From Grace-Marie Turner at the Galen Institute:
Health plans across the country are leaving the small group and individual health insurance markets, forcing people to find other sources of coverage. In this paper, we provide examples of how millions of people in dozens of states already are being negatively impacted by the law — from New York to Colorado, Virginia to Florida, and Connecticut to Indiana.
The paper provides an overview of carriers leaving the market; the impact of Obama administration rules on the child-only health insurance market; the disruptions caused by rules governing health premium payouts and “grandfathering;” and the threats to the Medicare Advantage market. …
Some insurance carriers are leaving the market because of onerous state regulations, others are victims of a faltering economy, but the cascade has been accelerated by the rules that already have taken effect and the many more that are to come as a result of ObamaCare [HR 3590].
Read more: A Radical Restructuring of Health Insurance, by Grace-Marie Turner Galen Institute.
The Denver Business Journal reports on what might be the first signs of government’s forcing out its competition in the health insurance business:
Colorado health insurers are diversifying their product offerings, selling policies outside of the health realm — such as workers’ compensation and life insurance …
In addition, national insurers recently have purchased non-insurance businesses, such as health clinics and electronic health information technology providers — also to increase their revenue base.
Colorado insurers began easing into new products in the last couple of years. But passage of federal health care reform last March sped up the pace.
Company executives say the timing isn’t coincidental, as new regulations are expected to cut into profit margins, making new sources of revenue and more efficient services even more important.
One new regulation, for example, requires that insurers spend at least 80 percent of health care premiums collected from small business plans on medical care rather than administrative costs. That number rises to 85 percent for large business plans.
This political control (“regulation”) is known as the medical loss ratio. For why this is a bad idea, see my previous posts:
Recall that in response to the health control bill [HR 3590], some Colorado insurers have stopped selling child-only policies because otherwise they’d have to charge the same rates to everyone regardless of risk. State Senator Morgan Carroll wants to force insurers to sell them.
If you think it’s alarmist to suggest the politicians backing the health control bill [HR 3590] want to use authoritarian methods to create a government health insurance monopoly, recall that (1) the proponents of the “public option” want a government monopoly, and that (2) characterizing the health control bill as a government takeover is surely not 2010’s the “lie of the year.”
Update to CO insurers stop selling child-only policies – blame health control bill:
The Denver Business Journal reports:
State Sen. Morgan Carroll is warning insurers in Colorado to return to the child-only individual health care market or face a “very good” chance she or another Democrat will introduce legislation come January compelling them to do so.
Summary of this issue: The federal health control bill (HR 3590) requires insurers to sell child-only policies to all parents who want them, at a price that does not reflect the kid’s health status. These insurance price controls are known as “community rating.” This means parents could wait until the child is sick to buy the policy. In attempt to remedy this, the Colorado Division of Insurance has ordered two month-long open enrollment periods
each year, so parents could not enroll whenever they want.
Even if this is effective, it’s bad news for sick kids with child-only policies. Since the price controls prohibit the insurers from risk-rating premiums, they lose money whenever they sell a policy to a child with a pre-existing condition correlated with expensive claims in the future. So insurers respond by trying to attract the healthy and avoiding the sick
Update to: CO insurers stop selling child-only policies – blame health control bill:
“It’s strictly information-gathering, as far as I’m concerned — no hammers, no nails.”
— State of Colorado Insurance Commissioner Marcy Morrison on her meeting with insurance companies about their decision to stop selling child-only policies because of insurance price controls.
From the Friday September 17 Denver Business Journal:
Anthem Blue Cross and Blue Shield of Colorado, the state’s largest individual-market health-care provider, announced Friday that it will stop selling new child-only individual policies on Sept. 23 because of uncertainty created by new federal mandates.
The company becomes the sixth major insurer to confirm that it is pulling out of the child-only individual market in the past 2-1/2 weeks, including four of the state’s six largest individual insurance providers.
Colorado Insurance Commissioner Marcy Morrison has called a meeting of the state’s individual-market health insurers for Friday to address the number of companies that are dropping child-only individual policies rather than conforming to increased federal mandates on those plans. …
“It’s strictly information-gathering, as far as I’m concerned — no hammers, no nails,” Morrison said.
But when asked whether the state could do anything to require insurers to offer such policies — a question that Jo Donlin, director of external affairs for the Colorado Division of Insurance, answered early this month with a “no” — Morrison instead offered no comment.
“That’s the $64,000 question,” she said. “I just know I want to hear from them. I have no comment now on whether the state can do anything.”
“No hammers, no nails”?! Gosh, sure sounds like she has them with her and is prepared to use them.
As I’ve noted in “Get Ready for Health Insurance Slumlords,” if insurers are forced to sell the policies, they will design them to make them unappealing to those with pre-existing conditions anyway.
The Denver Business Journal reports:
At least five Colorado insurers will stop selling new individual health insurance policies for children by Oct. 1 because of soon-to-be-enacted federal mandates [from HR 3590 – BTS] requiring them to cover all applicants under age 19, including those with pre-existing medical conditions.
…this action by several major companies, including three of the top six providers of individual accident and health insurance in Colorado, portends what could be even more major changes coming from insurance companies because of the recently passed federal health care reform law. …
A few months ago I warned to Get Ready for Health Insurance Slumlords, as when insurers are forced to insure high-risk people at the same premiums as those with low risks, they respond by designing their products and services such that high-risk customers do not want them. Or they can stop selling the product, as is the case here.