JUNK POLICIES
1. The bill is fundamentally flawed. Amendments to S. 1955 tinkering with benefit or rate rules will still result in a net loss for American consumers. Health insurance is not insurance if it doesn’t protect us from financial disaster or provide basic medical coverage when we get sick. AARP, the American Cancer Society, the American Diabetes Association and over 200 other patient advocacy groups still oppose the bill because it would eliminate basic protections and access to necessary medical care.
2. S. 1955 purports to create a buying pool that would give small businesses more choice and purchasing power in the health care market. Instead, however, it would give health insurers still greater control over price and treatment options.
3. Business associations and insurance companies supporting the legislation are more interested in profitably selling insurance under the new rules by undercutting state regulation (which is currently strong and effective in many states) than in making health care affordable.
4. This attack on states’ rights puts millions of consumers, many of whom are business owners and self-employed, at risk in a move that amounts to national deregulation of health care.
5. Under S. 1955, insurers could circumvent state health insurance regulation to price employers and families out of their current health plans and replace them with inferior policies.
6. Insurance companies would be allowed to sell this junk insurance to individuals and employers at higher rates based on health, age and where they live, even though this type of discrimination is currently illegal in many states.
7. Dana Christensen, who is featured in a PBS “NOW” exposé, bought an “association health plan” and was left with nearly half a million in unpaid medical bills when her husband, Doug, died of bone cancer. On his death bed, Doug urged Dana to divorce him to avoid liability for the bills, which she refused to do.
Although Dana and Doug were told otherwise when they purchased the policy, when it came time to pay medical bills, the Christensens’ realized that their policy had very limited maximum benefit ceilings and no cap on how much Doug and Dana had to pay out of pocket. The Christensens’ policy covered only $200 a day for hospital costs and $1,000 a day for chemotherapy — even though actual costs were 20 times higher. In the end, the Christensens’ insurer paid less than 18 percent of their medical costs.
8. S. 1955 would tempt small business owners and other employers, even those already providing legitimate insurance, to cut health care costs by pushing their employees into junk health plans.
9. As Dana Christensen’s experience shows, these plans would be marketed as comprehensive insurance at an affordable price. Policyholders won’t find out the truth until it’s too late.
10. Under S. 1955, every insurer would have the right to offer these plans in every state to any American at whatever price they chose. The danger is that these new federal association plans could become the most prevalent form of individual insurance.
DEREGULATION OF HEALTH INSURANCE
11. S. 1955 allows a health insurer to avoid all state regulation so long as it “offers” at least one plan that provides benefits equal to those provided to state employees in one of the five most populous states. But, because the bill allows an insurer to price that policy prohibitively high, the requirement fails to offer consumers any real protection. Moreover, one of the five most populous states, Florida, recently approved a high-deductible, low-benefits health plan for state employees. Under S. 1955 any insurer could choose to offer the Florida low-benefits plan in order to circumvent state regulation.
12. To add insult to injury, a health insurer retains its sweeping exemption from state regulation remains even if it fails to sell a single plan that meets the minimal state requirements. What the provision amounts to, therefore, is a giant skeleton key for health insurers that opens the door to total deregulation of the market.
MORE PROFITS & MARKET CONTROL FOR INSURERS, NOT AFFORDABILITY FOR SMALL BIZ
13. Mergers and acquisitions have given a handful of insurers a stranglehold over the health insurance market. Patients and small businesses need more protections, not less.
14. By removing state-required coverage mandates and affordability protections, insurers will be able to raise rates and boost profits by selling less protective policies.
15. In the last decade there have been more than 400 mergers of managed care companies. Now just 5 companies — WellPoint, United Health, Aetna, Cigna, and Humana — account for more than half of the entire U.S. health insurance market. A recent study found that, in over half the local markets surveyed, just one insurer provides health care to more than 50% of those with insurance.
16. HMO profits have jumped as sales increased for President Bush-backed junk policies that don’t actually protect patients when they are sick and need the insurance most: health savings accounts and association health plans
17. WellPoint, the nation’s largest insurer, said that its profit tripled in the 4th quarter of 2005 and announced another 20% profit increase in the 1st quarter of 2006.
18. UnitedHealth, the nation’s second largest health insurer, announced an 18% profit increase in the 4th quarter of 2005 and a 21% profit increase for the 1st quarter of 2006.
19. Aetna, the nation’s third largest health insurer, announced a 41% profit increase in the 4th quarter of 2005.
20. By removing a state’s right to require broad spreading of risk, which prevents “cherry-picking” of young, healthy policyholders, S. 1955 eliminates rather than enforces price controls. Associations under S. 1995 would be carved out of the rest of the small group market, increasing the ability of insurers to “cherry-pick” the young and healthy and ensuring higher premiums for everyone else.
21. S. 1955 fails to address health insurer overhead and profits, the fastest growing component of health care costs.
22. S. 1955 allows insurers to sell inferior coverage at higher rates based on health, age, geographic area and other factors disallowed by many states under community rating laws.
23. Unaffordable medical bills caused half of the personal bankruptcies filed last year in the U.S. Three-quarters of Americans who declared bankruptcy in 2005 had health insurance.
DELAYED DIAGNOSIS OF DISEASE
24. Supporters claim that to make health care affordable we have to cut back on state-mandated benefits. But because the health insurance plans allowed by S. 1955 will likely exclude preventive treatments and exams, they would prevent early diagnosis of disease.
25. Delaying care makes treatment more costly to the policyholder and ultimately to taxpayers, who pick up the bill when individuals cannot pay outrageous out-of-pocket costs.
ACCOUNTABILITY
26. Ironically, at the same time as S. 1955 forecloses consumer access to judicial recourse, it expands the right of health insurers to sue over the new rules, allowing them to go directly to the court of appeals and expedite any challenge to state attempts to enforce patient protections.
27. Dana Christensen was ultimately able to hold her insurance company accountable and recover her costs under state anti-fraud laws. S. 1955 would put her plan beyond the reach of this consumer protection statute.
28. S. 1955, would extend the so-called “ERISA pre-emption” to any individuals who buy health insurance through associations. As a result, individuals who purchase these health insurance plans will loose their right to sue for damages if they are harmed by an insurer’s decision to limit access to medical treatments.
Already, patients who receive health coverage through a private employer cannot sue for damages in state court as a result of a 1987 Supreme Court decision in Pilot Life Insurance v. Dedeaux which concluded that: “State common law causes of action arising from the improper processing of a claim are preempted.” The Enzi bill would extend the Pilot Life decision to include individuals who buy health insurance on their own and are now not subject to it.
UNINSURING THE INSURED
29. S. 1955 would create a huge underinsurance problem in the treatment of diabetes, cancer and other severe chronic problems.
30. Supporters claim that S. 1955 would decrease the number of uninsured workers. But insuring more people in plans that don’t provide real coverage is not insurance. Encouraging employers to drop good plans for junk plans is even worse. Insurance that doesn’t meet basic health care needs means patients will not be able to afford care even though they’re counted as insured.
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On Friday, the national PBS program “NOW” debuted an exposé on S. 1955. View a resource page for the NOW program, “Payment Due,” complete with a photo essay, “Barely Covered,” and an analysis of the bill at:
Read a transcript of the program.
For more information about Dana Christensen and other patients affected by junk association health plans visit: http://www.consumerwatchdog.org/healthcare/AHP/ and http://www.consumerwatchdog.org/healthcare/AHP/PatientStories/.
The Foundation for Taxpayer and Consumer Rights (FTCR) is California’s leading nonpartisan consumer advocacy organization. For more information, visit us on the web at: http://www.ConsumerWatchdog.org.
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