Senate Finance Committee Weakens Insurance Exchanges

by Gillian Hubble

categories: For Profit Insurance, National Health Exchange, Obama and Congress, State and Local Efforts

Published October 06, 2009 @ 06:00AM PT

Goings-on in Maine are taking a deserved media hammering this week. First Brave New Films puts out a hard-hitting clip about Wellpoint suing the state to increase its profits. Then it leaks out that last Thursday, Maine Senator Olympia Snowe was the main reason Massachusetts Senator John Kerry's amendment to strengthen insurance exchange consumer protections in the Senate Finance Committee (SFC) bill didn't pass. I'd hate to find out those two things are related.

First, a little background. Maine is a guaranteed issue state, meaning insurers may not deny you coverage based on health status. They must also offer policies with standard benefits, co-payments, and co-insurance, and may only exclude pre-existing conditions for 6 months (this is sounding pretty good, no?) Anthem, a Wellpoint subsidiary, in return asked the state of Maine to guarantee it at least a 3% profit margin off its just 12,000 members. Maine said no. So Anthem is suing the state.

Now, about Kerry's proposed SFC bill amendment. Called "Empowering State Exchanges to be Prudent Purchasers," it sought to protect consumers with stronger state standards for insurance exchanges. HR 3200 and the Senate HELP bill have these protections built in; the SFC bill creates more of a Wild West of insurance exchanges. Just what we need.

The idea of exchanges is to provide individuals and small businesses the same sort of pre-screened menu of more affordable, guaranteed issue options that is available to employees of large corporations. Massachusetts created a successful "prudent purchaser" exchange 3 years ago, and premiums for its most closely managed insurance option, Commonwealth Care, have risen much more slowly than other medical costs. It not only negotiates with insurers for lower rates, but has strict standards for coverage AND customer service. So insurers might chafe, but consumers are safe.

Contrast that with the SFC model: a Yellow Pages for plans of unknown quality, that meet minimal standards (maybe they filled out an application to join?) Jon Kingsdale, the head of the Massachusetts exchange, calls that a "policy disaster." You should have peace of mind that if you buy what you thought was catastrophic coverage, it shouldn't turn out to be alternative housing coverage--a $200,000 lesson for Lawrence Yurdin in Austin, TX.

Hopefully Kerry's standards will prevail during the bill reconciliation process, for our sake. But Olympia knows how much private insurers hate conforming to state insurance standards. It makes her life difficult when lobbyists go into overdrive and racks up her state's legal costs. Maybe that's why she blocked such a common-sense amendment: Wellpoint has her number.

Image saikofish // CC BY 2.0