For practitioners in large law firms, health insurance is provided by their workplace, and getting that coverage is pretty straightforward. They choose from a range of plans offered by their employer that fit their needs and family budget. And for the most part these plans include strong patient protections.
But for practitioners in smaller firms, or who buy insurance on their own, or who are uninsured, the insurance market is much more treacherous. Insurers usually charge a lot more — small employers pay an average of 18 percent more for coverage than their larger competitors — and plans come with more strings attached. Rates can jump by double digits without much warning. Finding and enrolling in coverage is often complicated and confusing. And in the individual market coverage can be denied based on a person’s health.
I am acutely aware of this situation because I manage a small, nonprofit law firm, the Pennsylvania Health Law Project (PHLP), and like other small businesses, we have seen our health insurance premiums rise by 40 percent in the past two years. That additional cost of health insurance far outstrips any growth in our employees’ wages. Moreover, PHLP’s field of expertise is providing advice and representation to low-income Pennsylvanians who have lost their health insurance and are delaying or forgoing needed health care (e.g., the 41,000 former enrollees of adultBasic who lost their medical coverage at the end of February). From both perspectives we believe the Affordable Care Act (ACA) creates an unprecedented opportunity to make insurance more affordable for families and businesses.
As state policy makers tackle implementing federal health reform, the number one concern is affordability.
Two pieces of legislation will provide much relief if passed by the Pennsylvania General Assembly. First, the Pennsylvania Department of Insurance needs authority to review health insurance premium rate increases on small businesses with 50 or fewer employees. Once passed, insurance companies that want to raise premiums for 2012 by more than 10 percent will have to publicly justify their rate hikes, and Pennsylvania will have the power to reject unjustified premium hikes.
Last month, the federal government gave Pennsylvania a financial boost when it awarded the insurance department a $4.3 million grant to contract with experts to review rate increases, train staff, buy technology to help it review rates and make more information on health insurance rate increase requests available on the Web. The grant is good news, but the legislation is essential. Rate review will shine a bright light on the industry’s behavior and drive market competition to lower costs.
Second, the General Assembly should move quickly to establish a state-based health insurance marketplace, or “exchange,” that will enable Pennsylvanians to purchase high-quality, affordable health coverage. Exchanges are places individuals and small businesses can shop for coverage and expect easy-to-understand information about insurance options. The key features of an exchange include:
• One-stop shop where you can easily see your private insurance options, compare prices and benefits, and pick the plan that’s right for you and your family.
• Conditions to ensure that insurers compete only on price and quality. Today, some insurance companies try to avoid enrolling sick people or skimp on care to keep their costs down. Exchanges will help prevent that from happening and be able to set standards for health plans on quality, coordination of care, and costs.
• A basic level of coverage. All plans sold in the marketplaces will offer a minimum package of benefits similar to those offered by employers today, so you can be confident the plan you buy will protect you if you get sick. And you will have the freedom to choose from a range of plans to find the one that includes your doctor and meets your needs. Once these reforms are fully in place, buying insurance will become much more like buying a home appliance or an airline ticket. The insurance customer — not the insurance company — will be in the driver’s seat.
Exchanges will initially serve individuals and small businesses. They will be the place (the only place) where people can purchase insurance with the tax credits that the ACA provides to make coverage affordable.
The ACA envisions that states will develop and run their own exchanges. To do so requires legal authorization for the exchange; establishing a governance structure; developing a budget and sustainability plan; and completing information technology systems design, development and implementation. If Pennsylvania does not implement its own exchange, or if it becomes apparent by January 2013 that the state has not made sufficient progress to operate an exchange, the federal government will set one up for that state.
Rather than defer to the federal government, Pennsylvania should operate its own exchange. There is a lot of flexibility in how Pennsylvania may design its exchange, and Pennsylvania faces different opportunities and challenges than other states (e.g., insurance carrier penetration, demographics, costs of health care delivery). Other states (e.g., Utah, Virginia, Minnesota and West Virginia) are already moving ahead and either already passed or are actively considering state controlled exchange legislation. Moreover, Pennsylvania should join dozens of other states that have applied and received federal funding to build the required infrastructure to establish state-operated health insurance exchanges.
The market reforms described above will give families and small businesses the clout they need to get a fair deal. We have a long way to go, and it will take time to make sure the insurance market works properly for families and small businesses. But for hundreds of thousands of Pennsylvanians those days are finally within sight.
Laval Miller-Wilson is the executive director of the Pennsylvania Health Law Project, a nonprofit law firm with offices across the state, which provides Pennsylvanians free advice and representation about publicly funded health care and long-term services. In addition to direct advocacy, PHLP works on health policy changes that promise the most to the Pennsylvanians in greatest need. Contact him at LMillerWilson@phlp.org.