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.

It makes sense that as more systems become automated and computerized, claims get paid faster and fewer billing errors will be made, resulting in fewer denied claims.  But we still have a long way to go.  I mentioned yesterday that my mother broker her leg a few weeks ago.  In the emergency room, my sister made sure that my mother’s health insurance card was placed on file within an hour of my mother arriving at the hospital.  But in the weeks that have followed my mother has received EOBs from her own health insurance company as well as a company she had never heard of, and more from her previous health insurance carrier.  Apparently the clinic where she had a mammogram a few years ago is associated with the hospital where she was treated for the broken leg, and someone managed to attach her current claim to the health insurance she had at the time of the mammogram.  As for the health insurance carrier she had never heard of, a person in billing told her that it looked like someone just typed in the wrong code in the billing office and somehow the claims got sent to a random health insurance carrier.

In addition to EOBs coming from multiple carriers, my mother got ten EOBs in one day last week, half of which were from her current health insurance carrier letting her know that they had denied the claims for preventive lab work during her recent hospital stay (she has an HSA qualified policy with only basic preventive care coverage).  Turns out that someone in the hospital had accidentally coded the lab work that was being done as preventive care, and thus all the claims got denied and had to be resubmitted with the correct code.

The reason I’m mentioning this story is that it’s important to note that claim denial and delayed payment is sometimes due to simple billing errors (obviously in the case of my mother’s surgery and hospitalization, her lab work should not have been coded as preventive, and only her current health insurance carrier should have been billed).  As we continue to automate and standardize our health care reimbursement system, we should see fewer errors like this.

For students who are graduating in May and June, this will be a huge help.  Technically, under the new law, graduating students in a lot of states could still have been dropped from their parents’ policies upon graduation, and would have had to find their own health insurance or go uninsured until September.

The health insurance companies are still collecting premiums for these young adults, via their parents’ policies.  But for families with group health insurance who have more than one child, the premiums are likely the same regardless of how many children are on the policy.  So a family with younger children who continues to keep an older child on their policy until age 26 is essentially getting “free” health insurance for that older child, since they would be paying the family premiums anyway, in order to insure their younger children.  In addition, continuation of family coverage is an excellent option for young adults with pre-existing conditions.  If they are not able to secure jobs that offer group health insurance benefits, they would have to apply for individual health insurance, and the pre-existing conditions would continue to be an issue until 2014.

Wellpoint, which operates Anthem Blue Cross Blue Shield here in Colorado, Humana, and United Healthcare are three of our most popular health insurance carriers, and we’re glad to see them stepping up and going beyond the letter of the law.  Hopefully other health insurance carriers will follow suit and as many young adults as possible will be able to remain covered on their parents’ policies this summer.

How can we most fairly spread the total cost of care for all Americans across the whole population?  Should sick people pay more than healthy people?  Should overweight people pay more than their slender neighbors?  Should a family with six children pay more than a family with one child?  Should older people pay more than younger people?  Should people with higher incomes pay more for their health care than lower income families?  These are the sort of questions that address the issue of how to fund our current high-priced health care.  And they are a huge part of the reform debate, including all the discussions about mandatory health insurance and guaranteed issue coverage.

But value in health care is another cost issue, and one that I don’t believe has been adequately addressed in the current health care reform bills.  Earlier this year, we had to call a plumber to have some work done in our bathroom.  He did a great job, and our total bill came to $165, including parts.  A week later, our son caught his finger in a door, ending up with a pretty severe cut.  We took him to the emergency room (unfortunately it happened after the lower-priced urgent care center had closed for the evening) where he had an x-ray and got three stitches.  We’ve started to get the EOBs from Humana, and so far the total amount that we’re expecting to be billed is over $1,400 (that’s after the network negotiated discounts, and there are likely more EOBs to follow).

We have an HSA qualified policy with a $5,000 deductible, so we’ll be paying the whole bill for our son’s finger ourselves.  But that’s not really the point.  Regardless of whether a bill is paid by the patient or by the health insurance company, we all need to be asking ourselves whether we’re really getting a good value for our money.  When the average household income in America is just over $50,000 a year, does it make sense for a cut that requires three stitches to cost more than $1,400?  Health care spending in the US is 16% of our GDP, which is dramatically out of proportion with what other countries spend.  And all of those dollars being spent on healthcare aren’t available to be spent on other things like education and quality food and clean energy.

