Conservative health care plans push Americans to buy health insurance in the individual market, outside of the employer-based system. Citing the rising costs of health care, conservatives argue that consumers can find cheaper plans and exercise greater control over their health care decisions if they go out and buy their own insurance.
But their rhetoric of “freedom” and “choice” obscures the dangers and shortcomings of the individual insurance market. “While employers are guaranteed the right to purchase health insurance,” the great majority of states — which govern the individual insurance market place — do not extend the same protections to Americans who buy individual insurance policies.
In fact, according to pre-released copy of a study by Families USA, acquired by the Wonk Room, in most states “insurers can refuse to sell individuals policies based on their health, recreational activities, occupations, credit histories, and a variety of other factors” — and state governments do little to stop them:
[States] are doing very little to provide basic protections for health care consumers. As a result, many consumers are turned down from coverage or are charged unaffordable premiums or have their health claims wrongfully denied.
Indeed, the study found that “only five states prohibit all insurance companies from cherry-picking the healthiest consumers and excluding everyone else” and gave the majority of states a “failing grade in consumer insurance protection”:
- 35 states: have “no limits on how much insurers can increase premiums based on an individual’s health status.”
- 21 states: “exclude coverage for pre-existing conditions for more than one year.”
- 44 states: allow insurers to “revoke an individual’s health insurance policy without advance review by the state.”
- 20 states: do not approve premium rates before they go into effect.
- 29 states: do not require insurers to complete all medical underwriting and resolve all questions at the time of application.
As Families USA points out, “the last thing the health care system needs is a new wild west mentality…with little or no protection or oversight”:
Without adequate protections, insurers can deny coverage, charge exorbitant premiums, and even revoke people’s policies without warning.
Conservative reform initiatives would provide consumers with even less protections. By deregulating the insurance industry and allowing individuals to purchase insurance policies across state lines, without requiring insurance companies to comply with the consumer protection laws of the state, companies would offer cheaper plans to healthier Americans, while charging higher premiums — or not offering any coverage — to the sickest Americans.