Insurer sees guaranteed health coverage without mandate

It could be in the fight over one particularly vexing aspect of the health care debate that the children will lead the parties to a resolution. Or more precisely, children’s health insurance.

Using some lessons drawn from that insurance arena, along with what he learned from providing insurance to the self-employed, the head of Rocky Mountain Health Plans said it might be possible to offer guaranteed-issue insurance without an individual mandate.

Those terms are the hot-button issue of the health care debate, and both are addressed in President Barack Obama’s health care legislation, the Affordable Care and Patient Protection Act.

Supporters and opponents have claimed court victories in litigation about the constitutionality of the provision that requires all Americans to buy insurance: the individual mandate. That part of the legislation appears bound for the U.S. Supreme Court.

Less controversial is the requirement that insurers provide coverage to anyone who asks, or what’s called guaranteed issue.

The two elements are linked because many observers contend the individual mandate is necessary to pay for the costs of guaranteed issue.

It might be possible, though, to separate the two, said Steve ErkenBrack, president and CEO of Grand Junction-based Rocky Mountain Health Plans.

“The conventional wisdom is if you’re going to have guaranteed-issue, you need the individual mandate,” ErkenBrack said.

Two experiences made him wonder whether the link might not be as strong as assumed, ErkenBrack said.

The first was Rocky Mountain Health Plans’ experience with what is known in Colorado as “business group of one,”  intended to allow sole-proprietorships access to insurance along with small businesses.

The problem was the same as with individuals, ErkenBrack said. There was nothing preventing a sole proprietorship from purchasing insurance just as the sole proprietor was in need of coverage. Establishing waiting periods to encourage sole proprietorships to buy coverage in advance, rather than at the operating-room door, seemed to help, ErkenBrack said.

Next was the requirement from the U.S. Department of Health and Human Services of guaranteed issue for children. Insurers of individuals and families had to cover any children who sought coverage, and the upshot was many carriers simply dropped those policies, ErkenBrack said.

Rocky Mountain Health Plans opted to try it, with some new wrinkles, he said.

Officials hoped that waiting periods to discourage opportunistic purchases of coverage, plus lower premiums the sooner children were enrolled, would encourage parents to sign up early.

“Actually, it worked,” ErkenBrack said.

The experience made him think that similar approaches to health insurance for adults — especially those in the 23–34 age range in which so many go uninsured — might work.

The ideas aren’t without precedent. Life insurers, for instance, offer lower rates the earlier people buy coverage.

“You have to be willing to have some consequences,” ErkenBrack acknowledged. Buyers have to be told, “If you don’t buy health insurance now, you won’t get the same deal six months from now.”

Consumers also have to understand they can’t simply shift their health care costs “to an amorphous entity,” ErkenBrack said. “If costs get shifted, they get shifted to your neighbors. We have to do this in a way that treats everybody fairly.”


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