Health bill stokes fears of ‘junk in­sur­ance’

Part of pro­vi­sion would let ven­dors sell bare-bones cov­er­age poli­cies

Houston Chronicle Sunday - - FROM THE COVER - By Reed Abelson

Julie Ark­i­son re­mem­bers what it was like to buy health in­sur­ance be­fore the Af­ford­able Care Act cre­ated stan­dards for cov­er­age.

The pol­icy she had was from the same in­surer that cov­ers her now, but it did not pay for doc­tor vis­its, ex­cept for a yearly checkup and gy­ne­co­log­i­cal exam.

“I couldn’t even go to my reg­u­lar doc­tor when I was sick,” said Ark­i­son, 53, a self-em­ployed horse­back­rid­ing teacher in Sa­line, Mich.

The plan did not cover her ex­ams be­fore and af­ter hip surgery, her phys­i­cal ther­apy af­ter her op­er­a­tion, the crutches she needed while she re­cov­ered, or any of her med­i­ca­tions. She es­ti­mates she spent $20,000 on med­i­cal care in the seven years be­fore she could buy a plan through the mar­ket­places cre­ated by the Af­ford­able Care Act.

As Se­nate Repub­li­can lead­ers strug­gle to se­cure enough votes to re­peal and re­place the health law, the cen­ter­piece of their ef­fort to win con­ser­va­tive sup­port is a pro­vi­sion that would al­low in­sur­ers to sell such bare-bones plans again. The new ver­sion of the bill re­leased Thurs­day in­cor­po­rates an idea from Sen. Ted Cruz of Texas that would per­mit in­sur­ers to mar­ket all types of plans as long as they of­fer ones that com­ply with Af­ford­able Care Act stan­dards.

State in­sur­ance reg­u­la­tors say the pro­posal harks back to the days when in­sur­ance com­pa­nies, even house­hold names like Aetna and Blue Cross, sold poli­cies so skimpy they could hardly be called cov­er­age at all. Derided as “junk in­sur­ance,” the plans had low pre­mi­ums but of­ten came with five-fig­ure de­ductibles. Many failed to pay for med­i­cal care that is now deemed es­sen­tial.

On Fri­day evening, the in­sur­ance in­dus­try’s two main trade as­so­ci­a­tions, Amer­ica’s Health In­sur­ance Plans and BlueCross BlueShield As­so­ci­a­tion, sent a let­ter to the Se­nate voic­ing adamant op­po­si­tion to the plan, which they say would cre­ate two dis­tinct mar­kets. The pro­posal “is sim­ply un­work­able in any form and would un­der­mine pro­tec­tions for those with pre-ex­ist­ing med­i­cal con­di­tions, in­crease pre­mi­ums and lead to wide­spread ter­mi­na­tions of cov­er­age for peo­ple cur­rently en­rolled in the in­di­vid­ual mar­ket,” the groups wrote.

Lim­its to pay­ments

Ned Scott, 34, who lives in Tuc­son, Ariz., said the health plan he had be­fore the Af­ford­able Care Act left him with $40,000 to $50,000 in un­paid med­i­cal bills af­ter he learned he had tes­tic­u­lar can­cer when he was in his late 20s.

“I thought it would cover things,” Scott said. But once he needed it, he learned the plan lim­ited what it paid for out­pa­tient care to $2,000 a year, and all of his treat­ment seemed to fall in that cat­e­gory.

Plans with much lower pre­mi­ums are cer­tain to be at­trac­tive to many peo­ple.

But El­iz­a­beth Imholz, a health pol­icy ex­pert for Con­sumers Union, warned, “The re­al­ity for con­sumers is that they can be stuck with huge, un­ex­pected out-of-pocket costs.”

The Repub­li­can pro­posal also en­cour­ages the sale to small busi­nesses of cheaper, less-com­pre­hen­sive plans mod­eled af­ter as­so­ci­a­tion health plans that were in vogue decades ago, al­low­ing as­so­ci­a­tions or groups of like busi­nesses to come to­gether to buy in­sur­ance.

The Repub­li­can bill would al­low small busi­nesses and peo­ple who are self-em­ployed to buy plans that would be largely ex­empt from the cur­rent Af­ford­able Care Act rules as well as state over­sight.

That, too, has drawn con­cern. The Na­tional As­so­ci­a­tion of In­sur­ance Com­mis­sion­ers, which rep­re­sents state reg­u­la­tors, wrote a let­ter to the Se­nate con­tend­ing that the pro­vi­sion “ap­pears to block the abil­ity of states to pre­serve im­por­tant con­sumer pro­tec­tions, ef­fec­tively over­see the plans, or en­sure a level play­ing field.”

Mis­lead­ing poli­cies

Antony Stu­art, a lawyer who lives in Cal­i­for­nia, has brought more than a dozen law­suits ac­cus­ing in­sur­ance com­pa­nies of mis­lead­ing con­sumers by sell­ing them poli­cies that pro­vided much less cov­er­age than they re­al­ized.

Stu­art re­called one case in­volv­ing a man, Doug Chris­tensen, who bought a pol­icy from Mega Life and Health In­sur­ance, which was the sub­ject of nu­mer­ous law­suits and state reg­u­la­tory ac­tions. Chris­tensen, who pre­vi­ously had bone can­cer, was as­sured by the in­sur­ance agent sell­ing the pol­icy that he would have ad­e­quate cov­er­age if the can­cer re­turned. But the plan lim­ited pay­ments to­ward chemo­ther­apy to just $1,000 a day of treat­ment when the ac­tual cost was some­times 10 times that amount. Chris­tensen was left with nearly $500,000 in un­paid med­i­cal bills.

“These plans lacked the nec­es­sary trans­parency that would give con­sumers an idea of what they were ac­tu­ally pur­chas­ing,” said Ash­ley Black­burn, a se­nior pol­icy an­a­lyst with Com­mu­nity Cat­a­lyst, a con­sumer ad­vo­cacy group.

Peo­ple buy­ing plans now ben­e­fit not only from the stan­dards the fed­eral law sets but also from the fact poli­cies are clearly di­vided into cat­e­gories with set lev­els of cov­er­age.

“We’re re­ally mov­ing back to a mar­ket where peo­ple are go­ing to have a hard time read­ing through their plan op­tions,” Black­burn said.

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