Center for Consumer Driven Health Care

DATE: March 5, 2003

TO: Consumer Choice Matters Readers

FROM: Greg Scandlen

IN THIS ISSUE:

· AHP Opponents Should Rollback State Regulations
· Rollback - No Willing Provider in Washington 
· Rollback - Opting Out in Georgia 
· Rollback - Mandate Free in Florida 
· A "Happy Alignment" of Disasters in Maine 
· Employers Near Breaking Point in Wichita 
· Switch From Community Rating Painful in Pennsylvania
· No Painless Remedies 
· Current Events: March 31 Seminar 

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AHP OPPONENTS SHOULD ROLLBACK STATE REGULATIONS

The National Governors Association (NGA) and the National Association of Insurance Commissioners (NAIC) are in the forefront of the opposition to Association Health Plan (AHP) legislation now before Congress. Yet, these two organizations are largely responsible for the chaos in the small group market today. Both groups jumped on the idea of "small group reform" in the late 1980s and early 1990s, despite warnings at the time that such regulations would strangle the market, drive out competitors, and raise costs dramatically. 

All of these predictions have come to pass. The mass of regulations -- including mandated benefits, rating restrictions, prompt payment laws, any willing provider laws, market conduct regulations, premium taxes, and many more too numerous to count - have made it impossible for the insurance industry to deliver low cost coverage to their small business clients. Employers and their employees are suffering the effects, and have turned to Congress for relief. They are asking Congress to allow the creation of AHPs to gain some of the same protection against excessive state regulations that larger, self-insured employers enjoy. 

If the NGA and the NAIC are opposed to this initiative, they hold the solution in their hands. All they need do is roll back the regulations that created this mess. About half of the governors and insurance commissioners are brand new this year. They don't need to defend the idiotic ideas of their predecessors. If they want to continue having the states control the insurance market, they have an obligation to move decisively to eliminate the causes of the problems. Some state legislatures are working on exactly that, as reported below.

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ROLLBACK - NO WILLING PROVIDER IN WASHINGTON

Peter Neurath reports in the "Puget Sound Business Journal" that an effort is underway in Washington state to repeal "the law (that requires) insurers to cover the services of every category of provider including chiropractors, naturopaths, acupuncturists, and massage therapists." The story cites Regence Blue Shield as saying these providers cost the company $44.5 million in 2002 alone, up from $20 million in 1999, $30 million in 2000, and $35 million in 2001. The local chiropractic association is opposed, saying, "If a provider can legally do a service, within the scope of their practice, then people should have a right to select that provider." Of course that's true, but people should also have a right to select an insurance plan that covers only what they want to have covered. 
SOURCE: http://seattle.bizjournals.com/seattle/stories/2003/02/24/newscolumn4.html 

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ROLLBACK - OPTING OUT IN GEORGIA

Small businesses in Georgia are also pushing for relief, according to Debbie Gilbert in the "Gainesville Times." Senate Bill 50 would allow employers to buy a package without including Georgia's 12 mandates. Insurers would still have to offer a plan that included these mandates, but employers could opt out of them. State Sen. Renee Unterman (R) is identified as a registered nurse who worked to get some of the mandates passed. She says, "It's a double-edged sword. Those mandates are important. But in these hard economic times, we need to do something to make insurance more accessible and affordable." 
SOURCE: This paper doesn't have a search function on its web site, http://www.gainesvilletimes.com  but you can probably e-mail the author, Debbie Gilbert at dgilbert@gainesvilletimes.com  for a copy of the article which ran on March 17, and the bill is available at: http://www.legis.state.ga.us/legis/2003_04/fulltext/sb50.htm  


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ROLLBACK - MANDATE FREE IN FLORIDA

Florida's insurance commissioner Tom Gallagher didn't wait for legislative action. On February 27, he issued a directive requiring all carriers in the market to offer an insurance plan that is free of the 52 state mandates. Small employers will be allowed to "pick and choose" from a menu of options. The article by Chris Kauffmann in the "Fort Pierce Tribune" estimates the new approach could save as much as 40% of premium. Business leaders in the area are described as "surprised and pleased" by the development. The directive also requires MSA-compatible deductibles, wider cost-sharing options, some prescription drug and transplant coverage, and coverage of "urgent care centers" as an alternative to emergency rooms. The department spokeswoman said the program could save between 20% and 40% of premium and encourage more carriers to re-enter the Florida market.
SOURCE: http://www.tcpalm.com/tcp/trib_local_news/article/0,1651,TCP_1107_1825647,00.html 

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A "HAPPY ALIGNMENT" OF DISASTERS IN MAINE

Not all states are in a rollback mode, however. Meg Haskell writes in the "Bangor Daily News" that the legislature is considering 100 bills aimed at changing the health care system - and this is before Governor Baldacci introduces his plan to achieve universal coverage. A local advocacy group has issued a set of principles to guide legislators in their deliberations. Joe Ditre of "Consumers for Affordable Healthcare," says that legislators should only support bills that conform to five principles:

1. Security - All Maine residents should have comprehensive coverage that is assured.
2. Fairness - Contributions for coverage should be based on ability to pay.
3. Equality - Coverage should be provided on an equal basis regardless of age, job status, employer size, geographic location, income, health status or occupation.
4. Stability - Cost of care and administration should be contained to make coverage and contributions affordable and predictable from one year to the next. 
5. Choice - Coverage allows consumers to choose their participating provider.

