Colorado will get $1 million to use for more extensive review of future rate increases, and the Division of Insurance has proposed hiring more analysts and actuaries to examine the data that is filed each year by the insurance carriers.  The rate proposals will get more scrutiny, which is a good protective measure for consumers.  But insureds could still see hefty rate increases thanks to the ever-increasing cost of health care.  In CA, after months of review, regulators still approved a double digit rate increase for Wellpoint policies (14% average, with individual increases as high as 20%).  If the cost of health care continues to increase at its current pace, health insurance premiums will also continue to climb.  A more thorough review of the extensive data involved in determining health insurance premiums makes sense, but without significant measures to cut the cost of health care, those reviews may find that there is no way around raising premiums year after year, often by noteworthy amounts.

Interestingly, the amendment wording does not make any attempt to reverse the provisions in the PPACA that require health insurance carriers to accept all applicants as of 2014.

If I understand it correctly, the backers of the Right to Health Care Choice Initiative want a health insurance system that would require health insurance carriers to accept everyone who applies (since they seem to have no problem with that part of the PPACA), but with no requirement that people purchase health insurance.  While I can understand the desire to be free from government regulations that direct how we conduct our lives, this particular freedom only works if the health insurance carriers can be free to determine which applicants they will accept and which they won’t (the way our system currently operates).

Most people I’ve talked to can see the problem we would have if we were to remove the guaranteed issue aspect of health care reform but keep the mandate portion (ie, require everyone to purchase health insurance but still allow health insurance carriers to underwrite based on medical history).  For some reason, the opposite scenario doesn’t seem as far-fetched to a lot of people.  But in reality, it just wouldn’t work.  I cannot see any conceivable way that health insurance premiums wouldn’t dramatically increase if all individual policies had to be guaranteed issue but people could come and go as they pleased from the health insurance system.

Regardless of whether amendment 63 passes or not this fall, federal law still overrules state law and Colorado will have to go along with the provisions of the PPACA unless there are changes to the law on a federal level.  But it will be interesting to see what the people of Colorado think about this issue.

On page 8 of the proposal, it’s noted that community benefit program expenses “for activities or programs that seek to achieve the objectives of improving access to health services, enhancing public health and relief of government burden” can be included in medical expenses.  So can expenses related to avoiding repeat hospitalizations (including post-discharge counseling) and expenses for programs that improve patient safety and reduce medical errors (page 17).  In addition, wellness program (ie, programs designed to help people combat obesity or tobacco use, public health education, ect.) expenses can be counted as medical expenses.

Some aspects of a medical loss ratio are pretty clear: health insurance employee and broker salaries, for example, are obviously not medical expenses and can pretty easily be noted in the administrative expense column (15% – 20% of premium dollars will still be allocated to administrative costs – those expenses are real and necessary).  On the other hand, payments to hospitals and doctors for acute care are obviously medical expenses and should count as such.  But there are a lot of grey areas in between, and the proposal released by the NAIC looks like it takes a very broad view of what comprises medical expenses.  This should please a lot of people who may have been worried that the MLR requirements were going to signal the end of things like insurer-funded wellness programs and disease management.

Jaan’s article was included in the Cavalcade of Risk this week.

But Maggie points out that this isn’t likely to be the case (instead, we’d just end up with continuing unchecked price increases for health care services, and correlated increases in health insurance premiums).  She makes a couple of very good points:  first, Medicare doesn’t cover everything (proponents of a single payer system often talk about “Medicare for everyone”).  In the case of a hospital stay that lasts several months, an insured with Medicare coverage who doesn’t have a supplemental policy would be facing a very large medical bill.  My father has kidney failure and was hospitalized for several months in 2004.  Medicare paid 80% of the cost, but if my father had not been covered by a supplemental private policy, my parents would have been on the hook for tens of thousands of dollars for the other 20% (even with the dramatic price reduction that goes along with the Medicare negotiated reimbursement rates).  Even a less catastrophic medical situation can get expensive for someone who doesn’t have a supplemental medigap policy.  20% starts to add up quickly.  Although Medicare is a great safety net for older Americans, it doesn’t provide as much coverage as the typical employer-sponsored group health insurance policy.  And it’s not free.  Enrollees pay premiums for Medicare itself in addition to private supplemental coverage if they choose to have it.  Once they tack on a supplemental policy, many enjoy health insurance coverage that is similar to what they received from their employers prior to retiring – but basic Medicare by itself is not as generous as the policies that most Americans get from their employers.

The other excellent point that Maggie made is that most Americans who have private employer sponsored health insurance like their coverage.  And they definitely like the fact that the employer pays a good chunk of the premiums.  If we were to switch to a single payer system, someone will have to pay for the coverage that employers are now providing, and it’s not likely that employers would continue to contribute as much to a single payer pool as they do to their own employees’ coverage now.  Basically, we’d end up with a single payer health insurance policy that would require more enrollee cost-sharing than current group plans, and with fewer benefits.

