After health-care plan splinters, pieces are being reconstructed

Although the governor’s health-care reform plan died this year in the Capitol’s political crossfire, critical pieces have been resurrected and are quietly moving through the Legislature. One of the most important–already approved in the Senate and opposed by HMOs–would force health insurers to give consumers uniform, clear and accurate descriptions of their policies to aid comparative shopping.

On its face, it sounds simple. In fact, it isn’t: The world of individual health insurance policies is  complicated, and advocates say health plans use that confusion to mislead customers.

“This is an attempt to provide better labeling, better consumer information and better consumer protection,” said Anthony Wright, executive director of Health Access. “There is incredible confusion with different plans that have different cost-sharing structures, different coverage limits, completely different issues. Policies can be cheap and look good, but not do anything. It helps them know if they’re buying something that’s not as comprehensive as they think.”

The proposal by incoming Senate Leader Darrell Steinberg of Sacramento, requires the sellers of individual health-care insurance coverage to identify their products according to five categories developed jointly by the Department of Managed Health Care – which regulates HMOs – and the Department of Insurance, which regulates insurance companies and some health insurers. The point of the bill is to standardize the myriad of health-care products that are available to the public, thus making it easier to understand co-payments, deductibles, and services that are covered by the plans.

The bill has moved through the Senate, and cleared the Assembly Health Committee this week.

A statewide group representing HMOs opposes the bill, saying it would drive up the costs of coverage and ultimately make it more difficult to negotiate some form of low-cost coverage for consumers. Critics also contend the bill makes an unwarranted intrusion into the private market place.

“We believe it will increase the number of uninsureds and increase of the cost of health care, because helath plans would be limited in the number of health plans they could offer,” said Nicole Kasabian Evans, a spokeswoman for the California Association of Health Plans.

Publicly, the governor has not discussed his position on Steinberg’s SB 1522. But privately, the governor is believed to be supportive of the bill, which was patterned after a provision in his health-care reform legislation that was shot down in the Senate.
The categories include the range of costs, coverage, marketing issues, renewals, access to care and pricing. The idea is to enable buyers to make an apples-to-apples comparisons and understand exactly is in their coverage. There are numerous examples, Wright said, of people who believed themselves to have specific kinds of health insurance and actually didn’t. In one case, a breast-cancer victim who believed she had hospital coverage only had out-patient benefits. In another, a youngster who was sent to an intensive care unit only had $1,000 in ICU coverage—far below the cost of care.

The five coverage categories would range from “comprehensive’’ to “catastrophic.’’

The “organization of plans into these categories would enable consumers to better track premium, benefits and cost-sharing, and assist consumers in making apples-to-apples comparisons between plans (and) weed out ‘junk’ insurance by developing minimum benefit standards,” according to Health Access, an ally of the Service Employees International Union.

Evans said the bill may inadvertently put health insurance out of reach for many potential customers. “By creating health-care categories, by making health plans fit within narrow boxes, we think the bill could take lower-cost health care off the table,” she said. “By limiting flexibility, you also limit affordability.”

But supporters of the bill believe some form of standardization is necessary to help consumers, who “face a ‘wild, wild west’ with confusing and unclear choices.”

“According to research done by Health Access in 2006, an average, healthy Californian looking for health insurance on the individual market would be confronted with 88 health plan choices. While so many options might seem a good thing, the lack of standardization in the individual market means that the average consumer is unable to compare plans on the basis of cost and coverage. Consumers without a college education, elderly consumers and consumers who speak English as a second language are particularly disadvantaged by the lack of standardized information,” Health Access reported earlier this year.