Mr. Ditre says there is "a happy alignment of factors" in the state, including a Democratic governor, Democratic majorities in the House and Senate, and "a widely acknowledged crisis in the health care system." (I guess crisis = happiness in some circles.) He warns legislators against supporting bills "to establish a high-risk insurance pool, medical savings accounts, and tax credits for health care." (They might reduce the crisis and lower Mr. Ditre's happiness level.) Still, some legislators have had the audacity to disregard Mr. Ditre's advice and have introduced legislation enabling MSAs.
SOURCE: http://www.bangornews.com/editorialnews/article.cfm?ID=348601&  

There is also an article praising the merits of MSAs written by state representative Steven Bowen available 
at: http://www.bangornews.com/editorialnews/article.cfm?ID=348032&  


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EMPLOYERS NEAR BREAKING POINT IN WICHITA

Not everyone is so tickled by the crisis. In Wichita, broker Gary Hardman says he "has never seen rates so high and climbing so fast," according to the "Wichita Business Journal." He says when he first started writing coverage in 1977 a family plan went for $35/mo, while today it is between $750 and $800/mo. Mr. Hardman adds, "Employers are near the breaking point on premiums." None of his clients have dropped their coverage yet, but he expects "significant fallout" if premium hikes continue to average 25 percent.
SOURCE: http://wichita.bizjournals.com/wichita/stories/2003/03/24/story7.html 

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SWITCH FROM COMMUNITY RATING PAINFUL IN PENNSYLVANIA

In Pennsylvania, small employers may not be dropping coverage, but they are considering the cost of coverage in making hiring decisions, according to an article in the "Patriot News." An applicant with a spouse and children is looking a lot less attractive than a single person due to the added coverage costs, according to Tom Fleischer of PIP Printing in Harrisburg. He says a family policy for one of his employees went from $467/mo in 2002 to $613/mo this year. The coverage includes a $500 per person deductible and a 20% copayment on the next $1,000 per person. 

The CEO of Capital Blue Cross says, "I don't see any let-up. I don't see anything that is going to change this." Part of the increase in Pennsylvania is due to a switch by the Blues from community rating to demographic rating, which the article says is "more fair because they allow groups with fewer medical expenses to pay less." The article points out that critics disagree, arguing community rating "keeps health insurance affordable for all, especially for older people who need more medical care and have less ability to pay." One business owner, 58-year-old Alan Geoffrey, says the premium for his family went from $587/mo in 2002 to $987/mo this year. On the other hand, Eric Buck, a spokesman for the Pennsylvania Builders Association, says that 60 percent of his members benefited from the change. He adds, "The issue of affordability is really beginning to reach a fever pitch," and 700 of his 6,300 members stopped offering coverage this year. 
SOURCE: http://www.pennlive.com/business/patriotnews/index.ssf?/xml/story.ssf/
html_standard.xsl?/base/business/1048329240281400.xml   


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NO PAINLESS REMEDIES 

And in the "Atlanta Business Chronicle", writer Julie Bryant sees, "No painless remedies for the uninsured problem." She cites the recent Robert Wood Johnson Foundation report and says, "One in three Georgians were without coverage in the past two years." She says, "Small employers have cried out for tax credits to help ease the cost of health coverage for individuals, while others have touted medical savings accounts as a solid solution." But Bill Custer of Georgia State University claims that such ideas do nothing "to address the overall problem of rising health-care costs." The article says Len Nichols of the Center for Studying Health System Change would prefer that Congress "tackle the problems of waste and inconsistent quality of care in the health care system."
SOURCE: http://atlanta.bizjournals.com/atlanta/stories/2003/03/17/newscolumn6.html 

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CURRENT EVENTS

On Monday, March 31, the Galen Institute is cosponsoring with several other impressive organizations a day long forum, "Toward Affordable Health Care: Prescriptions For Today" at the Ronald Reagan Building in Washington. The event is being moderated by Fred Barnes, and will include speakers such as Presidential Assistant Doug Badger, former CBO Director Dan Crippen, Arkansas Insurance Commissioner Mike Pickens, and of course our very own leader, Grace-Marie Turner. Registration is free but required. For more information go to: http://www.publicforuminstitute.org/activities/2003/dc/index.htm .

Please send all comments/questions directly to me at gmscan@aol.com. Replies to this message will go to an administrative mailbox.