Three Hospital-Owned HMOs Sue Indiana’s High-Risk Pool, Charging Unfair Assessments

Three hospital-owned HMOs in Indiana on July 2 filed a lawsuit against the state's health care plan for the uninsurable, claiming that "rising assessments on private [coverage] are unconstitutional and unfair," the Indianapolis Star reports (Swiatek, Indianapolis Star, 7/3). The "quasi-public" Indiana Comprehensive Health Insurance Association provides health insurance to state residents under age 65 who cannot purchase private insurance because of a pre-existing health condition such as AIDS or cancer (Kaiser Daily Health Policy Report, 5/09/01). The high-risk pool "seldom breaks even," and the state charges private health plans asessments to "make up the deficit," the Star reports. The plaintiffs, M-Plan, Advantage Health Plan and Partners National Health Plan, claim the program "puts them at a competitive disadvantage" compared with larger regional and national insurance companies, which "often have several lines of business and are able to fully offset their assessments." The suit, which alleges that the state "allocates a disproportionate after-tax share of (its) losses to HMO members compared with insurance carrier members," calls for the state to change the assessment formula and refund a portion of past assessments. The suit also seeks to put the plan's assessment revenues in escrow until the case is settled. "We're not asking them to close (the program) down. We're just saying, 'Make your assessment methodology more equitable," Alex Slabosky, president of M-Plan, said. The program's board of directors changed the assessment formula this year to include more self-funded private plans, but that change "won't solve the problems raised in the lawsuit," Slabosky added (Indianapolis Star, 7/3).