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Health Access Weblog

Evidence for Reform

Thursday, June 12, 2008
 
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.

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posted by Hanh Kim Quach | Permalink | 11:49 AM


 
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Pretty soon, the insureable will be a pretty exclusive club

Wednesday, June 04, 2008
 
The NYT had an interesting story on Sunday about women, of childbearing age, who are denied coverage on the individual market because they had previously had a Caesarean section. The rationale is that these women would be likely to have another expensive C-section should they get pregnant again.

If that were truly the case, most of the women I know who have had children would not be able to get coverage on the individual market, which seems horribly unfair -- as the story, and my friends point out -- many women don't go into labor wanting to have a C-section.
"Insurers are adding insult to injury. Not only are women feeling pressure
to have Caesareans that they do not want and may not need, but they may also be
denied coverage for the surgery.''

So women: If you haven't already been excluded from coverage for a rash, prescription, infection or allergy, having a baby will do it to you.

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posted by Hanh Kim Quach | Permalink | 1:54 PM


 
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But can Mrs. MIP get coverage?

Friday, May 02, 2008
 
With all the talk about the high-risk pools that McCain plans to create, it's a good thing to simply highlight that California already has a high-risk pool, even few people know about it.

It's called MRMIP, the Major Risk Medical Insurance Program.

It has a waiting list of over 500 people right now, according to a chart posted on its website. That's even though the program has never been promoted or advertised.

People who are denied coverage because of "pre-existing conditions" have to pay more than the market rate to get the coverage. It's a lifeline for those who can't get coverage any other way, but it's expensive, and has drawbacks.

The plans offered have a $75,000 overall annual cap on benefits (here's a report on the MRMIP benefit), leaving people with that coverage at risk to significant medical debt, if they happen to be sick.

There's a bill, AB2(Dymally), that Health Access California supports, to reform the program, including getting it more funding so it can provide a better benefit to more people. Its parked from last year, but without full "guaranteed issue" health reform, this issue will continue to be with us.

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posted by Anthony Wright | Permalink | 12:00 AM


 
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Heartburn by Blue Cross

Tuesday, June 26, 2007
 
I spoke in front of Congress of California Seniors today at their 30th Anniversary Convention in Long Beach, and got a laugh in my presentation by saying off-hand that "living over 50 is a pre-existing condition." But the truth may be worse...

Last week, in response to my op-ed about young graduates falling off of coverage, I got an E-mail from a 27-year old Ph.D. student denied for Blue Cross' "Tonik" product, because of a high cholesterol test.

Today, health policy-obsessed blogger Ezra Klein posts a letter to Blue Cross by a 28-year old denied for coverage for the pre-existing condition of... heartburn.

(In a similar vein, Lt. Governor John Garamendi also spoke today, and lambasted Blue Cross of California as a "lying bunch of thieves.")

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posted by Anthony Wright | Permalink | 8:03 PM


 
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Gov spends QT with insurers

Monday, June 25, 2007
 
Gov. Arnold Schwarzenegger told health insurers, "I need you,'' Friday at the industry's convention in Las Vegas.
Noteably, he said he wouldn't support a system where insurers would "go away'' -- a not-so-veiled reference to SB840 (Kuehl), the Legislature's universal, single-payer legislation.

Another thing Arnold said that irks health advocates:
"My plan also reforms some of the state's regulation that now stand in the way of your industry being able to offer lower-cost products to employers and individuals.''
The Translation: Let's get rid of "pesky mandates'' like mammograms and other cancer screenings, preventive care for children, treatment of osteoporosis. If we don't cover health care, health coverage will be cheaper.

The guv also said that while he didn't support "artificial means'' to bring down costs, he believes plans need to play a role in being "efficient, cost-effective, and focused on quality." This emphasis on efficiency and quality -- and insurers reponsibility to assure that -- goes further than what the guv said in January when he unveiled his health reform plan.

Lastly, the guv praised a number of health plans EXCEPT Blue Cross, who are "on board'' with his notion that people shouldn't be denied coverage because of pre-existing conditions. Blue Cross has put $2 million so far into defeating health reform efforts in the state -- which obviously is annoying the gov.

Watch his remarks and read the transcript here.

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posted by Hanh Kim Quach | Permalink | 1:07 PM


 
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But will they lobby on it?

Tuesday, June 05, 2007
 
The National Federation of Independent Businesses (NFIB), which made significant membership gains actively opposing President Clinton's health reforms in the early 1990s, released some responses from a membership survey, which had predictably skewed questions and predictably skewed answers, with a remarkably consistent 68-70% of respondents opposed to anything: HMO consumer protections (called "mandates on small businesses"), an individual mandate, even a subsidized pool for those who can't afford coverage.

The one response that wasn't predictable:

"...on whether or not the state should require health insurers to issue policies regardless of pre-existing medical conditions: A little more than half, 54%, said, ‘Yes,' 32% said ‘No,' and 14% were undecided."

Even this crowd, responding to a less-than-friendly question, thinks that there is a bigger role for the state to oversee the insurers.

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posted by Anthony Wright | Permalink | 12:20 PM


 
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More fact-checking, from Fresno to Albany...

Thursday, May 24, 2007
 
Another study that explodes BlueCross' stunning assertion about the "affordability" of the California individual insurance market.

Bottom line: If you are 20 and never had a health issue ever, you can probably get a good deal in California. But if you are older and/or and in less-than-perfect health, California becomes less "affordable," quickly. In New York, with guaranteed issue, access to coverage is ensured, and the standard rate for a comprehensive package may be more expensive for some, it is less expensive for others.