Both the plumber who came to our house and the PA who stitched our son’s finger performed a very necessary service for us.  Both are highly skilled in their areas of expertise, and we’re grateful for the work that they did.  But was the work that the PA did ten times more valuable than that of the plumber?

Perhaps the question we should be asking is not who should be paying for healthcare, but rather, why in the world are we paying so much in the first place?  Health insurance premiums will continue to rise as long as health care costs do the same.  It won’t do any good to try to address premiums without first figuring out why we’re paying so much for our health care in the first place, and doing something about it.

Anthem charges the same premiums regardless of whether a policy is new or has been in force for several years.  A 40 year old, healthy, non-smoking male who purchases a policy this month will be paying the same premiums as a 40 year old healthy non-smoking male who has had an Anthem policy for ten years, assuming they both live in the same zip code and have the same type of policy.  Because of this, it’s relatively easy to compare Anthem’s rates – even after rate increases go into effect – with those of other carriers in Colorado.  The rates being offered to new Anthem clients include the rate increases that went into effect in January.

To get an idea of how Anthem’s prices compare with other carriers, I got quotes for a family of three, living in the Denver metro area, for a high deductible, HSA-qualified policy with 100% coverage after the deductible.  These plans are relatively easy to compare, as they tend to be quite similar from one company to another.  I looked for policies with a $5000 or $6000 family deductible (most companies offer one or the other, but not usually both), or something in the middle of that range if neither exact number was available.

Here’s what I found, from several of the top carriers in the Colorado individual market:

• Cigna = $325 (for a $6000 deductible)
• Anthem Blue Cross = $377 (for a $5000 deductible)
• Humana = $402 (for a $5000 deductible
• Kaiser = $441 (for a $6000 deductible)
• Assurant/Time = $449 (for a $5700 deductible)
• United HealthOne (Golden Rule) = $461 (for a $5800 deductible
• Aetna = $481 (for a $6000 deductible)

Obviously this isn’t comprehensive data.  I only got quotes for one family, using a single zipcode.  Factors like pre-existing conditions, tobacco use, zipcode, and plan design all have an influence on premiums.  But these numbers would seem to indicate that while Anthem’s rate increase may have been large, it seems to be in line with what other carriers are charging in Colorado.  For the little test I conducted, Anthem’s premium was the second-lowest I found, and the only one with a lower premium had an additional thousand dollars in out of pocket exposure.

I’ll be curious to see what the Division of Insurance comes up with when they re-evaluate Anthem’s 2010 rates.  My guess would be that they will approve the rates.  If they don’t, it would stand to reason that they will have to also re-evaluate the most recent rate increases for all of the other carriers in Colorado too.

When Jay hurt his knee a couple years ago, an MRI was done prior to surgery.  We have an HSA qualified health insurance policy, and at the time our deductible was $3000.  So we paid for the MRI ourselves, and it amounted to more than a third of the deductible.  And that was after Humana reduced the bill to the network negotiated amount.  MRIs have helped to make medicine a much more exact science, but they are not cheap.

It seems that any system that pays physicians – directly or indirectly – to order additional testing will end up with excessive testing, adding to the overall cost of health care.  Even doctors with the best of intentions are likely to be swayed by the knowledge that they can boost their paychecks by adding a few MRIs here and there.

I believe that the number of tests a doctors orders should not impact his or her income.  And it seems that adding more medical imaging facilities in primary care offices will only increase our already burgeoning health care costs.

I found Stacey’s articles in Grand Rounds, hosted in trick-or-treat style over at Code Blog.

Dialysis does not remove phosphate, so my father has to be on a drug that prevents phosphate from building up in his blood.  In 2002, he was on PhosLo, a brand name drug, because the generic wasn’t available.  At that time, a three month supply cost $108.25.  Now, seven years later, he takes the generic version (calcium acetate) and a three month supply is $528.29 (a 488% increase in price).  Humana, his Medicare D carrier, picks up the tab, but we all know that claims costs are eventually passed along to insureds in the form of higher premiums or reduced benefits as time goes by.

