I like the compromise that the revised bill would create.  It will definitely expand access to maternity care for women in Colorado.  Right now, there are three health insurance companies here that offer maternity care:  Assurant, United HealthOne, and Rocky Mountain Health Plans.  The RMHP maternity option is very expensive.  The United HealthOne option isn’t terribly pricey, but the benefits are low for the first couple years after the policy goes into effect.  The Assurant policy is the most popular among our clients, but it requires that the client meet a separate maternity deductible before benefits begin.

For a woman in Colorado who does not have an option for group health insurance and is contemplating pregnancy, the choice is either to opt for paying for the pregnancy out of pocket (complications are covered on all policies), or to switch to one of those three health insurance companies that offers maternity benefits.  Most of the big-name health insurance companies – Anthem Blue Cross Blue Shield, Aetna, Cigna, Humana, Kaiser, etc. – wouldn’t be an option for her at all if she wants to have maternity benefits.  Right now, if a woman has her heart set on using a particular health insurance company and also on having maternity coverage, she’s likely going to have to pick one or the other.  If HB 1021 requires each insurance company to offer at least one policy with maternity benefits, the number of options available to women seeking maternity coverage would increase dramatically.  I have to assume that the increased competition would help to lower costs for this coverage.  It also  makes sense that if women had more options for coverage, more women would likely elect to add maternity to their policies, thus increasing the pool of insureds with maternity coverage, further driving down costs.

It would be nice to see more options available for our clients who are looking for maternity coverage.  My preference would be if clients could select their health insurance policy based on all of the other features of the plan, and then add maternity benefits after they had settled on a policy, rather than choosing a policy by default simply because it is one of a very few options that offer maternity benefits.

I can see both sides of this issue, but with all of the technological advances we’ve made over the last decade, it seems that something as simple as communication between hospitals and health insurance companies regarding patient admissions should be a simple, electronic process by now, with no clerical errors or staffing issues involved.  If astronauts can update their status on Twitter from the space station in real time, we should be able to devise a system that allows for instantaneous notification for health insurance carriers when an insured is treated or admitted to a hospital.

What if our health insurance ID cards came with barcodes that could be scanned in the doctor’s office or hospital, immediately allowing the office staff to see our benefits, how much of our deductible still needs to be met, and any exclusions on our policy?  Then admission and treatment data could be transmitted directly to the health insurance carrier, without the need for phone calls or extra staff.  Rather than having different scanners and transmittal systems for each insurance carrier, it would make sense for this to be a standardized system, with one system that would be able to transmit data to all of the  major health insurance carriers.  This isn’t a far-fetched idea – think of credit card processing systems.  Visa, MasterCard, American Express and Discover are privately-owned companies that are fiercely competitive with each other.  Yet a store owner does not need a separate processing system for each card.  When you pay at the gas pump with a credit card, the processing system can identify what type of card you’re using, transmit the data to the correct company, check to make sure you have available credit on your card, and authorize the transaction, all within a few seconds.  Visa doesn’t have to wait around for 24 hours before they find out that I bought some groceries today.

There has been a lot of talk about bringing our medical information system into the 21st century lately, and this battle over notifications is a perfect example of how the health care industry is lagging behind a lot of other sectors in terms of electronic data storage and transmission.

Another issue in this debate is how much health insurance premiums can vary from one employee to the next, working at the same company, and with the exact same coverage.  To get an idea of the discrepancies, I calculated a quote for a small group policy with Anthem Blue Cross Blue Shield (which has very competitive premiums in the Colorado market) for a hypothetical company based in Denver with six employees.  I looked at premiums for single employees as well as employees with families, and used a wide range of ages for the employees.  While Anthem has a wide range of plan designs available, I specifically looked at premiums for a policy with a $500 deductible and 30% coinsurance, with an out of pocket maximum of $3500 in addition to the deductible ($4000 in out of pocket exposure each year).  The policy I looked at only covered generic prescriptions, and did not include any dental, vision, life insurance, or disability coverage.  In other words, it had no bells and whistles and wasn’t even close to what most people would consider a “Cadillac” plan.

For a single, 21 year old employee, this policy would cost $3144/year, well below the threshold for the Cadillac tax.  But a 60 year old single employee with the same policy would be paying $15528/year (the employer would likely be paying a good portion of each employee’s premium, but the tax is calculated based on the total premium, not the portion that is paid by the employee).  This would mean that $7028 of the 60 year old’s premium would be taxed – at 40%.

For families, the disparity in premiums is similar.  Family coverage for a 24 year old at our hypothetical company would cost $13860/year – quite a bit under the threshold for the tax.  But family coverage for a 62 year old would be $34,056/year, and $11056 of that would be taxed (the portion that is over the $23,000 premium limit).

Taxing expensive health insurance policies is an idea with its heart in the right place.  Making individuals and employers more aware of the cost and value of their health insurance policies is a good start towards real comparison shopping.  But setting a flat dollar amount above which a plan will be taxed seems ill-advised.  It doesn’t really do a good job of weeding out health insurance plans that truly have too many bells and whistles, and it wrongly penalizes people who live in areas where health care costs are higher than average, or companies with a disproportionate number of older workers.

