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.
It will take both time and money to develop products under both programs, he says, and insurance companies need some level of confidence that Congress will not tinker with them willy-nilly.
Insurers, Akey says, would like to be assured that they can count on the program remaining stable for at least three to four years.
In other news, legislation backed by the insurance industry to reauthorize the Fair Credit Reporting Act is advancing with the introduction of bipartisan legislation and the strong support of the Bush administration.
FCRA establishes national standards on the extension of credit, including how credit information is shared among financial institutions. State laws inconsistent with FCRAs standards are preempted.
However, FCRA is due to expire at the end of the year.
Jack Dolan, a spokesman for the American Council of Life Insurers, Washington, says FCRA helps make life insurance products more accessible and affordable.
He adds that the uniformity established by FCRA is an important factor that drives down costs for consumers.
A bipartisan group in the House introduced legislation, H.R. 2622, that would permanently reauthorize FCRA as well as add new consumer protections aimed at preventing identity theft and making it easier for individuals to correct disputed information.
The bill is sponsored by Reps. Spencer Bachus, R-Ala.; Darlene Hooley, D-Ore.; Judy Biggert, R-Ill.; and Dennis Moore, D-Kan.
In endorsing FCRA reauthorization, Treasury Secretary John W. Snow says the availability of credit fostered by the act has major economic implications.
“The availability of credit improves peoples lives greatly and gives them a degree of economic freedom that is otherwise unimaginable,” Snow says in a statement.
“Because of these credit products, Americans have an unprecedented level of economic freedom and that freedom–the ready availability of credit–depends on businesss instant nationwide access to accurate, reliable consumer information,” he says.
The national uniform standards in FCRA, Snow says, essentially makes the reputation a consumer has as a borrower portable, so that he or she does not have to start from scratch in every city.
“Secure, reliable information is the lifeblood of all financial services, among which consumer credit is fundamental,” Snow says.
Bachus, the lead sponsor of H.R. 2622 and chairman of House Financial Services Committees Subcommittee on Financial Institutions, says he hopes to move the bill through his subcommittee this month.
Reproduced from National Underwriter Edition, July 7, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.