Steinberg Legislation Would Set Standards for Individual Health Insurance Market in California
13 03 08 - 20:28
Consumers Would Be Able To Price Shop, Do "Apple-to-Apple" Comparisons
Bill Would Set Standards for Health Insurance Cost-Sharing And Benefits
By Anthony Wright
Executive Director of Health Access California
The fight on health reform in the last year put a spotlight on many of the real issues in the insurance market, and in response, legislators this year have introduced a slew of stand-alone bills designed to set cost and benefit standards for health insurance and otherwise increase oversight of the private insurance industry.
THE BILL
SB1522 (Steinberg) organizes the individual insurance market and makes it understandable for consumers. It would allow consumers to see and understand their choices in the individual market, and be better informed about a plan's premium, benefits and cost-sharing. By setting a standard for coverage, it would also effectively weed out a lot of "junk" insurance.
Consumers in the individual market would have a better sense of their health coverage choices, since all health plans sold in the individual market would be classified into five "tiers." In this way, consumers would be able to know if a certain plan is a top-tier comprehensive plan, or a bottom-tier catastrophic plan, or something in between, and if one plan from one insurer is roughly comparable with another plan by another insurer. This provides some standardization and simplification of the marketplace, while preserving a wide range of choices for consumers.
To allow real price comparison, Insurers would be required to offer five "benchmark" plans, one in each tier. The bill would enable consumers to do cross-insurer price shopping, to make apples-to-apples comparisons, with the confidence of knowing that benchmark plans in a given tier have similar cost-sharing, benefits, and other plan features. The benchmark plan would help define the tier, by being the lowest-price plan in a given tier.
The bill would eliminate some "junk" insurance, products that are coverage in name only, that provide such limited benefits or leave consumers so financially exposed, that the product is not of value. Such plans, deceptively offer "coverage" but leave consumers facing major gaps in coverage and significant out-of-pocket costs. Insurers would not be able to sell new plans that do not meet the minimum benefit standards.
THE PROBLEM WITH THE STATUS QUO
California consumers who need to buy coverage as individuals face a paralyzing set of confusing and unclear choices.
• It’s impossible to make cost comparisons, since each plan from each insurer has different deductibles, co-pays, out-of-pocket maximum, benefits, networks, etc.
• It’s hard to determine what benefits are included or excluded, and how comprehensive any given plan is. Consumers without a college education, elderly consumers and consumers who speak English as a second language are particularly vulnerable in this unstructured market.
• Consumers are buying "junk" insurance and find out only when it is too late. Some plans are marketed as quality coverage but actually cover only hospitalization, or even only a small fraction of the cost of hospital care. Some plans leave consumers with significant gaps in coverage, sometimes with unlimited exposure to medical bills.
SB 1522 (Steinberg) would provide help for those in the individual market now; a framework to address the growing problem of "underinsurance"; and a foundation for further health reform. This oversight over the health insurance market is a necessary first step in moving to a guaranteed issue market, and an improved marketplace where consumers have confidence in the coverage sold.
Interested supporters are asked to write a letter in support of SB1522 (Steinberg). Send copies to Senator Steinberg, Health Access California, and the Senate Health Committee, chaired by Senator Sheila Kuehl--the first committee that will hear the bill, in the next several weeks. For more information, check out the fact sheet and sample letter of support on our website.
Health Access California is a statewide health care consumer advocacy coalition of over 200 groups. This article has also been published on the Health Access Weblog.