California wants to take on the largely unregulated individual health insurance market — a system within which insurance companies impose waiting periods for pre-existing conditions, offer less comprehensive benefits than employer-based coverage, charge higher premiums and deductibles, successfully exclude high-risk individuals form coverage, charge higher rates to higher-risk patients, offer a limited range of benefits, and spend a relatively small proportion of premiums on actual medical care.
California is proposing new rules to regulate the ‘wild-west’ environment that is the individual health insurance market:
– The new rules “would set a maximum amount patients would have to pay each year toward their bills” and “restrict insurers’ ability to cancel policies retroactively.”
– Another proposal would “limit cancellations to the first 18 months of coverage and require insurers to obtain approval from regulators before revoking a policy.”
– Schwarzenegger would have “independent arbitrators decide whether an insurer could cancel a policy.”
– State regulators “would sort policies into categories based on the benefits they offer and establish minimum benefits for each category. Presumably, that would allow consumers to compare what competing companies offer.”
– Insurers may be “be required to spend at least 85% of the premiums they collect on medical care, limiting the amount they keep as profit and for administrative expenses.”
The new rules come out of necessity, not regulatory zeal. Nationally, 89% of applicants are unable to find an individual health care plan that meets their needs.
The new rules would provide patients “with preexisting conditions and other medical problems” greater “access to quality, affordable health care” and begin to establish the individual market place as a viable source of insurance for the millions of Americans who are currently denied coverage.