Let’s not forget about the double digit percentage of revenue profits that most of the big pharmaceutical companies rake in.   Nor about the fact that part of Medicare D specifically disallows government negotiation with pharmaceutical companies when it comes to drug prices.  PhosLo is only indicated for patients on dialysis, the vast majority of whom are also on Medicare.  The makers of PhosLo are likely well aware that the majority of patients who take their drug will either be paying for the medication out of pocket (if they don’t have Medicare D), or they will be covered by a drug plan that prohibits the government from negotiating with the drug maker to lower the cost.

My father’s story is just one of many.  Over the last few years, the majority of the individual health plans available in Colorado have added separate  prescription deductibles or started offering plans with no prescription coverage at all.  It’s not hard to see why, when we consider the increasing cost of prescription drugs, combined with increasing utilization.

The individual market is different.  Medical underwriting is part of the application process, and applicants can be declined, offered coverage at a higher price, or offered coverage with pre-existing condition exclusions.  The trade off is that the policies are less expensive than they would be in the group market.

Jay and I have an HSA-qualified policy for our family.  It has a $5000 deductible (one deductible for all three of us together).  Other than a small amount of preventive care, nothing is covered before the deductible is met, so our coverage only comes into play if we have a relatively large claim.  But it only costs $288/month for our family.  It also allows us to put pre-tax money into an HSA and save up for the possibility of having to meet our deductible one day (or for retirement, if we don’t end up needing the money for medical expenses).

Jay and I are both full-time employees of our corporation, and could thus qualify as a group of two with any small group carrier in the state.  For comparison’s sake, I got a quote for us for an Anthem Blue Cross Blue Shield HSA-qualified policy.  Jay and I would each have our own policy as a group of two, with our son added to one of the policies.  I found an HSA qualified small group policy that would cost $578/month for our group.  But the deductibles would end up being a total of $15,000 for our family on that policy.  The policy would be twice as expensive as what we have now, and the out of pocket exposure would be three times as much as what we have now.  And that’s a quote from a very competitive carrier.

Incidentally, if all three of us had medical conditions that allowed us to qualify for Cover Colorado, we could pay a total of $550/month for three separate HSA qualified policies, each with a $2000 deductible.  This is another example of guaranteed issue coverage, and the increased price when compared with our current policy reflects the added cost that comes when health insurance picks up the tab for pre-existing conditions.

That’s what happens when policies have to be guaranteed issue (and include state mandated coverage like maternity on all policies).  Of course, the current small group market doesn’t include any sort of mandate requiring groups to purchase health insurance.  Proponents of a shift away from medical underwriting on individual health insurance policies also tend to back a measure that would require everyone to carry health insurance.  That would help spread the cost of care across a larger population, and would likely help to contain the price increase that we would see if medical underwriting were to cease.  But my guess is that we would still see a rather dramatic increase in premiums.  This highlights the importance of getting to the root of the issue of health care costs, and how to contain them at source.  Health insurance pays the costs, and unless we can lower those costs, it’s unlikely that we’ll be able to lower the cost of health insurance.

I found Hank’s post in the Cavalcade of Risk, hosted down under this week by Andrew at Oz Risk.

We spoke with an underwriter at Humana who said that we had to wait at least 12 months after having the lipoma removed, and then have a doctor write a letter stating that it was gone.  We finally got around to having that done last week.  Jay got a note from a doctor here in Broomfield that says that the lipoma is gone.  We also have a copy of the receipt from the original removal procedure.  Tomorrow we’ll submit the paperwork to Humana, and hopefully the lipoma exclusion will be deleted from our policy soon.

It’s a lot of hoops to jump through, but if you have an individual health insurance policy in a state like Colorado that allows pre-existing condition exclusion riders, you might want to double check to see if your rider can be re-evaluated.  Most carriers in Colorado require that the condition be resolved (treatment and symptom free) for at least a year before you can request a review of the rider.  Some exclusions will never be removed, like the internal fixation rider on Jay’s arm.  He has a titanium rod in his arm from a snowboarding accident years ago, and as long as the rod is in his arm, the exclusion will remain.  Since the rod is permanent, so is the exclusion.

But other exclusions can be subject to review once a condition is resolved.  The same applies to someone who quits smoking.  If you pay tobacco rates on your individual health insurance policy and then quit smoking, you can request that your rates be reduced.  Most carriers in Colorado require that you be smoke-free for 12 months before the rate can be lowered, but it can make a significant difference in the premium, and is definitely worth pursuing.