Florida Health Insurance Topic:
"Health Insurance Price Changes"

HEALTH INSURANCE MARKET CHANGES

One of the centerpieces of legislation to reform the individual health insurance market that Rep. Marc Corriveau, D-Northville, will introduce this week is the creation of a catastrophic insurance fund to reimburse health insurers for claims larger than $25,000, April 21, 2009.

The catastrophic, or reinsurance, pool would be funded by assessments on health insurers that write policies in the individual market, including Blue Cross Blue Shield of Michigan, said Corriveau, chairman of the Michigan House Health Policy Committee.

"I have spoken with hospitals, physicians, insurers and consumers, and everyone agrees we have a problem in the individual market that we need to solve," said Corriveau, who last year was chairman of a House-Senate conference committee that tried to craft a bipartisan solution to individual market reform.

Last December, the Legislature failed to reach a compromise on two bills that would have reformed the individual health insurance market. A coalition of competing health insurers, unions and consumer groups opposed the bills that were supported by Blue Cross, which writes more than half of the state's individual market policies.

"We need a broad-based solution because we have a big problem," said Corriveau. "We also will do something about rising costs and uncompensated care. The unemployed and underinsured are going to hospitals and driving up health care costs. Companies and individuals have to pay higher insurance costs because of it."

Sen. Tom George, R-Kalamazoo, also has a plan. He is developing legislation that includes a basic benefit package that all insurers would be required to offer. George's proposal also would be funded through assessments on health insurers, third-party administrators and from various state government programs.

Both George and Corriveau want to reduce Michigan's growing number of uninsured — now about 1.2 million, or about 12 percent of the state population.

Corriveau said his bill will create a Michigan Catastrophic Protection Plan, or MCAPP, that would reimburse insurers for claims they pay greater than $25,000.

"Individuals fear they will be rejected by health insurers. This bill will reduce the problem because the pool will reimburse carriers for catastrophic losses," Corriveau said.

Under Corriveau's plan, the Office of Financial and Insurance Regulation would collect assessments on insurers based on the percentage of individual market premiums they collect.

David Waymire, a spokesman the Michigan Association of Health Plans and Put Michigan People First, a coalition of insurers, seniors and the disabled, said any insurance company assessment should be broad-based and include self-insured employers such as General Motors Corp. and Ford Motor Co.

"If the goal is to reduce uncompensated care, GM should pay in, because they stand to benefit from the reduced costs," said Waymire, an executive with Martin Waymire Advocacy Communications in Lansing. "The broader the (assessment) pool, the lower everyone will pay and the fairer it will be."

Corriveau said his bill also will prevent insurance companies from rejecting people who apply for coverage for any individual product they write. Currently, only Blue Cross, as the insurer of last resort, is barred from rejecting applicants.

"This will spread the risk in the marketplace and reduce cherry-picking" where some insurers choose to insure healthier individuals, Corriveau said. "This should drop prices by 20 percent for the entire market."

Andrew Hetzel, Blue Cross vice president for corporate communications, declined to comment for this story.

Hetzel previously has said health insurance reform must be comprehensive and address "cherry-picking in the market by for-profit commercial insurers."

Corriveau said the legislation also will prevent insurers from charging higher premiums for health factors, he said.

Corriveau said the legislation should help Blue Cross minimize its losses in the individual market. Last year, Blue Cross lost $133 million in the individual market and projects even larger losses in 2009.

"If Blue Cross writes more policies for people who have claims of greater than $25,000, they will receive more in return," he said.

Corriveau also wants to expand the state's safety net program and reduce the number of the uninsured by creating a Health Affordability Fund.

By assessing Blue Cross and other nonprofit health insurers the annual value of their tax-exemption, Corriveau said the MIChild program, which provides health insurance to children under age 19 who are not eligible for Medicaid, could be expanded and subsidies made available for low-income people to purchase health insurance.

"Blue Cross' annual tax-exempt value is $100 million, and the nonprofit health insurers' tax-exempt value is $60 million," Corriveau said. "This amount would be used to contribute into the fund on an annual basis."

Corriveau estimated that the funding would be enough to cover all uninsured children in Michigan and provide funding to encourage the approximately 600,000 low-income people without insurance to buy individual policies.

Debbie Lantzy-Talpos, head of Aetna's Michigan market, said the key issue in Michigan is to provide an insurance program for the 15 percent to 20 percent of people seeking insurance who have high-risk medical conditions.

"Those folks need a separate solution, because they drive up prices for everyone else," said Lantzy-Talpos. "It will take a source of subsidy to give those folks access to coverage, because some have overwhelming medical needs."

The bills also would require all health insurers to offer three individual products: a health and wellness plan, a basic benefit package and an enhanced benefit package, Corriveau said. The benefits would include outpatient, inpatient, pharmacy and other services.

Corriveau also said the bills will require insurers to offer discounts for people who don't smoke and who maintain proper body weight.

Several other bills also will be introduced to address rising health care costs.

For example, one bill will require physicians to use electronic prescribing to order medications for their patients. Another would require individuals to fill out advance directives when they renew or apply for driver's licenses. Advance directives instruct doctors and hospitals what to do if a patient faces a life-threatening problem.

Another bill will help the state Medicaid program investigate and prosecute provider and member fraud.

Felicia Wasson, associate state director of government affairs with AARP Michigan, said Corriveau's bill has several good components that AARP could support.

"AARP believes that the use of a reinsurance mechanism will assist in coverage of high-cost claims that may be exhausted by the basic health care package," said Wasson in a letter to Corriveau.

Corriveau said the bill also contains important consumer protections that include:

• Replacing 12-month pre-existing condition waiting periods with six-month waiting periods for all consumers in the individual market.

• Limiting commercial insurers from using health status as a rating factor.

• Prohibiting insurers from raising rates at renewal when a person becomes ill.

• Narrowing the range of rates a carrier can charge consumers.

• Protecting women in the individual market from gender discrimination. The bill would prohibit insurers from considering a person's gender when setting rates.

• Enabling the insurance commissioner to order rate refunds to consumers if their insurer is making excessive profits.

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