Watch the Individual Coverage Market....

By Steve Schulte of
Health Advocate Solutions

(213) 999-1227

To get a feeling early on for how well healthcare reform legislation is working watch how insurers cover individuals and families.

Why? Because here---other than the senior market that is pretty well covered under Medicare---is where the "hard to cover" reside.

In the 1990s many states were under pressure to cover "small groups". This generally meant groups of 2-50. In covering these groups insurers had to observe certain standards, for example, they could not deny coverage to anyone who was legitimately part of such a group as long as everyone signed up in an "open enrollment period".

The insurers maintained some control by strictly enforcing these open enrollment periods---and by reviewing rates for the entire group periodically. This usually resulted in higher premiums for the group overall.

But individuals and families with unemployed adults had no such protection---if you will, no such "safe haven". Single persons, the self-employed and families above the poverty level but with no adult wage-earner were out of luck. Not surprisingly, two large high risk groups could be found there: hard to cover individuals with more health risks and people 55-64---right up to eligibility for Medicare.

The federal and state governments in the last few years have expanded programs such as Children's Health Insurance (S-CHIP) and Healthy Families to assist lower income children (and some adults) above the eligibility levels for Medicaid (Medi-Cal). That left individuals and older citizens even more vulnerable.

So, watch how these two groups get covered under the new legislation. Granted, everyone has to be covered without regard to health status by 2014. But in the meantime? In California, for example, big insurers Anthem Blue Cross and Blue Shield have just announced that rates for this group will increase by 13-17%---for now. (That is an amendment to the 39% rate hike Anthem had announced for individuals earlier this year. Until Obama and Sibelius stepped up to the plate.)

The insurers are taking advantage of these groups because they have more leverage here. Less pushback. To verify this, check out the rates in the state "high risk pools": extremely high rates for a most vulnerable population that has already been denied coverage at least once.

Is there a way around this? How about finding ways to wrap individuals into larger purchasing groups and mixing them with small groups, for example? That would help even out the risks they pose.

Or, why not impose the coverage mandate before 2014 (requires a change in the law) and then fold individuals and unemployed older workers into Medi-Cal (or a large purchasing group) early?

All this is possible. But the insurers prefer to hedge bets and raise rates rather than to try to truly assist some of those who need coverage the most.

To see if healthcare reform is working, watch this picture.

Sources: Los Angeles Times, Kaiser Family Foundation, MR/MIB (CA high risk pool).

Next time: Healthcare Reform and Long-term Care Insurance.

To respond to this blog, email steve6schul@yahoo.com