Here in Colorado, 56.6% of the population had employer sponsored health insurance as of 2008, which is higher than the national average of 52.3%.  I have no doubt that when the numbers come out for 2009 and 2010, there will be a drop in both of those numbers due to the recession.  But  most non-elderly Americans still get their health insurance through their employers.  And in general, as long as people are somewhat satisfied with the status quo, most of us tend to be a bit resistant to change.  Obviously, people who are currently uninsured are likely to support sweeping changes in the health care system.  But most Americans do have health insurance, and those who have generous policies – that are at least partially funded by their employers – might find themselves with less coverage if we moved to a single payer plan.

Maggie’s article was included in the Health Wonk Review this week, hosted by Joe Paduda of Managed Care Matters.

The only way an insurance policy will be able to avoid some of the changes implemented by the new law is to retain grandfathered status, basically by keeping the policy mostly unchanged from the way it was on March 23, 2010, when the law was passed.  But it turns out that the benefits of grandfathering a policy aren’t really worth the restrictions involved, for most US companies.  Ninety percent of employers expect to lose their grandfathered status before 2014, mainly because they want to be able to make significant changes to their plan design or adjust the amount that they contribute to employees’ premiums.

Some of the new rules will apply to all policies, even if they retain grandfathered status.  The ban on rescission except for causes of fraud, the ability for people to remain on their parents’ policy until age 26, and the removal of lifetime coverage maximums will apply to all policies, grandfathered or not.  In addition, employer sponsored group plans will have to provide coverage for children regardless of pre-existing conditions, even if the plan is grandfathered.

Most large employer-based plans already offer many of the protections that are included in the Affordable Care Act, which likely explains why employers would rather choose flexibility over grandfathered status.  They won’t have to make significant changes in order to conform with the law, and they want to retain the option to decrease benefits or lower their contribution rates in order to keep their health insurance costs in check.

Small employers and people with individual health insurance are more likely than large groups to make significant plan changes or switch to a new carrier in any given year, so it’s reasonable to expect that most people with small group or individual coverage will not be on grandfathered plans by 2014 either.

The text of the bill is relatively clear on some of the specifics:   It states that all group and individual health insurance policies…

“…shall insure against the expense of normal pregnancy and childbirth or provide coverage for maternity care therefor and provide coverage for contraception in the same manner as any other sickness, injury, disease, or condition is otherwise covered under the policy or contract.”

I would take that to mean that the policy out-of-pocket costs in terms of deductible, coinsurance, hospital and doctor copays, etc. would have to be met by the patient, and the rest of the costs would be covered by the insurance carrier.

The bill also states that individual policies (but not group policies) are still allowed to exclude pregnancy as a pre-existing condition:

“Individual sickness and accident insurance policies or contracts may exclude coverage for pregnancy and delivery expenses on the grounds that pregnancy was a preexisting condition.  The exclusion for the pregnancy as a preexisting condition under the policy or contract shall not apply for any subsequent pregnancies.”

But does that mean that the insurance carriers have to accept pregnant women and just exclude the pregnancy and delivery from the coverage?  Currently, no individual health insurance carrier in Colorado (or most other states) will accept any expectant parent (mother or father) at all until after the baby is born.  The pregnancy is considered a pre-existing condition, and because new babies can be added to either parent’s existing policy in the month following birth with no underwriting, health insurance carriers have all opted to deem pregnancy as an automatic decline.  As of 2014, this will no longer be the case, but I have heard nothing indicating that there will be any changes to the universal underwriting guideline that states that an expectant parent cannot get a new individual health insurance policy.

In terms of what policies will be affected, the bill states that the new requirements wills apply to policies “issued or renewed on or after the effective date of this act.”  (January 1, 2011).  My interpretation of that would be that new policies issued beginning January 1, 2011 will include maternity coverage, and that as existing policies renew throughout the year, maternity will be added to them.  So for example, the policy that Jay and I have for our family renews each year on November 1.  So I would assume that for the first 10 months of 2011 we will continue to not have maternity coverage, but then as of our renewal date in 2011, maternity will be added to our plan.

Of course my guesses in terms of how this will all work are just that – guesses.  And I have not been able to find anyone who has more concrete details at this point.  We still have several months left in 2009 for regulators and insurance companies to work out the details, and I’m sure we’ll know more by the end of the year.  When you combine this with the new Colorado law banning gender rating on health insurance policies, and the myriad of reforms coming from the federal government, I’d say that health insurance regulators in Denver are going to have their hands full for a while.

I agree with Bob that this decision is likely to result in fewer family applications placed with Cigna.  But I wonder if the recent addition of the option for insurers to use an open enrollment period for children will make this sort of commission-cutting unnecessary for other carriers.  Obviously insurers aren’t going to be excited about the prospect of offering guaranteed issue coverage to sick kids, especially while there is no requirement that all kids be insured (which would mean that there would be more healthy kids in the pool to offset the costs of care for the sick ones).  But it does seem a bit counter-productive to discourage agents from marketing policies to families in general, as a family with a sick child might have several other healthy family members who would be on the policy too, requiring little in the way of expensive care.

My guess is that if the provision for an open enrollment period had not been added, the guaranteed issue for children idea would have caused more problems than it solved.  There is no doubt in my mind that some parents would have opted to not have health insurance for their kids until if and when the child became ill and needed care.

