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Health Insurers Offer to Accept All Applicants, on Condition
By Robert Pear, The New York Times
November 19, 2008
The health insurance industry said Wednesday that it would support a health care overhaul requiring insurers to accept all customers, regardless of illness or disability. But in return, the industry said, Congress should require all Americans to have coverage.
The proposals, put forward by the insurers’ two main trade associations, have the potential to reshape and advance the debate over universal health insurance just as President-elect Barack Obama prepares to take office.
In separate actions, the two trade groups, America’s Health Insurance Plans and the Blue Cross and Blue Shield Association, announced their support for guaranteed coverage for people with pre-existing medical conditions, in conjunction with an enforceable mandate for individual coverage.
In the absence of such a mandate, insurers said, many people will wait until they become sick before they buy insurance.
Members of Congress said Wednesday that they wanted to pass legislation next year, as proposed by Mr. Obama, to expand coverage and rein in health care costs.
The new position taken by the insurance industry — the industry that helped sink President Bill Clinton’s plan for universal health coverage in 1994 — could ease the way for passage of such legislation.
But the industry’s position differs from that of Mr. Obama in one significant respect. Insurers want the government to require everyone to have and maintain insurance. By contrast, Mr. Obama would, at least initially, apply the requirement only to children.
In the race for the Democratic presidential nomination, that was a major point of contention between Mr. Obama and Senator Hillary Rodham Clinton of New York. Mrs. Clinton said that everyone should be required to have coverage. Mr. Obama said he wanted to be certain that insurance was affordable and available to all before considering such a broad requirement.
Asked on Wednesday for reaction to the insurance industry’s proposals, Tommy Vietor, a spokesman for the Obama transition team, said, “We are declining comment.” Mr. Vietor cited Mr. Obama’s view that “we have only one president at a time.”
In many cases, people with cancer, diabetes, traumatic brain injuries or other serious afflictions have found that they cannot obtain health insurance at any price.
Research suggests that some insurers turn down 10 percent or more of applicants for individual coverage because of their pre-existing medical conditions.
Donald G. Hamm Jr., president of Assurant Health, explained why the industry thought an individual mandate must be coupled with any ban on such underwriting practices.
“In the individual market, people can choose whether or not to apply for coverage,” Mr. Hamm said in an interview. “If they know they can obtain coverage at any time, many will wait until they get sick to apply for it. That increases the price for everyone.”
Insurers say that is just what happened in several states that prohibited insurers from turning down applicants on the basis of their health status.
The new policy statements are silent on two important issues: how to enforce an individual mandate and how to regulate insurance prices, or premiums.
While insurers would be required to sell insurance to any applicant, nothing would guarantee that consumers could afford it. Rate regulation promises to be a highly contentious issue, since it pits the financial interests of insurers against those of consumers.
At present, insurance premiums are generally regulated by the states and often vary according to a person’s age, sex, medical history and place of residence within a state. In the individual market in most states, a person with a history of serious or chronic illness can be charged much more than a healthy person of the same age and sex.
Mr. Hamm, a member of the board of America’s Health Insurance Plans, said the group might offer recommendations to define “a fair and appropriate rating structure.”
Alissa Fox, a vice president of the Blue Cross and Blue Shield Association, said the individual mandate was an indispensable corollary of any approach forbidding insurers to reject applicants because of health status.
“Insurance works best when everyone is in the pool,” Ms. Fox said. “You need healthy people in the insurance pool to help pay for sicker individuals who are much more motivated to buy coverage.”
Insurers did not say how the government should enforce an individual mandate: whether through fines, tax penalties or other means. Politicians have also been reluctant to specify details of enforcement, which could prove highly unpopular.
Setting aside such thorny issues, seven senators responsible for health legislation met Wednesday and promised to work together. Those participating were Senators Max Baucus of Montana, Christopher J. Dodd of Connecticut, Edward M. Kennedy of Massachusetts and John D. Rockefeller IV of West Virginia, all Democrats, and Michael B. Enzi of Wyoming, Charles E. Grassley of Iowa and Orrin G. Hatch of Utah, Republicans.
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