April 21, 2009

Individual insurance market “Exhibit A” on why America needs health reform

(Washington, DC) — Citing the Catch-22 of the individiual health insurance market — where if good coverage is available, it is usually too expensive for those who need it most — Consumers Union on Wedensday will lay out the needed steps to reform the insurance market before the House Ways and Means Committee.

Bill Vaughan, CU health policy analyst , says the insurance market is “Exhibit A for why America needs health reform.”

“It is the epitome of everything that is wrong in the system,” Vaughan said. “Pre-existing conditions and medical underwriting means it often doesn’t cover the costs consumers are most likely to incur. Many policies have gaps in coverage that consumers often don’t understand. All too often it is a hassle to collect on a policy, and all too often, if you use it, you lose it, because of future huge increases in premiums.”

Consumers Union’s recommendations include:

A new Office of Consumer Health Insurance Education and Information that will provide general and comparative information about insurance issues and policies using consumer-friendly formats.

“We need a Medicare Compare-type website (with notable improvements) applied to all health insurance sectors where policies can be compared on price and quality. Extending this comparison site to all insurance would help stop the waste in the Medigap market where seniors are talked into buying a standard policy that is up to 1,600 percent of the cost of the low-cost plan in their state,” Vaughan said.

Require standardization of insurance definitions and forms so consumers can easily compare policies on an “apples-to-apples’ basis.

Require insurers to clearly state (in standardized formats) what’s covered and what’s not in every policy offering, and to estimate out-of-pocket costs under a set of typical treatment scenarios.

Maintain an insurance information and complaint hotline, and compile federal and state data on insurance complaints and report this data publicly.

Institute and operate quality rating programs of all insurance products and services.

Manage a greatly expanded State Health Insurance Assistance Program that would provide technical and financial support (through federal grants) to community-based non-profit organizations providing one-on-one insurance counseling to all consumers, not just the Medicare population.

An insurance “exchange” or “connector,” offering a choice of plans, that will:

Like Medigap, include an optimal number of plan choices – not too few and not too many.

Limit excessive variations in benefit design so that plans compete more on price and quality.

Require information on price and quality to be presented in consumer-friendly formats.

Require plans to provide year-long benefit, price, and provider network stability.

Protect against marketing abuses and punish insurers that mislead consumers.

Ensure that consumer co-payments for out-of-network care are based on honest, audited data.

Make consumers fully aware of their rights to register complaints about health plan service, coverage denials, and balance-billing and co-pay problems, and to appeal coverage denials.

“We hope that this year Congress will enact reform legislation to ensure that a comprehensive package of benefits is always available and affordable for every American. That legislation will mean a number of big changes, including insurance reform: no pre-existing conditions and no waiting periods,” Vaughan said.

Contact: Bill Vaughan, 202-462-6262