Hopefully the fact that insurers can designate an open enrollment period for children to be accepted on a guaranteed issue basis will make it more likely that parents will keep their children continuously insured.  The spirit of the law regarding coverage for children is good:  It isn’t right that sick kids should be unable to get health insurance at any price.  But with no requirement that all kids be insured, and without a designated open enrollment period, the new law would absolutely have encouraged adverse selection.

I found Bob’s article from a link in this week’s Cavalcade of Risk, hosted by Nancy Germond.

The Colorado Trust put together an extensive report earlier this year about how community-based organizations can help to increase the number of children who are enrolled in public health insurance programs.  They considered the impact that CBOs can have on enrollment, looking at organizations from schools and libraries to fire departments and county fairs.

Only six states have a higher rate of uninsured Children than Colorado, so this issue of of particular concern here.  Undoubtedly, a lot of the children in Colorado who are currently uninsured are eligible for Medicaid or Child Health Plan Plus (CHP+).  But there are plenty of hurdles between eligible and enrolled.

Parents who want to enroll their kids in public health insurance programs can download application information and go to the state offices that administer the programs.  But that is often easier said than done.  Community based organizations are much more accessible for busy parents, and probably less intimidating.  In addition, people there might be able to spend more time with the parents, helping them complete the enrollment paperwork, explaining things when there is confusion, and helping the parents with follow-up issues.  The parents might already be familiar with some of the community organizations in their town (things like Big Brothers Big Sisters, or the local churches), and might feel much more comfortable there than they would at a big impersonal government office.

With budget cuts all over the county, now is probably not a good time for state agencies to add staff who focus on helping parents enroll their kids in public health insurance programs.  But existing community based organizations could be a great resource for parents with uninsured kids.  And this might also be an excellent position to fill with volunteers who are willing to work with parents in their own communities.

Health care reform has helped to expand Medicaid, but that’s only part of the battle.  The next step is to make sure that eligible individuals are enrolled in the program.  The more people and organizations working together to make this happen, the better.

The addition of the option for insurers to have an annual open enrollment period for children makes the new rules regarding children much less likely to result in adverse selection.  There is currently no requirement that all children have health insurance (that won’t come until 2014), and if the law had been interpreted to mean that health insurance carriers simply had to accept any child who applied, at any time, with no regard for medical history, there would have been nothing to protect insurers (and insureds who maintain continuous coverage) from people who opt to go without health insurance until they are sick.

Some parents with sick kids have done everything they could to maintain coverage for their children, and the new law will be a blessing to them.  But we’d have to be wearing very rose-colored glasses to assume that no parents would abuse the system by not paying premiums when their kids are healthy, and then applying for coverage when something appears to be wrong.  Having an annual open enrollment period makes health insurance available for families who truly want to maintain continuous coverage for their children but have been unable to do so because of pre-existing conditions.  But it will make it much more difficult for people who want to obtain coverage for a limited time while a child is in need of care.

So far, we’ve been notified by one Colorado carrier (Celtic) that they will no longer accept applications for child-only policies, and other carriers around the country are taking similar steps.  Hopefully the fact that insurers are going to be allowed to set up open enrollment periods will mean that most carriers will continue to offer child-only policies.  There has always been a genuine need for that type of policy, and I’d hate to see if disappear because of adverse selection.

Proponents of a health insurance system with little or no government regulation might believe that the government shouldn’t dictate what types of policies can be sold, but rather that the free market will figure it out.  But we know that underwritten health insurance doesn’t operate in the same type of free market model as say, designer handbags.  It’s a lot more complicated than that.  And buying the wrong coverage can cost a consumer far more than just the premiums.

Most people shopping for health insurance look for advice from their family and friends, agents and brokers (not all of whom are honest and ethical, unfortunately), and marketing materials created by health insurance carriers.  Very few people read all the fine print on their policies during the 10 day free look period.  Often they just put the policy in a drawer until they need medical treatment, at which point they might find out that the policy they got is full of holes.

If something sounds too good to be true, it probably is.  That’s good advice, and is very applicable when it comes to insurance.  ”Discount plans” that offer to cover your whole family for $99/month with only $25 copays for doctor visits are fairly easy to spot as scams (although unfortunately some people do still buy them).  But when a policy is actually labeled as “health insurance” and has lots of familiar terms like deductible, coinsurance, network, etc., it can be harder to spot the -sometimes gaping – holes in the coverage.  Often these policies are sold by lesser-known carriers, and sometimes the premium will be lower than policies sold by more reputable carriers.  But a closer look might reveal very scanty annual or incident maximums, “optional” coverage for essential services like chemotherapy, no limits on out of pocket expenses, and the list goes on.

The new regulations won’t have much of an impact on good-quality policies from reputable health insurance carriers.  Those plans already provide solid coverage for essential services.  But removing the worst policies from the market – or forcing them to improve their coverage – will protect consumers who might otherwise have bought those plans thinking that they were as good as all the other options.  And that’s a good thing.

Beth’s article was included in the Health Wonk Review this week.