Health Coverage Bills: Little Aid for Uninsured

The spate of recently enacted managed care bills is cause for celebration in some quarters, dismay in others. Here’s a look at how some of these measures will affect the estimated 1.5 million managed care health plan members in Orange County.

The most widely heralded legislation, SB 21, allows members to sue plans for damages if they experience substantial harm from denied or delayed treatment. The threat of lawsuits could influence HMOs to practice “defensive medicine” and become more lenient about treatment authorizations. After Texas passed similar legislation, PacifiCare’s medical expenses in that state rose about 6%. Large numbers of suits and big settlements could drive some plans out of the California market.

Health plan members will face fewer restrictions on obtaining highly specialized care and greater access to many treatments now considered experimental. AB 12 allows patients to obtain a second medical opinion regarding a proposed treatment at the health plan’s expense. SB 59 requires health plans to provide more information to patients about treatment decisions and in a more timely manner.

Under AB 55, health plan members can appeal denials of treatment requests to an independent review body, with all costs paid by the health plan. The independent review process, if implemented effectively, could forestall the threat of lawsuits and limit large punitive damage awards and attorneys’ fees. However, if review findings are deemed admissible in subsequent legal actions, the independence of the review process will be severely constrained.

Mental health advocates rejoiced when Gov. Davis signed AB 88. This bill requires all state-regulated health insurers to cover nine of the most serious mental illnesses--schizophrenia, major depression, bipolar affective disorder (also known as manic-depressive illness), panic disorder, schizoaffective disorder, obsessive-compulsive disorder, pervasive developmental disorder (or autism), anorexia and bulimia--as well as any children’s emotional disorder. These illnesses are serious, long-term, chronic and can be extremely expensive to treat. There is also considerable debate among respected clinical experts about the most effective treatments for a number of them. The broad mandate for children’s mental health coverage may encourage inappropriate medical treatment for many conditions that are commonly regarded as behavioral problems.

Health plan members and group disability policyholders, as well as employees covered under self-insured benefit plans in some cases, will now be guaranteed coverage that many HMOs already provide. These include breast cancer screening, diagnosis and treatment (SB 5); all “generally medically accepted” cancer screening tests (SB 205); contraceptive drugs and devices (AB 39, SB 41); diabetes treatment and management (SB 64); hospice care consistent with Medicare and MediCal benefits (AB 892); and testing and treatment of phenylketonuria (PKU), a rare metabolic disorder that is deadly if not diagnosed and treated in infancy (SB 148).

Insurers not already providing these benefits will incur additional medical expenses. They may also experience increased adverse selection if sicker patients choose them instead of HMOs when they also offer these expanded benefits.

To summarize, the recent HMO reforms are good news for people who already enjoy health insurance coverage and health plan membership. They provide greater access and more benefits--if not Cadillac-style, at least a well-equipped Buick type of coverage--for people already riding in comfort who are cushioned from the impact of premium increases because few pay directly for their health insurance coverage.

The bad news is that health insurance premiums, which have just begun to rise again after several years of stability, will likely increase more as a result of expanded legal redress, easier access to treatment, and a plethora of newly mandated benefits.

The really bad news is that California’s large uninsured population--7 million statewide, including at least 500,000 in Orange County--will grow as a result of premium price hikes.

Most employers, especially in good economic times, will absorb a premium increase or pass only a portion of it to their employees. But some employers who are not enjoying much prosperity may drop health insurance coverage entirely, or shift the entire premium increase to their workers. And some of those workers will find health insurance unaffordable for themselves or their family members.

Small businesses, in particular, will be even more reluctant to purchase health insurance for their workers when premium costs start to cycle upward again.

So while currently insured health plan members coast along the health care highway in their now more “fully loaded” health plans, a growing number of uninsured Californians will continue walking--many limping--along the rough and rocky road of no coverage.

Unfortunately, these new reforms make it even more difficult now for insurers to market less expensive insurance products for businesses and individuals that can only afford Volkswagens.

The real health care reform challenge lies ahead: to find ways to extend affordable health care coverage to uninsured Californians.