• When would group-to-individual portability guaranteed-issue rights under HIPAA be triggered?
HIPAA group health provisions also appear to be problematic for Connector proposals. HIPAA requires that
health plans that involve an employer must comply with
all of the group health insurance protections the law mandates. Connector plans sold through employer groups
would seem to clearly fall under the category of employer
involvement, particularly if employer contributions or the
creation of a Section 125 plan were involved. Therefore,
Connector policies would have to be compliant with all of
the HIPAA group health insurance protections even if they
were technically individual policies. These requirements include mandatory guaranteed issue, limitations on pre-existing condition look-back and exclusionary periods, and
non-discrimination rules. The private health insurance
market in Massachusetts has always been regulated very
heavily and already required individual policies to meet
most of these requirements prior to the creation of the
Connector. As such, a Connector and associated market reforms have been much less disruptive in Massachusetts
than they would be in virtually any other state.
Other questions are: What service would an exchange
provide? And why should we replace services currently
being provided by the private health insurance market
with a government entity? Individual health insurance
products are readily available for private sale through licensed professionals and insurance carriers in all 50
states. They are sold through the Internet, over the phone
and in person. Licensed agents answer questions, provide
advice and options, resolve claims issues and help millions of American consumers navigate often confusing
health care bureaucracies.
Furthermore, we feel that great emphasis should be
placed on the economic
34
impact of an Exchange, including the possible unsustainable costs of public program growth and the effect that the
potential loss of insurance-related jobs could have on the
economy. Finally, an Exchange would do nothing to address the rapidly rising costs of providing medical care in
this country, which is the true source of high health insurance premiums.
Public Plan Option
Many proponents of a national Connector also support
the creation of a public health insurance program to be offered along with private plans. A top concern about a public program buy-in option that competes with the private
insurance market is the potential for an unlevel playing
field between the two coverage options. Even if extreme
care was taken to ensure that factors like subsidies, rating
and issuance requirements were the same relative to the
public and private plan options, because the public plans
reimburse providers at lower rates and account for other
administrative costs differently, the playing field would
never truly be level. Over time, it is a fundamental insurance principle that this will lead to adverse selection and
long-term market damage.
Another concern is that state-level experiments with
public program buy-ins have not been particularly successful. States allowing for SCHIP buy-ins are only seeing an eight percent to 11% take-up rate, perhaps because unsubsidized premiums are very high to pay for
state-mandated rich benefit packages. In addition, states
with such programs are reporting adverse selection
against the public plan.
Another significant factor relative to the creation of a
public plan option is the indirect costs that privately insured people will bear due to its existence. Existing public
programs like Medicare and Medicaid pay providers a reduced rate as a financing mechanism. There is a great deal
of evidence to show that providers then shift these costs
onto the private payers. Any expansion of a public program
or buy-in plan would only increase the amount of cost
being shifted to the privately insured.
Cost-shifting occurs when providers and hospitals
charge privately insured individuals more to make up for
the lower reimbursement rates they receive for taking care
of Medicare, Medicaid and SCHIP beneficiaries. A national
actuarial study released by America’s Health Insurance
Plans, the Blue Cross Blue Shield Association, Premera and
the American Hospital Association found that annual
health care spending for an average family of four is $1,788
higher than it would be if Medicare, Medicaid and private
employers paid hospitals and physicians similar rates, with
total provider reimbursement unchanged.
M andates to Purchase Coverage
Two other market reform ideas that are routinely disc ussed are government mandates that individuals and employers must purchase coverage. NAHU has historically
approached the idea of an individual mandate to obtain
h ealth insurance coverage with great caution. Similar man-