Joe Paduda’s article was included in the Health Wonk Review, hosted this week by Jaan Sidorov of the Disease Management Care Blog.

Dr. Austin’s dental practice is offering the HIV testing for free, but she pointed out that if a dentist isn’t offering the test for free, patients would have to pay out of pocket, as dentists cannot currently bill health insurance companies.  There is a medical code for HIV testing, but it isn’t recognized if it’s submitted by a dentist.  This doesn’t make much sense, but I’m sure that there’s a combination of inertia and turf wars between dentists and primary care physicians blocking the way for dentists to be able to bill a patient’s health insurance company for an HIV test.

The CDC webpage about the OraQuick (OraSure) test doesn’t specify a cost; it simply states that the fee will be determined by the manufacturer and the lab that performs the test.  I imagine it’s relatively inexpensive, otherwise dental offices wouldn’t be able to offer it for free.  But anytime a test is covered by health insurance, more people are likely to get the test (think of mammograms and paps).  Even if the cost of the test is only counted towards a patient’s deductible (as might be the case if the patient has an HSA qualified plan, for example), just knowing that it will be billed to the health insurance company might make a patient more likely to get the test.  In addition, billing the test to a health insurance company is likely to result in a lowered final price for the patient based on network negotiated rates.  All around, it makes sense for dental offices that provide HIV screening to be able to bill a patient’s health insurance company for the test.

David Williams’ article was included in Grand Rounds last week.

In reality, I imagine that such a scenario would actually make our health insurance industry look a lot like our credit card industry.  Where does your credit card payment go? Chances are, it’s not to the state where you live.  In 1978, the Supreme Court ruled that nationally chartered banks only have to abide by the laws in the state where they are incorporated, not in all the states where they conduct business.  This made states without caps on interest rates a favorite incorporation spot for credit card companies – and of course the increased tax revenue meant that the states in question had little motivation to limit the amount of interest a bank could charge.

Most individual state insurance commissioners have fought hard to win consumer protections and regulate how insurance companies do business, but the extent of those protections varies tremendously from one state to another.  Health insurance companies – like most businesses – are focused on the bottom line (as publicly traded companies, they have to be).  If the opportunity arises for them to set up shop in one state and do business in all states, it would be financially foolish of them to pass on that opportunity.  And chances are, the states with the most lenient regulations and the fewest consumer protections would be the favored incorporation spots for health insurance carriers.  States that don’t have high risk pools (and thus don’t charge their insurance carriers a fee to maintain the risk pool) would likely be popular, as would states that have few benefit mandates.

I’m not opposed to the idea of health insurance companies that could operate on a national basis, allowing people to keep their health insurance if they move to another state.  As an example, there are Blue Cross Blue Shield plans in all 50 states, but if one of our Anthem clients moves out of Colorado, she must apply for a new plan in her new state under current regulations.  That is frustrating for the insured, especially if she likes her current plan design or if she has developed a health condition that will make going through new underwriting a difficult process.   It does make sense to allow people to keep their health insurance plans if they move out of state but to an area where they still have good network coverage.  But such a plan would have to be overseen by federal – rather than state – regulations.  Simply opening things up to allowing health insurance companies to base themselves in any state they choose, operate under that state’s laws, and sell health insurance in all states, would take us to the lowest common denominator in terms of consumer protections.

As of November 18th, 2009, Imerica has been placed in Rehabilitation, and is no longer issuing new policies.  During this process, the Arkansas Insurance Commission will be overseeing the day to day operations of Imerica, and for now, claims will continue to be paid.  If it is determined that Imerica can be rehabilitated, they will continue to do business under the rehabilitation plan.  If not, Imerica would be liquidated, and policyholder claims not paid by Imerica would become the responsibility of the life and health insurance guaranty funds in the states where Imerica was licensed.  In Colorado, this group is known as the Life and Health Insurance Protection Assocation (LHIPA).  LHIPA has a maximum benefit of $500,000 for major medical insurance, which is significantly lower than most of the benefit maximums offered on private health insurance policies in Colorado (including Imerica, which offered policies with lifetime maximums ranging from $2 million to $8 million).

If you currently have a policy with Imerica and are in reasonably good health, you may be able to qualify for a policy with another carrier.  This will involve medical underwriting, but we can help you determine whether there is a company that would work for you, based on your medical history.  If you are in very good health, changing to another carrier will be a relatively easy process.  Please contact us if you have questions about switching to a new carrier, or if you would like to compare other options that are available in Colorado.

One of the major aspects of health care reform that has gained a lot of traction this year involves doing away with medical underwriting on individual health insurance policies, and would require health insurance carriers to accept all applicants, regardless of health history.  Obesity is considered a pre-existing condition by all of the individual health insurance carriers in Colorado.  Obviously applying these standards to a healthy, breastfeeding baby is ill advised, but I believe it makes sense for adults.

