Insurer oversight advances…

HEALTH ACCESS UPDATE
Wednesday, July 15th, 2009

SENATE COMMITTEES PASS INSURANCE REFORMS
* Key Measures from Assembly Pass Senate Health & Judiciary Committees
* Bills Included AB786(Jones) to Better Label Insurance Plans, Limit Out-of-Pocket Costs
* Trio of Insurer Oversight Bills Focus on Controversial Rescission Practices
* Next Stop: Senate Appropriations Committee for Fiscal Review, then to Senate Floor

* More Updates on blog.health-access.org: Senate HELP Passes Bill; House Bill Unveiled; Even Wall Street Agrees on the Broken Health System; California Blue Dogs on Health Reform and the Public Health Insurance Option; Health Reform Blog Updates; Kids Will Die; Budget Protests; Myths and Facts on the Governor’s “Reform” of Medi-Cal Eligibility

* Follow Health Access California on Facebook at www.facebook.com/healthaccess and on Twitter, at @healthaccess, or www.twitter.com/healthaccess for updates on budget, legislation, and federal health reform.

SACRAMENTO – The Senate Health Committee, chaired by Sen. Elaine Alquist (D), and the Senate Judiciary Committee, chaired by Sen. Ellen Corbett, supported important health care consumer protections in the past two days. These and other bills will be going to the Senate Appropriations Committee, before going to Senate floor for a full vote.

HEALTH COMMITTEE ON INSURANCE REFORM: The bills included AB786 by Assemblyman Dave Jones (D), which aims to better label the insurance products sold to individuals, limit out-of-pocket costs, and ultimately help Californians avoid being sold “junk insurance” policies. Jones told committee members the bill, sponsored by Health Access, was critical to helping consumers know exactly what kind of coverage they are getting when they pay for an individual health care plan.

An increasing number of California consumers are being forced into the individual policy market as they lose employer-sponsored or group coverage in the state’s lingering economic downturn.

Thus, it is more crucial than ever that insurers represent policy features with more clarity and transparency regarding what health care procedures will be covered, and what portion of the medical debt will be shouldered by the consumer.

AB786 would institute a tiered system of defining the various benefits levels individual policies offer, allowing consumers to comparison shop in an “apples to apples” manner.

Currently, it is very difficult for consumers to obtain clear and accurate information about what their individual policies cover, and what they do not. This has left many consumers surprised by huge medical bills that they believed were covered by the policy they pay premiums on.

Martha Yvonne Fadlin, of San Jose , testified in support of AB 786. Fadlin, a 62-year-old licensed vocational nurse turned to the individual market for coverage when her job was down-sized from full time to part time and she no longer had her employer-provided insurance.

Fadlin said she shopped around, and researched plans by Blue Cross, Blue Shield and Kaiser. She ended up buying an individual policy from MultiPlan, whose ads she saw on television and seemed cheaper.

Although the health plan she bought claimed to cover hospitalization, emergency room visits, X-rays and other diagnostic tests, it was less than forthcoming with information telling her how much of those health care services it would cover in exchange for her $268 premium.

When Fadlin went to the doctor for severe abdominal pain, it was determined she should go to the hospital. Tests showed she suffered from diverticulitis and she went home with a prescription to help with her condition.

Her bill? Ten thousand dollars, of which MultiPlan paid only $2,000. She now owes a hospital bill of $8,000.

“It never occurred to me that an insurance company could say it covered something but only pay a tiny fraction of the cost,” she told committee members.

Speaking in support of the bill was Health Access California, Western Center for Law and Poverty, Congress of California Seniors, California Immigrant Policy Center, California Teachers Association, Californians for Disability Rights, California Alliance for Retired Americans, Jericho, and the American College of OBGYNs . AB 786 would also impose a maximum $10,000 out of pocket obligation for the policy holder and would standardize terms and definitions of coverage.

Testifying in opposition were Anthem Blue Cross, Health Net, the California Association of Health Plans, other insurers and a representative of agents and brokers who predicted that categorizing insurance policies in 10 tiers would be too difficult because he, for example, sells 136 types of individual insurance products.

Another key consumer protection bill that passed the Senate Health Committee Wednesday was AB244 by Assemblyman Jim Beall (D). AB244 would require mental health care parity for adults and youths for a range of mental and substance abuse disorders that benefit from treatment.

TUESDAY’S JUDICIARY COMMITTEE ACTIONS: This is the final week for policy committees to approve Assembly bills on their path through the Senate On Tuesday, the Senate Judiciary Committee, chaired by Ellen Corbett (D), passed three key pieces of legislation designed to combat the insurance industry’s practice of retroactively rescinding health care coverage for consumers who undergo costly medical care. Votes were along party lines.

The trio of insurance company oversight bills, supported by Health Access California , are:

* AB2, by De La Torre (D) and supported by the California Medical Association and other physician groups, would ensure an independent third party reviews all insurance company rescissions. Thus, the bill also raises the standard that insurance companies must meet before retroactively cancelling health care coverage of a consumer with an individual policy. Currently, health care plans yank coverage without any prior approval. If AB2 passes and becomes law, insurance companies will have to prove the customer willfully misrepresented his or her medical history to get coverage. AB2 also will require insurance companies to develop and use standardized, clear and easy-to-understand application questionnaires for consumers applying for a health care policy. Representatives of large health plans, including Anthem Blue Cross and Health Net, were joined by the California Chamber of Commerce in opposing the bill. Industry spokespersons did, however, concede that independent review of rescissions, which have targeted thousands of Californians in the past few years, could be acceptable–depending on the rules of the independent reviewer used–as was developing standardized, understandable application materials.

* AB730, also by De La Torre, was sponsored by the California Department of Insurance, which regulates the individual policy market. The legislation would increase penalties for wrongful rescission from $118 to $5.000- $10,000, closer to the level of fines the Department of Managed Care is able to use in its regulation of managed care insurers of group policies. Fines are levied in cases where an insurer is found to have unlawfully engaged in post-claims medical underwriting – or investigating a patient’s history only after the patient has undergone expensive medical care. Industry representatives said they were not opposed to increasing the fines from $118 per case, which Assemblyman Hector De La Torre said was too low, and “hardly a disincentive” to insurers.

* AB108, by Assemblywoman Mary Hayashi (D), would cap at 18 months the length of time an insurer has to rescind, cancel, or limit individual health care policies – or charge higher premiums – because of fraud by a consumer. The bill would reduce from 24 months to 18 months the window of opportunity for insurers to take action against a consumer who knowingly misrepresented their medical issues in order to obtain coverage.

While the legislative leadership is focused on the ongoing budget negotiations, the regular calendar of considering bills continues. For a full list of bills of interest to health care consumers, visit our website to get the Health Access California bill list, at:
http://health-access.org/files/advocating/HAC%20Bill%20List%206-5-09.pdf

Visit the Health Access website, http://www.health-access.org, for more information on any of these issues. This update was reported by Cynthia Craft of Health Access California.

Health Access California promotes quality, affordable health care for all Californians.

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