The study: A national study in 2001 by the Kaiser Family Foundation, authored by Karen Pollitz and Richard Sorian at Georgetown University, and Kathy Thomas, had seven hypothetical applicants, from a 24-year old waitress with hay fever, to a 36-year old with knee surgery 10 years ago, to a 48-year old breast cancer survivor, apply for insurance. They applied to 19 insurers and HMOs in eight markets, including Fresno, California.

The result: Only 10% of application were accepted as "clean" offers--35% were either rejected, and over half (53%) were offered with a premium increase or a benefit limit.

The California conclusion: Carriers in Fresno (and Indiana) had more frequent rejections and premium surcharges than insurers in other markets. On average, applicants were offered coverage only about half of the time in Fresno, compared to about two-thirds of the time in other communities. Applicants in Fresno had surcharges apply 58% of the time, compared to 25%-39% in the other markets.

So any "rate" listed for California ignores how many people are rejected, and how many get a different and higher rate, due to their age and health status.

Comparison with New York: Blue Cross also slams guaranteed issue states, including New York, for having the highest rates in the nation. As a born and bred New Yorker, I hate to break it to them--everything, including insurance, costs more in New York.

But from this study, the hypothetical consumers applied for health insurance in Albany, New York--all got coverage. They all would have been sold a standard policy at a standard rate without any exclusion riders or other coverage penalties for their health conditions. The average premium for our single applicants in Albany was $4,104 per year--only slightly higher than the average premium ($3,996 a year) quoted to many applicants in less regulated markets.

In short, costs in New York, with "guaranteed issue" and "community rating" were similar to those in unregulated states, on average (recognizing that in other states, some paid more and some paid less). But everybody had access to comprehensive coverage, which is not the case in California, despite what BlueCross says.

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posted by Anthony Wright | Permalink | 3:44 PM


 
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After the slightly off-color joke about Paris Hilton...

 
Governor Schwarzenegger revisited The Tonight Show last night, where he was introduced as "easily the most popular Republican in the entire country," a phrase that has a bit more edge than Jay Leno is known for.

After suggesting that Jay Leno's proposed 60th birthday idea of having a registered nurse jump out of a bran muffin was "kinky" (will CNA respond?) and admitting to watching all of Paris Hilton's "movies," the Governor talked about health care.

Jay: "On a more serious note: Health care reform. You have a plan here for health care in California. I'm sort of waiting for this Michael Moore film to come out, Sicko, where he talks about the American health care plan. How do you do it? It seems that the drug companies, and everyone, wants to fight this national health care."

Arnold: "It's a huge challenge. It's one of the major, major challenges. As a matter of fact, it goes back to 1912 when Teddy Roosevelt talked about that he wanted health care for all Americans. And since then, the federal government has tried and tried and tried, and they haven't come up with a way of doing it. So now the states are taking on the responsibility, and so here in California we have decided that this is the year of health care reform. Let us insure everybody, and let's make sure that the insurance companies have to cover everybody, so they can't refuse anyone anymore because of age, or because of some medical history. That's what we are trying to accomplish." [Applause]

Jay: "My mother-in-law was in England and had a heart attack, a stroke, and was stuck there for three months, and in the three months I got a bill for $4500, for three months. And then a friend of mine here broke his leg: it was $18,000 for three days, with the emergency room, etc."

Arnold: "Absolutely, it's a real problem, not only that, it is such a broken system. For instance, here in California, we have people that are insured, that are afraid of losing their insurance because of some illness they may have; people that are uninsured that are afraid of [not?]getting insurance. For it's a disastrous situation. And the people who are insured, like you and I and many of the people here, are paying for the uninsured. There's 6.5 million people that are uninsured. They are paying a hidden tax. So if you pay premiums, or for out-of-pocket expenses, co-pays, deductibles, all of those things, there's a fee added, and tax added. The private sector, businesses in California, right now are paying $14.7 billion of that hidden tax. So that's unfair. What we want to do is lower the health care costs, insure everyone, and make sure that all insurance companies cover everybody who wants to be covered."


First of all, it's not often that even this level of discourse about health policy and the uninsured is on The Tonight Show.

Its noteworthy how Governor Schwarzenegger continues to cite the federal government's failure on this issue, as he has on other issues. His biggest applause line was stopping the insurance companies from denying people because of their health status--it's an important principle.

Jay Leno made strong points, talking about Great Britain's National Health Service in a favorable light, and correctly looking at the drug companies and other vested interests as potential opponents. Getting actual hospital bills these days is a shocker, and can make reformers out of most of us. Maybe Jay can get the Governor to reconsider SB840?

The Governor's rhetoric about the "hidden tax" always troubles me, because the way he says it, it seems like he is blaming the victim--the person who happens to be uninsured. We agree that we all pay more when McDonalds and Jack-In-The-Box pay less. But then that's the rationale for having a minimum employer contribution that is close to the cost of coverage, something that the Perata, Nunez, and Kuehl proposals have.

The Governor usually uses the "hidden tax" argument to justify the individual mandate, but he didn't explcitly bring it up. In fact, he said, closing out this topic, that he wanted to find a way to lower health costs, to insure everybody, and to "make sure insurance companies cover everyone who wants to be covered." Doesn't sound like he's completely comfortable talking about the practical issues with the individual mandate.

Overall, some of his statements were things we could have said. Whether he will follow through with policies that actually achieve those goals is the real question, what we need to keep him accountable on, even if he rejected previous efforts.
Regardless of what you thought about Governor Schwarzenegger's statements, there's going to be more of this discussion in the media in the next several months. Stay tuned, he'll be right back.

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posted by Anthony Wright | Permalink | 12:21 AM


 
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Anthony Wright is the executive director,
with a background as a consumer advocate and community organizer on many issues, including health issues for the last ten years in California and New Jersey.


 
Hanh Kim Quach is the policy coordinator; previously serving as
a newspaper reporter covering the Capitol for the Orange County Register and other papers for eight years