A press release we put out today…
New Reports Spotlight Several Consumer Protections
Missing in California’s “Wild, Wild West” Individual Market
As Lawmakers Refocus on Health Reform and the Individual Market,
New National Report Outlines Key Elements to Consider
Comparisons with Massachusetts Market Spotlighted
SACRAMENTO—As lawmakers return from their summer break to focus on health reform, Health Access California and other consumer groups are spotlighting the need for new consumer protections in the California individual insurance market, especially in any consideration of a mandate to buy private coverage without the benefit of employer or public program assistance.
A new report from Community Catalyst, a national consumer health advocacy group, points to the concept of a “Connectors” as a way to improve access to health care coverage, but emphasizes that states should implement strong consumer protections in the use of a “Connector” and as part of any affordable health insurance expansion.
Health Access California also published a comparison chart comparing Governor Schwarzenegger’s health care reform proposal, which includes an individual mandate, to that of Massachusetts, which had a range of consumer protections in place even before last year’s reform and the individual requirement.
“California’s health insurance market is the wild, wild west for individuals–not a friendly place for consumers to have to get coverage. Individuals need not just guaranteed issue and affordability standards, but standardized benefits and group purchasing power. With all the comparisons, it’s important to recognize that that Massachusetts’ individual market had in place more consumer protections in place before their reform, than Governor Schwarzenegger’s plan would have after reform.” said Anthony Wright, executive director, Health Access California, the statewide health care consumer advocacy coalition. “Governor Schwarzenegger’s individual mandate proposal is to the right of Romney. Any requirement on Californians to buy coverage as individuals won’t work without significantly more consumer protections than what is in the discussion now.”
To view the Health Access chart, go to: http://www.health-access.org/
Before their reform package last year, Massachusetts has guaranteed issue, community rating for age, gender, and health status, and a range of mandated benefits. Their reform law, which included an individual mandate, also included affordability and hardship exemptions, tax savings provisions, and a “Connector,” to organize and standardize the marketplace, and also to assist individuals’ ease of signing up for coverage.
“A Connector alone will not increase health insurance coverage for the uninsured or underinsured in any state,” said Michael Miller, Director of Policy at Community Catalyst. “However, with the right framework in place, Connectors can serve as a critical hub for expanding access to health insurance.”
Connectors are an organized marketplace of health plan options and encourage competition between insurers and transparency of benefit information as a way to reduce barriers to acquiring insurance coverage for everyone. The concept of Connectors has existed in state-run purchasing pools since the 1990’s. However, many models now exist, including a Connector like the one recently implemented in Massachusetts, which provides health insurance to everyone statewide and provides state oversight.
In the report, A Consumer Guide to Creating a Health Insurance Connector, Community Catalyst favors a comprehensive model, yet cautions that a Connector cannot reduce the cost of health insurance on its own. The group points to six specific elements that will help provide the base needed to build an effective Connector and to expand access to affordable health care coverage. The Connector should:
* Offer a limited number of standardized plans, giving consumers a choice of options with the opportunity to compare like plans and know what benefits are included and excluded;
* Subsidize premiums for lower-income people;
* Provide outreach and enrollment support.
“What makes the most sense in health reform to secure and expand group coverage, through employers or public programs. In contrast, the individual market is the least efficient, most expensive way to get coverage, where consumer are left to fend for themselves with the big insurers,” said Wright. “Reforms should shrink, not expand, the individual market, and provide more consumer protections for those having to buy coverage by themselves, without the power of group purchasing.”
To view the full report, go to www.communitycatalyst.org/issues?id=0001.
View the Chart Here:
Beyond Guaranteed Issue:
Many Consumer Protections Needed In the California Individual Market
August 2007 fact sheet
Today in California, consumers trying to buy coverage on the “individual market” face major barriers, of availability, affordability, and administrative hassle. It is the least efficient, most expensive way to get coverage.
Yet Governor Arnold Schwarzenegger’s health reform proposal includes an “individual mandate,” requiring even those without employer-based or public program coverage to buy coverage as an individual. The Governor’s proposal acknowledges that such a mandate to buy coverage in the individual market could not be implemented in the current California market. Most notably, insurers are currently allowed to deny coverage to consumers because of “pre-existing conditions.”
To address this issue, the Governor proposes “guaranteed issue,” to require insurers to provide coverage to all, and other changes. However, he does not propose the full range of consumer protections to make an individual mandate workable, much less fair.
The only state in the nation to pass and individual mandate, Massachusetts, already had stronger-than-California consumer protections in place for over a decade before their reform law in 2006, and was compelled to add additional affordability and consumer protections along with the “individual mandate.”
Unlike those in group coverage, that have the benefit of employers or public programs negotiating for the best deal, individuals have little market power against big insurance companies. Mandates to buy in the individual market take away the one bit of leverage that individuals do have: the ability to say “no.” Any attempt to remove that ability needs to be coupled with a strong, robust oversight and enforcement on the insurance industry.
The need for these consumer protections are even more acute in California than in Massachusetts. Massachusetts has a much greater percentage of people in group coverage, especially employer-based coverage. This means relatively fewer people have to deal with the individual market in the first place.
In the absence of having an employer or public program using its bulk purchasing power, Californians need consumer protections.