Insurers Seek Bigger Reach in Coverage


Acknowledging that too many people simply cannot obtain health insurance on their own, the insurance industry plans on Wednesday to propose a series of steps the companies say would let more individuals, even those who have health problems, obtain coverage.

The proposals, approved by a board of the industry’s main trade group, would make it harder for insurers to cancel policies or deny coverage to people with pre-existing medical conditions. The steps would also limit the premiums that could be charged for such people. The trade group also called on states to provide individual coverage for people who were likely to incur very high medical bills.

The effort is meant to help address the problem of 47 million Americans without health coverage. And it signals a willingness by insurers to abandon practices that have seemed aimed at excluding all but the healthiest individuals.

“We are taking responsibility for ensuring that no one falls through the cracks,� said Karen Ignagni, the chief executive of the trade group, America’s Health Insurance Plans, which is based in Washington. While the group is proposing that the states cover the most costly individuals, private insurers would offer policies to everyone else. “We are providing essentially a coverage safety net,� she said.

It is far from certain whether any of the specific proposals will be enacted or states will finance the cost of broader coverage. But the industry’s position indicates a willingness to move toward a system in which everyone can find coverage.

“The individual market is recognizing that we need to improve the way we do business today,� said Don Hamm, the chief executive of Assurant Health, a Milwaukee insurer, who was among the executives who drafted the proposals.

The industry’s announcement comes at a time when dozens of states are already considering some kind of health reform and insurers are increasingly being vilified by the Democratic presidential candidates. This month, former Senator John Edwards pledged to take on the insurance companies, saying “the American health care system is broken because wealthy insurance corporations and their lobbyists have rigged the system against the American people.�

Much of the discussion has also focused on whether insurers should be forced to cover anyone who applies, which is a requirement in only a handful of states. The industry is also pledging to address criticism that some insurers have inappropriately canceled policies, by proposing that decisions to rescind coverage be subject to third-party review.

“The health insurance is coming to grips with the fact that practices that are clearly driven by market forces are giving the industry a black eye,� said Paul B. Ginsburg, the president of the Center for Studying Health System Change, a Washington research group.

But the industry is also trying to have a greater say in any state changes that may be enacted. Many insurers chafe, for instance, over what they consider an overly regulated approach in Massachusetts, which has created an agency to oversee the market for individual insurers as part of a new law requiring everyone to buy coverage.

“This is advice to the states on how they can create functioning and viable marketplaces,� said George C. Halvorson, the chief executive of Kaiser Permanente, the California insurer, who chairs the trade group.

Insurance executives acknowledge that these proposals are only part of the changes necessary in health care. But they say the suggested steps are a way in which states and private insurers can work together to provide coverage in which insurers try to address shortcomings of the individual market.

“This is a far-reaching proposal that responds to the concerns that people have appropriately raised,� said Jay M. Gellert, the chief executive officer of Health Net, a California insurer, another executive involved in the proposals.

As long as the group of people covered was large enough, private insurers could make the market work, he said. “If a state or the government is committed to universal participation, you can have a viable market and take all comers.�

How many people would be able to obtain coverage under these proposals was unknown. Currently, about 11 percent of all individuals who apply for coverage are not offered a policy after the insurers review their medical conditions, according to a new survey of the trade group’s members that is also to be released Wednesday. And nearly 30 percent of individuals who are in their 60s but too young for Medicare are denied coverage.

To extend coverage to high-risk people with expensive medical problems, or likely to incur them, would cost money, and states might not go along. In states that already have programs for high-risk individuals, significant numbers of people still do not obtain coverage because the premiums are high.

“Few states are willing to come up with the money to subsidize them so they can cover enough people,� Mr. Ginsburg said.

In fact, only about 180,000 people around the country were covered by existing high-risk pools, said Katherine Swartz, a Harvard professor who studies health insurance issues.

The new proposals call for states to provide affordable coverage to anyone whose medical costs are expected to be at least twice the average. For other higher-risk patients who do not meet those criteria, the insurers would agree to cap the premiums at 150 percent of the market rate.

The insurance executives say that the proposals represent a real avenue to overhauling health coverage.

“I have optimism that the states and the country will step up to the issue,� said Ronald A. Williams, the chief executive of Aetna, a large insurer in Hartford.

The trade association declined to provide any estimates for the cost of its proposals. But executives argued that this approach was not so ambitious as to make it out of reach. “It won’t break the bank,� said Mr. Gellert.

The insurance industry has backed health care change before. Insurers were at first supportive of the initiatives of President Bill Clinton in the mid-1990s, until they felt threatened and unleashed the memorable “Harry and Louise� advertising campaign that helped derail the effort.

But Ms. Ignagni said her group was ready to push for change. “What’s different than in 1992 is we as an industry did not have a proposal of our own,� she said. “We were reactive to others’ proposals.�
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