The individual market makeover: mend it, end it, or both?

Last week, I attended a conference with fellow state-based health consumer advocates and now-notorious “community organizers,” and was impressed by the range in activity around the country.

Even as we see what is likely at the federal level next year with a new President and reconfigured Congress, state legislators and advocates are not waiting around: they are actively pursuing health reforms, from Albany to Harrisburg, from Augusta to Springfield, from Trenton to Salem.

Much of that advocacy has traditionally focused on expanding public coverage programs like Medicaid and SCHIP. Yet I spoke on a panel on private coverage–which states are currently in charge of regulating–and that leads us to the current policy debate in DC and elsewhere.

There’s big divide in health policy: One mainstream, proven way is to provide for subsidized group coverage, whether through an employer (how most get coverage now), a public program (how nearly a third get coverage), or even a universal single-payer system.

Another theory is to switch people into a more functional individual market. For example, President Bush (and now, Senator McCain as a candidate) would shift tax policy to discourage employers from providing coverage, and rather encourage people to buy coverage on their own. These proposals are obviously flawed, because they don’t even attempt to fix the most glaring problem in the individual market: that insurers can deny patients for “pre-existing conditions” which would amazingly (and ironically, if it wasn’t so sad) leave the sick out of their health coverage.

But there are more reasoned, thought-through proposals that at least try to take an individual market approach seriously, that recognize the flaws of the individual market, but seek to remake the market as they expand it. This includes relatively progressive legislators at the state and federal level, including Senator Ron Wyden of Oregon, who has an ambitious proposal, and Governor Schwarzenegger, based on his original proposal in January 2007. These efforts include significant regulation of the insurance industry and changing the way they do business. To be serious, they at least include guaranteed issue–that insurers must take all patients, regardless of health status–and some form of community rating–restricting variation in what is charged between patients.

My take? I still remain skeptical. As the least efficient, most expensive way to get coverage, the individual market seems a poor platform from which to rebuild a health system. Individual consumers simply don’t have the group purchasing power of large employers or public programs, and are simply at the mercy of the big insurers. It’s confusing and complex, and hard to compare and to sign-up for coverage.

When debating health reform last year in California, Health Access detailed a chart of what would be consumer advocates would want “Beyond Guaranteed Issue,” from subsidies to standards, minimum benefits to easy enrollment, rate regulation to medical loss ratios. The chart looks at what regulations exist in California and Massachusetts–where more still needs to be done.

Some of the real problems and provisions to address them included in the negotiated agreement of AB x1 1, and also discussed this year in SB1522 (Steinberg), to standardize the individual market. What we learned in this debate even makes me more alarmed, that consumers are getting a raw deal, paying premiums without proper protections in place.

Some of the bills that were passed this year, from AB1945 (De La Torre) to AB2 (Dymally) deal with other issues in the individual market, from rescissions to what happens after people are denied for “pre-existing conditions.” But there’s so much more to do.

My overall takeaway is that I would focus efforts at reform on expanding group coverage, which is thankfully where Senator Obama is (and where Senators Clinton and Edwards previously were), where Jacob Hacker and other academics are, and even where Rep. Conyers and other single-payer advocates are.

In virtually all reforms, an ancillary market of individual coverage will exist (like in the current “system”), and such regulations, oversight, and consumer protections are, and will be, desperately needed. I absolutely believe that we can improve the individual market; I appreciate those with the confidence to remake it altogether. I’m not sure we can fix everything about the individual market–it requires a lot more than guaranteed issue. As a consumer advocate, I am hesistant to shift people there wholesale unless we can prove that it can work. It’s one of the main policy debates of the next few months.

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