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Compromise health insurance plan unveiled for covering the uninsured

While politicians wrangle about ways to cover the 47 million uninsured Americans, health insurers themselves have a plan: It outlines guaranteed access to individual health insurance for those who don't have group coverage through work.

Introduced in December 2007 by America's Health Insurance Plans (AHIP), an industry group representing almost 1,300 health insurers, the "Individual Market Guarantee Access Proposal" offer routes for all uninsured to secure coverage and puts the cost burden on both states and health insurers.

About 18 million people currently carry private health plans. Most people who seek to buy individual health insurance plans are offered one. AHIP reports that about 89 percent of applicants who undergo medical underwriting are offered a policy — from a high of 96 percent for applicants under age 18 to a low of 71 percent for those age 60 to 64.

Among those offered policies:

  • 49 percent were offered preferred rates
  • 40 percent were offered standard rates
  • 11 percent were offered higher-than-standard rates

 

Single coverage: $2,613
Family coverage: $5,799

Source: AHIP

The sickest Americans who can't qualify for health insurance on their own often end up uninsured or in their state's high-risk health insurance pools. Eligibility and rate caps for these vary by state. Rates are typically capped at 130 to 200 percent of the average cost of individual policies in the state.

Health care reform among states usually takes the form of enacting guaranteed issue laws (which require health insurers to take all comers) or requiring "community ratings" (where everyone pays the same no matter what their health condition). Turn the page in that book, though, and it has empty in spots: Health insurers leave those markets and healthy folks drop their policies because their rates have gone up.

Under AHIP's plan, states would each establish a Guarantee Access Plan.

AHIP's plan takes a page from guaranteed issue laws and a page from high-risk pools and proposes a combination system that assures everyone lands somewhere.

Under AHIP's plan, states would each establish a Guarantee Access Plan, much like high-risk pools. An applicant who is denied coverage or offered "substandard" rates in the individual market would be directed to the state Guarantee Access Plan. If their expected claims are at or above 200 percent of the state average, they'd be automatically accepted into the state plan, with premiums capped at 150 percent of the state average.

Those not eligible for the state plan (because claims costs are anticipated to be below 200 percent of the state average) would be guaranteed coverage by the private health insurer, also at a premium cap of 150 percent of standard rates. Health insurers would provide a certain number of these guaranteed plans based on their market size.

Health plans would help the applicants who don't qualify for private coverage to get into the state Guaranteed Access Plan. For example, when an applicant with very high expected claims costs applies and can't be offered a plan, the insurer would assist the person in applying to the state plan by transferring their information to a Guarantee Access Plan application.

In addition, AHIP proposes:

  • The state Guarantee Access Plans would offer a range of coverage options and premiums to better reflect policies available in the private market.
  • Pre-existing conditions will not be excluded from coverage if the individual maintains continuous coverage.
  • Health plans will limit rescission actions to those based solely on information that should have been included a complete response to understandable application questions. If you're wondering what that means: Health insurers can't go around canceling policies by saying that you provided unclear health information to them. They can cancel your policy only if you omitted information about pre-existing conditions. AHIP's data show that there were 1,842 rescissions in 2006 (0.15 percent).
  • States should provide a third-party review process to examine disputes between consumers and insurers over pre-existing condition exclusions and rescission decisions.

 

AHIP acknowledges that any reform will hinge on the next presidential election but the organization says they'd like "a seat at the table."

There's no money for this

In response to AHIP's proposal, the National Patient Advocate Foundation (NPAF), a nonprofit focusing on better patient access through public policy reforms, said the plan has short-comings. Specifically, NPAF pointed out that AHIP's Guarantee Access Plans would place significant burden on states, which are already struggling to fund current high-risk health insurance pools. These pools often have waiting lists of the uninsured.

In addition, NPAF wonders what the pre-existing exclusions will be if a person hasn't had continuous coverage (as outlined by AHIP's plan), what the definition is of "continuous coverage," and how long the whole application process would take.

Quick look: Other proposals for national health insurance reform

Other proposals for national health insurance reform include the following.

National Association of Health Underwriters (NAHU) "Healthy Access" plan:

• All states must have at least one private guaranteed option for individual health insurance, such as a high-risk pool. (Thirty-four states currently have pools.)
• The federal government should provide seed grants to states creating high-risk pools and subsidize the expansion of existing private individual-market high-risk pools.
• Make subsidies to low-income citizens who otherwise cannot afford coverage.
• Make subsidies to older beneficiaries who pay the highest rates, including early retirees.

American Medical Association proposal for reform:

• Individuals, not employers, would choose the kind of coverage they want, whether through an employer or not. Consumers could keep or change their plan regardless of where they work.
• Employer contributions to health insurance would be reported as taxable compensation and individuals would directly subtract health insurance tax credits from their tax bills. Those with lower incomes should receive greater subsidies than those with higher incomes.
• Strict community rating should be replaced with modified community rating, risk bands or risk corridors.
• Individuals who are currently insured should be protected by guaranteed renewability laws, meaning they can renew their policies no matter what their health condition.
• Those wishing to switch plans should be subject to less risk rating (meaning premium increases due to health conditions) and pre-existing condition exclusions than individuals who are seeking new coverage.
• Guaranteed issue regulations should be rescinded.
• Remove legal barriers to the formation of group-purchasing alliances, which can negotiate for lower rates.
• Minimize state benefit mandates, which require coverage for specific conditions.
• Require individuals and families earning greater than 500 percent of the federal poverty level to obtain, at a minimum, coverage for catastrophic health care and preventive health care. (The 500 percent level is $106,000 for a family of four in 2008.)

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