WASHINGTON — A host of medical services that insurers must pay for in California — from cancer screenings to diabetes treatment to two-day hospital stays for delivering mothers — could be weakened or lost if the health care reform measures pending in Congress become law.
Currently, any health insurer selling policies in California must comply with the state’s extensive consumer protections. The reform measures would allow insurance firms to sell policies across state lines if certain conditions were met, bypassing California’s rules in favor of the requirements in the state where the policy is issued.
The result, critics warn, would be a "race to the bottom," in which insurance companies set up shop in states with the weakest consumer rights and skirt California’s lengthy list of mandated health care services.
"This has the potential to wipe out all of these hard-fought protections," said Rep. Jackie Speier, D-San Mateo, who led the drive for several of those mandates as a state legislator earlier in her career and is now threatening to vote against health care reform that weakens California’s standards.
Speier and 28 other Democratic House members from California outlined their concerns about interstate health insurance sales in a letter to House Speaker Nancy Pelosi, D-San Francisco, and Senate Majority Leader Harry Reid, D-Nev., last week.
"Practically speaking, insurers will domicile their plans in states with less stringent regulations and market to the population in more protective states like ours, just like nationally chartered banks have done," stated the letter, which was signed by several other Bay Area Democrats. "California residents will lose out if state protections are undermined."
California could take steps to preserve the state’s protections, but that could be tricky given the power of the insurance lobby.
Selling insurance across state lines has long been touted by Republicans and insurance firms as a way to spur competition and reduce premiums. More interstate sales, they say, would mean more choices for consumers.
"One of the challenges and barriers to competition is all the varying and conflicting state mandates that exist across the country," said Robert Zirkelbach, a spokesman for the industry trade group America’s Health Insurance Plans, arguing that the patchwork of rules contributes to higher premiums.
The health care reform legislation would create a few avenues for interstate insurance sales. Under one scenario envisioned by the Senate bill, insurers could sell so-called "multi-state" policies with benefits meeting minimum standards that would be defined by federal regulators after health care legislation passes.
If California wanted to mandate benefits that exceed federal standards — including those now in place — it would have to add them back through new legislation passed in Sacramento. Moreover, California would have to pay the extra costs of any additional benefits it mandated — either by compensating individuals enrolled in the plans or by paying insurance companies directly.
That could lead to a situation, critics say, in which many of the state’s current consumer protections are stripped away. To get them back, "we would have to go back and fight these battles again, one by one" in the state Legislature, said Jerry Flanagan, a health care advocate for Santa Monica-based Consumer Watchdog.
Under another scenario, states could enter into compacts in which insurance companies would be subject to the regulations of the state where they issue policies instead of the customer’s home state. For that to happen, California leaders would have to voluntarily enter into agreements with other states, knowing that California’s own health care protections could be ignored.
Although that might seem far-fetched, it’s not inconceivable, Speier argues, given the insurance industry’s political influence in Sacramento.
Allowing health insurance to be sold across state lines could affect California’s top insurers in different ways. Those owned by large national companies, such as Anthem Blue Cross and UnitedHealth Group, would likely benefit from the ability to sell streamlined policies to customers in many states, while potentially avoiding California’s strict rules.
But the change could mean more competition for insurers concentrated in California, such as Kaiser Permanente.
UnitedHealth declined to comment, while representatives for Blue Cross and Kaiser Permanente did not respond to requests for comment.
The list of mandated benefits in California numbers in the dozens, ranging from asthma care for children to post-mastectomy reconstructive surgery. Aside from such benefits, state laws give consumers other protections designed to boost their leverage with insurance companies. For example, if a medical procedure is denied or delayed by an insurer, patients can seek an independent third-party medical review.
According to Speier, more than half of the 7,000 denials or delays of care reviewed through that appeals process since 2000 have been reversed.
"There really is a lot at stake," she said