It’s an evocative term. In fact, “subprime” is the “Word of the Year,” according to the American Dialect Association. (It beat out other noteworthy words, including Googleganger, vegansexual, and waterboarding.)
Typically use in reference to mortgages, it’s clear that such a designation is needed in the world of health insurance. There’s lots of “junk” health insurance out there, where people pay a premium and may not realize how little it covers–until it is too late. This includes disease- or treatment-specific coverage, “bare-bones” or “skeleton” plans, coverage that is capped, etc. It includes products sold by companies like Mega with daily caps and other signficant cost-sharing, and simply some of the high-deductible policies, like Tonik, sold by Blue Cross.
Some represent a trade-off that some wealthier people can afford to make, to have greater cost-sharing in order to get cheaper premiums. But other plans are, frankly, close to consumer fraud, and should not be certified to be sold in the market. In the interest of disclosure, some of these plans should, at the very least, be clearly marked as “subprime,” so people know what they are buying the first place. Right now, there’s no minimum standard for health insurance–It’s just “let the buyer beware.”
With support from the national group Community Catalyst, Health Access is working with Western Center on Law and Poverty and several other consumer and community groups over the next several years to work on issues of “underinsurance.” This Health Initiative on Overcharging and Underinsurance (“Health IOU” for short) will work to prevent medical debt that too many insured people face.
We will work to better implement AB774, the law against hospital overcharging we passed in 2006. But we also want to do a better job providing oversight of these “subprime” insurance plans as well.
The proposed health reform does set a minimum standard for coverage, that is inclusive of “physician, hospital, and preventative services,” as well as “existing coverage requirements under law.” It doesn’t do all we wanted, but it does much more than what exists in the status quo, including creating a process to set more specific standards, including on cost-sharing. It establishes a framework to work from, including organizing the insurance market in tiers, so people have a much better sense of what kind of coverage they are buying in the first place.
In other words, if health reform passes, there’s still will be work to do. If health reform does not pass, there will be a helluva lot of work to do, to protect consumers from the perils of subprime insurance.