California Draws State Line At Health Care Insurance
LIANE HANSEN, host:
This is WEEKEND EDITION from NPR News. I'm Liane Hansen.
The passage of the much-debated health care overhaul bill is very much up in the air and congressional leaders are trying to figure out what to do next. But one good compromise issue popular among Republicans is likely to remain in whatever bill goes forward. The proposal would allow insurers to sell some health insurance policies to individuals across state lines for the first time.
But in states like California that aggressively regulate the industry there is cause for concern. From member station KQED in San Francisco, Sarah Varney reports.
SARAH VARNEY: Today, if an insurance company wants to sell a non-group policy in California it has to meet a long list of requirements. Any plan that offers prescription jobs, for example, must include contraceptive coverage. Insurers must pay for osteoporosis screening, HIV testing and reconstructive surgery after a mastectomy.
Congresswoman Jackie Speier, a Silicon Valley Democrat, wrote many of those laws when she was a state legislator. She says the proposal in Congress would allow insurance companies to sell plans from states with weak regulation and sidestep California's rules. She points to when credit card companies moved to South Dakota where the rules were lax.
Representative JACKIE SPEIER (Democrat, California): Because then the laws, the codas were determining their activities in other states. It is a race to the bottom.
VARNEY: Speier says California laws have managed to reign in the insurance industry and protect consumers. And she's unswayed by explicit language in the congressional designed to uphold those standards.
Rep. SPEIER: Health insurance is all about providing a service but making the highest profit.
VARNEY: Under the Senate bill, insurers selling interstate plans would still have to follow consumer protection standards. For example, a Californian buying an out-of-state policy would still have the right to dispute claims through independent medical review. And the interstate policies would have to meet new federal standards by including so-called essential health benefits - emergency and lab services, maternity and pediatric care, mental health treatment, wellness benefits and prescription drugs, among others.
Mr. J.P. WEISKI(ph): I don't think consumers that see any significant differences on a broad category level between the policies sold, say, from Arizona and a policy from California if they purchase one or the other.
VARNEY: J.P. Weiski represents companies that sell health insurance to individuals.
Mr. WEISKI: Where you would see some differences is in specific mandated benefits. You know, sorts of things like contraceptive mandates. The interstate plans would likely offer fewer guaranteed health care services for residents in tightly regulated states like California and Massachusetts.
But Americans living in more laissez-faire states would see the list of covered benefits expand. Ed Kaplan is an underwriting expert at the Segal Company, a national benefits consulting firm.
Mr. ED KAPLAN (Underwriting Expert, Segal Company): If you happen to be in a state where it's a little bit lax, you may have to improve some of their benefits to meet the federal coverage requirements.
VARNEY: The insurance industry and many small employers contend the provision would lead to greater competition and possibly lower rates. Industry spokesman Weiski.
Mr. WEISKI: And it's less of an issue for a state like California where it has some pretty robust competition. But if you're looking in a state like North Dakota and South Dakota, Montana, where the populations are relatively small, they have a hard time attracting carriers into that state. If you drop the barriers to entry, some companies may go in and start selling and trying to compete with the Blue Cross/Blue Shields in those states.
VARNEY: Even if the provision stays in the current House and Senate bills, out-of-state insurers face major hurdles before they could sell individual policies across state lines. The big one: State legislatures would have to approve reciprocal agreements with other states before any interstate policies would be allowed.
For NPR News, I'm Sarah Varney.
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