Colorado Healthcare Reform - New Proposal

[mykidslovedogs]

Here is an interesting proposal, recently put together by the Colorado State Association of Health Underwriters. It was chosen as one of four possibilities by the Colorado Blue Ribbon Commission for Healthcare reform. It has some of the characteristics regarding mandated coverage and a BASIC guaranteed issue plan that I have actually discussed in earlier threads and would support. Thought some of you might be interested..


http://www.colorado.gov/cs/Satellit...goBlobs&blobwhere=1167363633930&ssbinary=true

 

[FIRE'd@51]

On consumer choice:

"All Colorado health insurers and HMOs would be required to participate in this program, thus allowing a choice of HMO, PPO, or indemnity plans according to their needs. In addition to the limited benefit guaranteed plan design that would be available to all Colorado residents, additional, expanded and medical underwritten options would be available."


IMO, this part would have to be done very carefully so as to avoid adverse selection. What sort of additional benefits could be offered in the underwritten plans? If the underwritten plans include the limited benefit guarantee, wouldn't they attract the healthier people to the underwritten plans, leaving the sicker folks in the guaranteed-issue risk pool leading to the same adverse selection problems we have today?

 

[mykidslovedogs]

On consumer choice:

"All Colorado health insurers and HMOs would be required to participate in this program, thus allowing a choice of HMO, PPO, or indemnity plans according to their needs. In addition to the limited benefit guaranteed plan design that would be available to all Colorado residents, additional, expanded and medical underwritten options would be available."


IMO, this part would have to be done very carefully so as to avoid adverse selection. What sort of additional benefits could be offered in the underwritten plans? If the underwritten plans include the limited benefit guarantee, wouldn't they attract the healthier people to the underwritten plans, leaving the sicker folks in the guaranteed-issue risk pool leading to the same adverse selection problems we have today?

I'm not so sure there would be much of a problem with allowing people to buy up. Since EVERYONE would be required to have AT LEAST the basic plan, and the basic plan is guaranteed, you kind of eliminate half the problem right there. Adverse selection is more of a problem when the healthy people OPT OUT of coverage all together or buy down (while the sick people stay in a plan with rich(er) benefits), which causes premiums to go up. But since no-one will be allowed to opt out, we've got everyone covered at least on the minimum level of coverage. If healthy people buy up, then they are paying more into the system for a plan that they might not really use that much, so buying up might actually be good, and eventually help lead to lower premiums, overall, for everyone.

Granted, it might not seem FAIR that some people might be allowed to buy up while others may not, but I think it's better than forcing everyone to have a cadillac plan that they might not need or want.

 

[FIRE'd@51]

I guess what I'm wondering is what do you mean by "buy up"? Could you give an example of what would constitute a buy up?

 

[ziggy29]

I guess what I'm wondering is what do you mean by "buy up"? Could you give an example of what would constitute a buy up?

Choosing to pay additional premiums for more comprehensive insurance, perhaps one that has lower deductibles and co-payments.

Healthy people would more easily be able to "buy up" whereas insurers may balk at providing more than the mandated minimums for sicker individuals. Still, it's better than nothing as everyone would have at least baseline coverage at relatively affordable rates.

 

[mykidslovedogs]

I guess what I'm wondering is what do you mean by "buy up"? Could you give an example of what would constitute a buy up?

A "buyup" could be, potentially, a plan that has a lower-deductible, better coverage for prescriptions, better office visit copays, all of the above, etc... Since the proposal doesn't really specify yet what the BASIC plan is going to look like, it's hard to say. However, I'd be really surprised if they offer any underwritable (is that a word?) buy-down options, because that would be what would lead to adverse selection.

In reading the proposal, I also like that they plan to increase Medicaid reimbursements to docs, because that will help a lot with cost-shifting, which I think one of the big problems is.

I also liked this part:

"State insurance regulations limiting employer financial support of individual medical
plans would have to be changed or eliminated. Ultimately federal tax law should be
changed to allow an income tax deduction for the premiums paid by individuals form
their health insurance coverage."​

 

[mykidslovedogs]

This plan basically eliminates employer sponsored coverage by creating a guaranteed issue basic individual plan that everyone would have access to. I can't believe how similar this proposal is to the ideas that I have been thinking about. I will definately want to watch it progress.

 

[chinaco]

Good to see that another state is considering doing something.

 

[FIRE'd@51]

A "buyup" could be, potentially, a plan that has a lower-deductible, better coverage for prescriptions, better office visit copays, all of the above, etc... Since the proposal doesn't really specify yet what the BASIC plan is going to look like, it's hard to say. However, I'd be really surprised if they offer any underwritable (is that a word?) buy-down options, because that would be what would lead to adverse selection.

So what you're saying is that the "buyup" would be a rider to the basic plan? That way even those who purchased the "buyup" would remain in basic plan risk pool, therefore preventing adverse selection?

 

[mykidslovedogs]

Correct - Well, the way I understand it is that it would be a basic plan design that every carrier would be required to offer in their mix of plans, so it seems to me that it would be the same risk pool.