A national report released today confirms what many health advocates already knew: California’s individual health insurance market is a big mess.
The individual market is where consumers to go buy health insurance if you don’t get it at work (where you have a group going in to buy coverage together and spreading out the risks) or through public programs.
California’s feeble — or lack — of protections leaves consumers extremely exposed. Here’s how we fared:
- Requiring insurers to sell coverage to all applicants (also called guaranteed issue): No Credit.
- Requiring affordable coverage alternatives for uninsureables — people with pre-existing conditions: Partial Credit. (California has the Managed Risk Medical Insurance Program, which allows this population to buy coverage at above-market rates. Without this program, these consumers would be denied coverage. MRMIP, however, is unable to accommodate all who need coverage. They do not advertise, yet have 8,101 enrollees and 339 applicants on a waiting list.)
- Prohibiting higher premiums based on health status: No Credit.
- Requiring advanced review of proposed premium rates: No Credit.
- Requiring insurers to spend at least 75% of premiums on health care: No Credit. (Actually, HMOs in California are required to spend at least 85% of premiums on health care. PPOs, which are regulated by a different department, are required to spend 70% of premiums on health care, though some insurance products spend as little as 51% on health care)
- Limiting how long coverage can exclude pre-existing conditions: Partial Credit.
- Limiting look-back period: Partial Credit
- Using objective standard to define pre-existing conditions: Full Credit (the first!)
- Requiring medical underwriting to be completed during application: Full Credit (We’re not completely convinced this is the case — otherwise, why the need for some insurers to rescind insurance later?)
- Reviewing insurers’ requests to revoke coverage: No Credit (The Department of Managed Health Care Services has restored coverage to more than 1,000 patients and is in the process of reviewing more than 5,000 cases where patients have had their insurance revoked since 2004. )
- Accepting appeals when coverage is revoked: Full Credit
- Reviewing denials for all state-licened carriers: Full Credit
- Making external reviewer decisions binding: Full Credit
- Offering free external reviews regardless of claim size: Full Credit
Pretty sad. But there’s hope! Fortunately, we’re actually trying to do something about our abysmal performance.
- SB 1522 (Steinberg) INSURANCE MARKET STANDARDS & PREVENTING “JUNK” INSURANCE. The bill would set a minimum benefit standard for coverage, and weed out “junk” insurance that still leaves people exposed to bankruptcy. It would require coverage to have an overall cap on out-of-pocket costs, and cover doctor, hospital, and preventative care. It would sort health insurance policies into five coverage categories, ranging from “comprehensive’’ to “catastrophic.’’ Organization of plans into these categories would enable consumers to better track premium, benefits and cost-sharing, and assist consumers in making apples-to-apples comparisons between plans.
- SB 1440 (Kuehl) CAPPING ADMINISTRATION AND PROFIT. It would set a minimum medical loss ratio – requiring every insurer to spend at least 85 percent of premiums on patient care.
- AB 1945 (De La Torre) INDEPENDENT REVIEW OF RESCISSIONS. It would require health plans to seek approval by an independent review panel under the Department of Managed Health Care or Department of Insurance for each individual rescission. It would also standard the process and questions used in any underwriting. Also up in the Assembly is AB 2549 (Hayashi) that would impose a six-month time limit in which insurers have to rescind individual health care policies once consumers’ applications are approved.