One of the first benefits of health care reform will kick in this fall, when all health insurance policies will have to abide by new standards in terms of minimum coverage requirements. Beth Capell of Health Access Blog explains how this will help to weed out some of the worst policies from the market, and it’s hard to see this as anything but a good thing.
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.