5 hot battles over the PPACA-free zone

In practice, insurers and state regulators have clashed with federal regulators over the need to squeeze all of the information required on four 8.5-inch by 11.5-inch sheets of paper. Insurers, consumer groups and regulators have also clashed over matters such as which typical health care use scenarios should be included in the standard examples of how a plan might work, and how much information an SBC should provide concerning how a plan handles certain types of patients, such as children, or patients with severe health problems.

Goff has objected to the idea of requiring accident and sickness product providers to produce SBCs for their products.

“This would create more, not less, confusion on the part of consumers as to the distinctions between supplemental and voluntary coverage products from major medical products,” Goff writes.

Consumers simply need a notice to make sure they understand that the supplemental product they are buying cannot help them meet the PPACA individual coverage mandate, Goff says.

See also: Reality collides with PPACA benefits summary length limit

4. 22 NAIC consumer reps: Why do model law and model regulation continue to allow the sale of specified disease insurance?

Ten years ago, consumer groups often opposed the sale of cancer insurance policies, hospital indemnity policies and other supplemental policies, arguing that the benefits those policies provided were too small compared with the premiums for the products, and that consumers would be better off buying better major medical policies.

PPACA seemed to create more need for “gap filler” products, by encouraging insurers to sell moderate-income consumers bronze-level policies with single deductibles over $6,000 and family deductibles over $12,000.

Twenty-one of the people the NAIC has designated to represent consumers in official NAIC proceedings say, in response to the new model revision drafts, that they would like state insurance regulators to look closely at products such as specified disease policies, which are now more commonly known as critical illness insurance products, to see if they should continue to be on the market.

“Given that individuals, at least in theory, now have access to comprehensive insurance coverage, we believe that a rationale must be presented for the continued need for these products,” 21 consumer reps write in a joint letter. “If they are in fact still necessary to supplement existing comprehensive health insurance coverage, the model law and regulation should ensure that they are designed to serve this purpose.”

The 21 consumer reps say the NAIC should conduct a thorough fact-gathering hearing — to fully understand the nature of critical illness insurance products and how they are being marketed — before they revise the models.

The reps say the NAIC should look at critical illness insurance loss ratios, lapse rates, and commissions.

A 22nd rep, Jackson Williams, has written separately to say he thinks “critical illness products are retrograde” and exploit consumers’ overestimation of their risk of suffering from catastrophic illness.

“To my knowledge, the only people who think that high deductibles are primarily a problem for those with catastrophic illness are the benefits sales force,” Williams writes. “Within the health policy community, it is felt that the most significant problems with high deductibles are financial distress from more common minor acute episodes and inhibiting enrollees with chronic illness from spending (e.g., on maintenance drugs, primary care and the like) to manage their condition. To purchase CI to cover a deductible for a catastrophic illness is to insure against one remote, contingent event — high expenses from an acute illness — by layering over it a bet on another remote and even less likely event, affliction with one of the serious illnesses specified in the policy. This doubles down the consumer’s dollars on a long shot rather than hedging for the far more likely need to pay for immediate expenses.”

See also: 2016 outlook: Health products other than major medical 

5. Missouri: What about group supplemental products?

Molly White, a Missouri regulator, has written to say the accident and sickness product trend she has noticed is a “healthy proliferation of group limited accident/sickness, etc., type plans in [Missouri], which I think is spurred by those crazy federal regulations for group ‘wrap around’ plans.“

She notes that the current accident and sickness model revision drafts would exclude those types of group products. She wonders what models might apply to the new products that have been spawned by the limited wraparound product regulations. 

See also:

Feds post final limited wraparound regs

PPACA-free zone: Limited wraparound plan comments

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