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June 22, 2008

It's 'buyer beware' in California individual health insurance market

More than 2 million Californians purchase their own medical coverage – a number that's growing as fewer employers offer group coverage.

Thwarted in their efforts to overhaul the state's health care system, consumer advocates are now concentrating their efforts instead on tightening regulation of that market.

Unlike the heavily regulated group insurance market, advocates say the California individual insurance market is rife with "junk insurance" policies that provide minimum benefits, such as hospital-only coverage, and don't set limits on out-of-pocket expenses.

Advocates say it's often impossible to determine what a plan does or doesn't cover, and some consumers – like Mary McCurnin and Ron Bednar of Rancho Cordova – find out too late after they run up thousands of dollars in medical costs.

Sen. Darrell Steinberg's Senate Bill 1522, which is sponsored by the consumer advocacy coalition Health Access California, would standardize the individual insurance market and limit out-of-pocket expenses.

California health plans would be split into five tiers to allow consumers to compare prices and better understand what they were buying.

"Consumers have the right to basic information about what they're buying," said Steinberg, D-Sacramento. "This bill is all about transparency, about ensuring that so-called junk insurance is no longer a part of the market."

SB 1522 is one of more than a dozen Democratic bills targeting the insurance industry that are moving through the Legislature.

Other bills would block insurers from canceling policies of patients needing costly care and would require insurers to spend at least 85 percent of their earnings on California medical care.

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Posted by healthinsurance at June 22, 2008 04:27 PM