The guidelines are currently pretty lenient when it comes to weight.  Most carriers start to increase the premiums on their policies if an applicant has a BMI of around 30 – which is the cutoff for obesity, according to the CDC.  Being overweight, but not obese (BMI of 25 to 29.9) doesn’t result in a rate increase at all with many carriers.  So a 5′5″ female can weigh up to 180 pounds and still qualify for a standard rate with many of the individual health insurance carriers in Colorado, assuming she is a non-smoker and doesn’t have any other pre-existing conditions.

I’m curious to see what happens to underwriting regarding obesity and tobacco use as health care reform moves forward.  Both of these factors are known to increase health care costs.  They’re also factors that each person can control – not saying that it’s easy, but it can be done.  I can see the benefit to making sure that everyone gets accepted for health insurance, regardless of weight, as it’s counterproductive for society as a whole to have people who are uninsured.  But I believe that it makes sense for obese applicants, and tobacco users, to pay more for their health insurance in order to offset the higher claims they are statistically likely to have.

I’m curious to hear what our readers think about this topic.  Should obese applicants pay more for their health insurance than normal weight applicants?  What about smokers?  Does this amount to something akin to a regressive tax, since lower income people are more likely to be overweight, and also more likely to be smokers?  Should income then be taken into consideration when setting health insurance premiums?

Cover Colorado is a reasonably-priced alternative for people who aren’t eligible for private health insurance.  It’s also available for those who have been offered a private policy with a rate higher than Cover Colorado’s, or with an exclusion on a particular pre-existing condition.  But this basically means that the insureds in the Cover Colorado system tend to be some of the state’s sickest residents.  Group health plans also have plenty of sick people (since group policies have to accept all eligible employees of an insured business, regardless of health), but they also have lots of healthy people.  Since Cover Colorado basically requires that an applicant have pre-existing conditions, their claims to premium ratio is understandably high.

An article in the Denver Post yesterday indicated that perhaps someday Cover Colorado will expand their eligibility.  Apparently it is being discussed as a possibility, although funding is the major hurdle.  The most obvious benefit would be the rise in premium revenue that would be collected if more people were to join the pool – and if those people were healthy, the premiums to claims ratio could be expected to improve over time.

It wouldn’t be fair to expect private health insurance companies to continue to subsidize the Cover Colorado program at the current levels if healthy people were allowed to join, but perhaps the increased premium revenue would make up the difference.

I’m glad that we have Cover Colorado as an option here, and I’m well aware that there are states where people who don’t qualify for private health insurance have no option at all.  But there are some eligibility guidelines for Cover Colorado that still end up leaving people uninsured or under-insured.  The six month residency requirement is a tough one, and it’s only waived for people who are moving from another state’s high risk pool.  People who are coming off of a group health insurance policy in another state (and who are unable to qualify for a private individual policy) have to live here for six months – uninsured – before they qualify for Cover Colorado.  In addition, a person who is eligible for any group health insurance policy – regardless of how bad the coverage might be – is not eligible for Cover Colorado.

My vote would be for relaxing both of these guidelines.  That would no doubt increase the number of sick people enrolling in the program, but it would also help to expand health insurance coverage and access to health care to more people, which should be the ultimate goal.  In order to make up for the additional losses created by enrolling more high-claims people in Cover Colorado, perhaps eligibility could be expanded to include some of the state’s healthy – but currently uninsured – population.  Obviously the premiums are the major issue here (Cover Colorado is currently more expensive than private health insurance), but I’m glad to see that people are considering this as a possibility for insuring Colorado’s uninsureds.

There isn’t likely to be any one solution that will insure all 800,000 Colorado residents who currently are without health insurance.  But perhaps expanded eligibility for Cover Colorado might be part of the solution.

Now, an insurance company called GuideOne Mutual actually had a question about “religious denomination.” And it seems that Atheists and Agnostics were charged more.

The Department of Justice sued GuideOne in federal court in Kentucky after receiving complaints about the insurer’s “FaithGuard” policy that offered homebuyers, owners and renters in 19 states special benefits and discounts if they were churchgoers.

Senator Bennet mentioned during his Chamber of Commerce meeting that he supports initiatives that would reward doctors based on performance, measured by patient outcomes.  He was asked what safeguards would be implemented to keep doctors from cherry-picking the healthiest patients under such a system, and replied that it was a good question that required more analysis.  I agree that patient outcomes should be a factor in determining physician reimbursement, as should medical errors and repeat hospitalizations.  But we have to take into account the patient’s health at the start of the physician/patient relationship, in addition to patient lifestyle factors.  The financial incentive has to be higher, and the outcome expectations a little lower, for doctors who take on sicker patients.  It doesn’t make sense to just set the bar at one level and expect doctors to get all of their patients to that level in order to get paid.  A 60-year-old obese smoker with heart disease isn’t going to have the same outcomes as a 25 year-old fitness instructor with a sprained ankle, no matter how careful and efficient the doctor is.

In order to truly provide quality care, a doctor is likely going to have to spend more time with sicker patients.  This should be reflected in how the doctor is compensated, along with the outcome-based incentives.  There are ways to implement an outcome-based incentive system for doctors while at the same time making sure that doctors aren’t encouraged to avoid the sickest patients.  I hope that this aspect of health care reform continues to be addressed and eventually makes its way into normal physician reimbursement arrangements.