As readers of this blog know, Health Access has waged a long fight to eliminate “junk” insurance: insurance that costs less because it does not cover basic health services.
On June 22, the three month anniversary of health reform, the U.S. Department of Health and Human Services released new rules on annual and lifetime limits as well as rescissions and pre-existing condition exclusions.
The new rules on annual and lifetime limits effectively eliminate the junkiest of junk insurance effective September 23 of this year.
The rules require health insurers to cover all minimum essential benefits up to an annual limit of no less than $750,000 effective Sept. 23, 2010, no less than $1.25 million in 2012, no less than $2 million in 2013 and with no annual limits at all in 2014.
What are minimum essential benefits? Doctors, hospitals, lab, radiology, prescription drugs, mental health and substance abuse—and that is exactly what almost everyone thinks of as basic health benefits—except insurers who think that benefits with more holes than Swiss cheese are a good way to make money off unsuspecting consumers.
What does this mean in the real world?
One of the first people we met in this fight was Susan Braig: she was a freelancer who lived in Altadena. When she turned 50, she did what she thought was the responsible thing and bought health insurance. Since her income goes up and down, she bought what she thought was catastrophic coverage.
Then Susan got breast cancer—and her insurance covered virtually none of her care because it was a hospital-only policy and most of her care, from the lumpectomy to chemotherapy and other treatment was outpatient. She ended up tens of thousands of dollars in debt—and unable to get any other insurance because she was medically uninsurable.
Under the new rules, her insurance would have covered all of her care up to $750,000 a year this year—unless it excluded all care for cancer and disclosed this.
Another person we met was a woman who had retired early and opened a wine shop. Being responsible she bought health insurance that her broker told her was just as good as the coverage she had had at her corporate employment. It all went fine until she got bit by a rattlesnake while clearing out her new backyard and found out the insurance did not cover the first day of hospitalization, the only day she needed. The hospital billed her $98,000 for that day of care—fortunately, she found information about hospital discount protections on the Health Access website and negotiated the bill down to less than $10,000—still a lot of money but much more affordable than almost $100,000. Under the new rules, her insurer would have been required to cover all of her care—and presumably would have negotiated discounts with the hospital similar to what she negotiated for herself.
What the new rule means is no more health insurance that is hospital-only or doctor-only or that covers two doctor visits and one day in the hospital and nothing else. It means no more generic-only drug coverage for insurance regulated by the Department of Insurance.
Until 2014, insurers are allowed to exclude all care for a specific condition. That means insurers can continue to exclude prenatal care. That is wrong and Health Access will continue to support AB1825 (De La Torre) which requires maternity coverage and SB890 (Alquist) which requires insurers to cover the same basic benefits that HMOs and PPOs regulated by the DMHC have been required to cover since 1975.
And insurers are allowed to continue to have limits, including limits on visits and hospital stays, on grandfathered plans. Generally in the individual market, a plan is grandfathered if the increase in copays and deductibles is limited and the benefits are not reduced.
But starting September 23, less than six months from now, the annual limit on “minimum essential benefits” including doctors, hospitals, and drugs will be no less than $750,000, phasing out in 2014 when there will be no annual limits.
So adios, sayonara, adieu, good-bye and please never come back to the junkiest of junk health insurance.