Panel to ease rules for individual health plans

October 06, 1994|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Writer

In a setback for backers of universal access to health insurance, a state task force is preparing to recommend that insurance companies not be required to sell individual health insurance policies to all comers, and that insurers keep the right to refuse to serve customers with pre-existing medical conditions.

The plan would also let insurers continue to charge different prices to individual customers based on where they live, how old they are, and their family status.

The changes proposed for individual health insurance rules are less sweeping than the reforms that went into place for small group insurance plans in July. But officials of the Expansion of Insurance Reform Task Force, which is scheduled to talk about and possibly vote on the plan today, say that is because the individual health insurance market is more prone to abuse by consumers.

"This clearly is an incremental package we are talking about," said John Colmers, executive director of the state Health Care Access and Cost Commission. "You have to beware of unintended consequences."

But that did not appease either consumer advocates, who said the plan shortchanges the 7.2 percent of Marylanders who buy health insurance on the individual market, or Blue Cross and Blue Shield of Maryland, the state's biggest health insurer.

"My impression is that [the state] has been listening very carefully to the insurers and HMOs," said Al Cohen, a leader of Health Care for All. "Consumers have been relegated to the position of 'Gee, they want some things we just can't do.' "

But Blue Cross Vice President Marilyn Maultsby said, "We don't believe the individual market is broken." She said the state should be wary of making changes in individual insurance plans until it knows how reform of the small group insurance is working.

The task force was set up last year by the Health Care Access and Cost Commission, which in turn was created by the health care reform bill the General Assembly passed in 1993.

The staff of the task force sent the group recommendations late last month and scheduled a vote Sept. 30. But the vote was delayed because members had so many comments, task force member Susan Cohen said.

The recommendations include:

* Opposing calls for "guaranteed issuance," a rule that says that carriers who sell any individual health policies in the Maryland market must sell policies to anyone who applies.

* Letting some business owners whose employees do not participate in a proposed group insurance plan buy group coverage just for themselves. * Requiring insurers to renew individual health insurance policies, even for customers who have filed claims big enough to make their carriers lose money.

* Making insurers charge premiums based on a form of "community rating," which spreads risks over a broad group instead of charging prohibitively high rates to specific people who have been sick in the past. But the commission declined to bar rates that vary based on age and geography.

Mr. Colmers said the staff decided against barring geographic and age distinctions because 12 percent of those with individual insurance dropped coverage after New York adopted community rating last year.

But Kala Ladenheim, a George Washington University researcher, said the problem in New York also stemmed from a big rate increase by that state's Blue Cross affiliate that was unrelated to the change, and said states that phased in community rating slower than New York did have avoided problems.

* Allowing customers who have insurance with one company to switch carriers without being subject to a new medical exam for pre-existing conditions.

* Mandating that those who sell individual health insurance policies offer at least one health maintenance organization or preferred provider plan, in addition to conventional fee-for-service coverage. Mr. Colmers said the recommendation is designed to give consumers the most possible choices.

All of the reforms would be subject to approval by the General Assembly, Mr. Colmers said.

The reforms in small group health insurance standards were more sweeping than the proposals for individual coverage, because the group plan mandates guaranteed issuance and eliminates pre-existing condition limitations.

The biggest debates are likely to be over guaranteed renewal, which Ms. Cohen said is useless without limits on how much insurers can raise rates, the exclusion of people with pre-existing medical problems, and community rating.

Mr. Colmers said allowing people to buy insurance when they have medical problems will encourage them to wait until a problem pops up before they buy insurance. That means the price of insurance will have to move closer to the actual price of health care to offset the fact that a higher percentage of insured people are filing claims, he said.

"People can come in when the house is burning," Ms. Maultsby said.

Ms. Ladenheim said a provision forcing people with existing conditions to delay their right to make claims for those problems is enough to keep people from abusing the system without denying them coverage entirely.

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