Friday, April 4, 2008

War on Affordable Health Insurance

A sampling of this week’s political headlines would lead a reader to believe that our nation’s War on Terror had been replaced by a War on Affordable Health Insurance. The most severely affected were Montana residents where Celtic Insurance Company announced a temporary suspension of new applications. The suspension applies not only to the low priced short term medical insurance but also to the popular renewable “CelticCare” and “CelticSaver” Health Savings Account plans for individuals and families. Because of the relatively small number of low cost health insurance carriers in Montana, the suspension will immediately affect the state’s insurance residents.

Celtic Insurance issued a statement saying “We are currently in discussion with the Montana Department of Insurance to gain new product approval for our filing. We are working closely with the Department to ensure a quick reentry into the Montana market.” The company gave no reason was given for the suspension but we presume that Montana’s notoriously difficult insurance regulatory system is to blame.

Another insurance product that covered emergency room treatment administered by Value Benefits was withdrawn from the market, according to the administrator, and was then quickly announced as reinstated in 22 states by the end of the week. As of today, “Value ER” policy is available only to residents of AK, AL, AZ, FL, GA, HI, IA, ID, IL, LA, MA, MI, MO, MS, NC, ND, NE, NM, OK, OH, PA, RI, SC, TN, VA, WI, WV, and WY . Emergency Room insurance has grown in popularity as the deductibles of most group health policies increased to eliminate any benefit in the event that immediate care is needed. This supplement insurance ensures that covered members won’t avoid treatment because of the cost when they need emergency care. A report released last month by the ALF-CIO showed that almost a third of Americans surveyed said that they had avoided necessary medical care due to the cost.

Announcements of proposed legislation in several other states including Pennsylvania and Florida drew fire for the effects it could have on eliminating more affordable coverage like short term medical insurance. An increasing number of states are considering laws that would have everyone purchase substantially the same type of insurance coverage. This type of legislation was enacted in New Jersey more than a decade ago and resulted in ridiculously high individual health insurance rates. More than half of the uninsured people in the U.S. qualify for health insurance and could afford coverage but are either unaware of the more attractive insurance choices or do not perceive the value of coverage. They tend to be uninsured for less than a year and find coverage in their next job or through some other means other than government paid coverage. joined with other consumer advocate groups earlier this year in proclaiming that the proliferation of many new limited benefit health insurance plans meant that there were now more affordable health insurance choices to most people than ever before. Limited benefit health plans are used by large employers like Wal-mart to provide affordable health coverage for their lower income employees. These policies can be purchased by individuals to supplement other health insurance (for example, to lessen the risks of a $5,000 deductible health savings account policy) or may be used alone when no other insurance is available or affordable. Some limited benefit plans like Core Health Insurance do a reasonable job in bridging the affordability and coverage gap between today’s most common health plans and traditional major medical insurance.

The practice of regulating health insurance through legislation instead of dealing with the underlying cost of medical care continues to hurt consumers. It appears that our celebration of the increase in affordable health insurance choices available in the market might have been premature.

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