Legislators, regulators, and even state attorneys general are putting the spotlight on private insurance companies that are exploiting a public good - access to health care - for its profit-making potential. As we wrote in Monday's Stateside Dispatch, California regulators are investigating and imposing fines on many of the state's insurance companies for abusive and anti-consumer business practices. Healthnet has been exposed for providing bonuses to employees who cancel health plans after members experience costly medical events and Blue Cross of California has been recruiting physicians in canceling health insurance coverage.
New York State Attorney General Andrew Cuomo is broadening an investigation of whether insurance companies are defrauding customers by artificially jacking up out-of-network costs. In many insurance plans, particularly indemnity and PPO products (see Families USA's excellent Glossary of Medical Terms), insurance companies charge customers higher co-pays and co-insurance for seeing providers who are out-of-network, or who aren't listed as a "preferred provider" by the insurance company. Navigating these rules - knowing which providers, and in many cases which procedures, are conferred out-of-network status - and predicting what costs a patient will face throughout treatment for a medical event can be maddening. Mr. Cuomo is alleging that insurance companies have manipulated data and knowingly underestimated the costs of out-of-network care, which in turn increases the costs patients must pay.
Legislators in Washington State decided to exert some control over insurance companies after year's of premium increases and broken promises by insurers not to increase rates. And, lawmakers were emboldened by news that a state-based non-profit insurer transferred $49 million in premium revenue over the past three years to a faltering for-profit subsidiary in Arizona.
Last Friday, legislators passed SB 5261 which will restore state oversight of the individual health insurance market. The law authorizes the Insurance Commissioner to disapprove unreasonable rate increases and establishes a sliding-scale medical loss ratio for insurers. The debate was fueled, in part, by estimates that insurers have surpluses totaling $1.4 billion.
As Families USA discusses, medical loss ratios require insurers to spend a certain amount of premium revenue on direct medical care. These laws help ensure more of our premiums are used on medical care and less on administrative costs, including profits and bonuses. The Washington bill sets up a tiered loss ratio that is tied to the number of people an insurer denies for coverage. For example, a rate of denial under 6% equals a loss ratio of 74%, meaning 74-cents of every premium dollar must be spent on medical care. Insurance companies that deny coverage to more people, more than 8% for example, face a loss ratio of 77%.
The rate oversight bill was a key legislative goal of the Healthy Washington Coalition, a broad coalition of health care advocates and stakeholders working to "achieve secure, quality, affordable healthcare for all Washingtonians."
States have a menu of options to rein in private insurance companies, part of the broader set of options states have to move towards comprehensive health care access that we described in the Stateside Dispatch. As Families USA discusses, many of these measures help lay the groundwork for comprehensive health care for all reform. They point out that Massachusetts' 2006 health care reform law was "built on Massachusetts' expanded public programs and its highly regulated insurance market."
A new Commonwealth Fund report - Health Policy Reform: Beyond the 2008 Election - uses the 2008 election as the context for a discussion of the health care programs plaguing America and the policy options under consideration for addressing them.
According to the National Clearinghouse on the Direct Care Workforce, "one in every four nursing home workers and more than two out of five home care workers lack health insurance coverage." To address this and other problems facing the direct care workforce, Health Care for Health Care Workers has issued two reports with policy options for state legislators:
There is great inequity in US health care, particularly across racial and ethnic factors. As the Kaiser Family Foundation reports, a new CDC study finds that while only one in four US residents are aware of the five signs of a heart attack, whites are almost twice as likely to be aware of the signs than people of color and to know what actions to take in response.
Healthy Washington Coalition - 2008 Legislative Agenda
Families USA - Establishing a Medical Loss Ratio
Families USA and Community Catalyst - How will this proposal expand access and increase affordability in the private insurance market?
Georgetown University Health Policy Institute - Key Consumer Protections in Individual Health Insurance Markets
Georgetown University - State Consumer Guides for Getting and Keeping Health Insurance
Statehealthfacts.org - Percent of Private Sector Firms Offering Coverage