Designated nonprofit insurance program for people with pre-existing health conditions, turned down for individual market coverage (34 states).o Premiums are capped; income-based subsidies
available in some states. Pros: Spreads risk without disrupting market. With
adequate funding, can be affordable option. Cons: Often unaffordable for consumers.
Continual fight for adequate funding and benefits.
![Page 10: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/10.jpg)
3) Insurer of last resort
Designated nonprofit insurer must sell to everyone, or every insurer must sell one standard policy to everyone.o Not always mandated by state law. o Rate protections typically inadequate.
Pros: Easy to establish, good use of nonprofit surplus.
Cons: Lack public oversight. Inadequate rate protections. Other insurers don’t share risk.
![Page 11: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/11.jpg)
4) Group coverage access
Dependent coverage: Allow young adults (to age 21-30) to maintain coverage on family health plan (24 states).o Keeps young and healthy in risk pool.
Groups of one: Allowing sole-proprietors / self-employed to purchase small group market coverage as a ‘group of one’ (14 states). o Makes coverage available to sole-proprietors.
![Page 12: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/12.jpg)
AFFORDABILITY
1) Pure and modified community rating
2) Rate bands
3) Restrictions on deductibles and out-of-pocket costs
![Page 13: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/13.jpg)
1) Community rating
Pure community rating: Same premium prices to everyone, regardless of age and health (one state); or
Modified community rating: Same premium regardless of health, but allows limited variation for age, gender, and other factors (6 states).
Pros: Non-discriminatory; spreads risk among young and old, healthy and sick.
Cons: Raises price of insurance for young and healthy; may contribute to adverse selection.
![Page 14: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/14.jpg)
2) Rate Bands
Limits how much premiums can vary based on health, age, gender, industry, etc. o For example, premiums may only vary up or
down by 25% for health status. Pros: Some limits are better than none;
incremental way to rein in variability. Cons: Incomplete risk-sharing; all factors
taken together may allow huge variance.
![Page 15: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/15.jpg)
3) Restrictions on cost-sharing and deductibles
Few states regulate individual and small group market products to limit deductibles, impose out-of-pocket cost maximums, restrict maximum annual & lifetime benefit maximums.o Maine & Massachusetts through new programs.
Pros: Sets realistic limits on how much consumers can pay.
Cons: May cause adverse selection if not imposed on entire market.
![Page 16: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/16.jpg)
ACCOUNTABILITY
1) Medical loss ratios
2) Prior approval of rates
![Page 17: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/17.jpg)
1) Medical loss ratios
Require health insurance companies to spend a minimum percentage of premiums on medical care vs. administration and profit.o For example, 80% in the individual market (2
states) Pros: Easy to administer; controls profits. Cons: Doesn’t get at underlying medical
costs; companies hide profit.
![Page 18: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/18.jpg)
2) Rate review/prior approval
Insurance department must review insurers proposed rates before they go into effect.o 25 states have prior approval of all products
in the individual market. Pros: Gives regulators authority to
disapprove outrageous premium increases. Cons: Requires vigilant regulators; will not
decrease or dramatically slow rate increases.
![Page 19: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/19.jpg)
ADEQUACY
1. Pre-existing condition exclusions
2. Other adequacy tools
![Page 20: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/20.jpg)
1) Pre-existing condition exclusions
Limit pre-existing condition exclusions:o Prohibit insurance companies from excluding
coverage of pre-existing conditions for any longer than 6 months (2 states);
o Limit look-back period to 6 months (15 states);o Define pre-existing conditions objectively (19 states).
Pros: Helps people with pre-ex get services; prevents insurers from alleging pre-ex based on unrelated symptoms.
Cons: Adverse selection; market churning.
![Page 21: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/21.jpg)
2) Other adequacy tools
Appeals procedures and external review. Benefit mandates. Standardized benefit plans to allow easier
comparison shopping. Ombudsman or consumer assistance
programs. Consumer report cards.
![Page 22: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/22.jpg)
Risky Ideas
1) Consumer-driven health care & HSAs
2) Deregulation
![Page 23: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/23.jpg)
1) Consumer-driven health care
Idea: Require consumers to pay more for health care services; health consumers become savvy shoppers and bring down health care costs.
Reality: o In 2007, 48 million Americans reported having trouble
paying medical bills.o 18.7 million non-elderly Americans will spend more than
25 percent of their income on health care costs in 2009. o Medical crises contribute to half of home foreclosure
filings; 23 percent are attributable to medical bills.
![Page 24: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/24.jpg)
1) Consumer-driven health care:Health Savings Accounts
Idea: Contribute tax-free dollars to a savings account for health care expenses; linked to high-deductible health plan.
Reality: o Impossible to shop for health care;o Creates tax shelter for rich;o Shifts costs to workers;o Undermines risk-sharing.
![Page 25: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/25.jpg)
2) Deregulation
Idea: Allow consumers to buy insurance across state lines; choose best product.
Reality: Drastically weakens existing state consumer protections.
![Page 26: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/26.jpg)
Federal help on the way?
Federal bills under consideration in Congress take many critical steps to enact or move towards the consumer-friendly reforms described in this presentation. Progress is expected on accessibility, affordability, and adequacy.
To learn more, visit http://www.familiesusa.org/health-reform-2009/
Stay tuned!
![Page 27: Consumer Protections in the Private Health Insurance Market Ella Hushagen Families USA Updated November 9, 2009](https://reader036.vdocument.in/reader036/viewer/2022070305/5514c97955034640138b5cd9/html5/thumbnails/27.jpg)
More information
www.familiesusa.org Private Market Publications; Resources for Consumers; Private Market Legal Rights Center
www.standupforhealthcare.org Contact us!
202-628-3030Cheryl Fish-Parcham, [email protected] McAndrew, [email protected] Stoll, [email protected]