Health Insurers Concerned Over Many Elements Of Medicare Bills
While a House-Senate Conference Committee grapples with the challenge of putting together a consensus Medicare prescription drug benefit bill, health insurers are urging the conferees to keep an eye on the real-world marketplace.
While health insurers generally support efforts to create a Medicare prescription drug benefit, Larry Akey, a representative of the Health Insurance Association of America, tells National Underwriter many practical concerns exist over how the program is designed.
Looking first at the stand-alone prescription drug policy, which would be underwritten by private insurers, Akey notes that for the product to work, it must be large enough and have sufficient spread of risk to create a true insurance pool.
Under both the House and Senate bills, purchase of the drug benefit would be voluntary.
If the only people who purchase the prescription drug policy are those who have substantial prescription drug costs, Akey notes, the premium would be so high due to adverse selection that the policy would be unaffordable.
HIAAs biggest concern as the conference proceeds, Akey says, is to find ways to assure a large enough pool so the prescription drug policy would be a viable product.
If people can move in and out of the market without a significant penalty, he says, the program would look, not be a true insurance program.
Regarding the proposal to allow Medicare beneficiaries to receive services through preferred provider organizations, Akey says one of HIAAs major concerns involves the geographical areas that are contemplated under the program.
He notes the legislation establishes some 10 regions around the country, each encompassing three to five states, which PPOs would serve.
However, Akey says, the regions are too large. It will be difficult for some insurers to compete in these regions because they are not licensed in every state.
If the regions remain as they are, he says, only a limited number of insurance companies will be able to compete in the PPO program.
Another problem, Akey says, one that relates to both the prescription drug and PPOs programs, involves flexibility. The programs should be as flexible as possible, he says, so insurance companies can compete.
However, he says, the benefit designs under both programs are so so tight that there is no ability to innovate. This, Akey says, means there is less of an incentive for insurers to participate.
Finally, Akey says, insurance companies would like some assurance that there will be stability in the market.