Congress is debating provisions of health reform bills that would considerably revamp segments of the private health insurance market. Focused on health insurance for individuals and small businesses, the changes would end the commonplace practice in these parts of the insurance market of using health status to set premiums or deny coverage.
A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation examines these proposed market reforms and new consumer protection measures. The provisions have won unprecedented support from both consumer advocates and, with some qualifications, from insurance industry leaders. But insurers remain concerned that inadequate penalties for enforcing a mandate on individuals to purchase coverage could keep millions uninsured. That, they say, could spur “adverse selection,” in which only the sickest people would sign up for coverage, and would defeat the entire premise of insurance market reform.
The legislation adopted by three committees of the U.S. House of Representatives and two U.S. Senate committees all would impose new federal regulations on individual health insurance, as follows:
- Coverage would be “guaranteed issue” — sold to anyone who applied for it, regardless of health status.
- Coverage could not exempt payment for treatments of an individual’s pre-existing medical conditions.
- Coverage would be guaranteed to be renewable every year and could not be cancelled.
- Premiums charged to individuals could not vary based on an individual’s gender, employment, or health status. They could, however, vary on the basis of a policy holder’s age.
Supporters of these changes believe these reforms are essential to achieving universal coverage. Because almost everybody would be covered – and therefore in the insurance “pool” – the risks that a relative few could become sick would be spread across the far larger group of people who are likely to be healthy. Coverage would thus be far more affordable for millions.
On the other side are some who are opposed to greater federal regulation of health plans, or who have specific concerns about aspects of the proposed reforms. Some fear unintended consequences that could raise everyone’s premiums. They say that these changes, coupled with other provisions of reform proposals, could actually make matters worse.
The new health policy brief is one of a series of briefs geared to policymakers, congressional staffers, news media, and other readers who may not have a background in health issues but want to better understand the basics of proposed changes in the nation’s health care system. The briefs provide jargon-free overviews that include arguments from competing sides of a policy proposal and the relevant research supporting each perspective.