States Provide ‘Inadequate’ Protections for People Who Purchase Non-Group Health Coverage, Families USA Study Finds

Most states do not provide adequate protection from unfair practices for consumers who purchase health insurance in the individual market, according to a report released on Thursday by Families USA, CQ HealthBeat reports. For the report, Families USA examined all 50 states and Washington, D.C., on 14 areas. The areas included whether consumers can obtain health insurance, with a focus on cases in which they have pre-existing medical conditions or a family history of health problems; the cost of coverage; whether health insurers can deny applicants because of pre-existing conditions; and the rights of consumers to appeal when health insurers revoke their coverage.

According to the report, most states allow health insurers to accept only the healthiest applicants, increase premiums based on the health status, limit coverage based on pre-existing medical conditions, and perform medical underwriting and revoke coverage after they issue policies. Among the states that received the highest scores were Connecticut, Washington state, New York, Oregon and New Hampshire, the report found (Parnass, CQ HealthBeat, 6/12). Lobbying efforts by health insurers have left "consumers with a patchwork of protections that are inadequate as a whole and that vary greatly from state to state," according to the report.

Ron Pollack, executive director of Families USA, said, "Very few states provide meaningful protection" (Dorschner, Miami Herald, 6/13). He said, "The individual health insurance market is still the wild, wild west for America's health care consumers," adding, "It is a market with many abuses and with far too few state-level consumer protections" (Rosetta, Salt Lake Tribune, 6/13). According to Pollack, in 2006, 27 million insured U.S. residents had individual health insurance, and the number likely will increase as more employers drop coverage for employees (CQ HealthBeat, 6/12).

Recommendations
Pollack recommended that the federal government "establish some meaningful protection" for consumers who purchase individual health insurance (Karash, Kansas City Star, 6/12). The federal government should mandate that health insurers cannot deny applicants because of pre-existing medical conditions and place limits on the amount of premiums retained by the companies, Pollack said (CongressDaily, 6/13).

In addition, he said that the health care proposal of presumptive Democratic presidential nominee Sen. Barack Obama (Ill.) would provide more protections for consumers than the plan of presumptive Republican nominee Sen. John McCain (Ariz.). Pollack said, "Sen. McCain's ideas, I'm sorry to say, would make a bad situation worse." Obama's health care proposal includes mandating that insurers offer policies to all applicants, essentially preventing insurers from denying coverage because of pre-existing conditions (Miami Herald, 6/13).

The report is available online.