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Survey: Many States Weak on Oversight of Individual Health Insurance

By Danielle Parnass, CQ Staff

June 12, 2008 -- Most states' oversight of health care provides little protection for consumers seeking coverage in the individual health insurance market, according to a recent 50-state survey by Families USA, a nonprofit health care advocacy group.

Speakers at a press conference Thursday at the National Press Club discussed inadequacies in the individual health care market and called for federal intervention to establish nationwide protections for consumers. That ability is currently under the jurisdiction of individual states.

Findings from the survey of all 50 states and the District of Columbia show that regulatory efforts in most states do not prohibit insurance companies from granting coverage to only the healthiest applicants, raising premiums based on health status, limiting coverage for pre-existing conditions and performing medical underwriting and revoking policies after coverage was already issued.

In 2006, 27 million people with health care coverage received it in the individual health insurance market. That number is growing each year as employer-sponsored insurance declines, said Ron Pollack, executive director of Families USA.

"The individual health insurance market is still the wild, wild west for America's health care consumers," Pollack said. "It is a market with many abuses and with far too few state-level consumer protections."

For each state, the survey examined 14 areas based on key questions such as: whether an individual can get coverage, especially if there's a family history of health problems or pre-existing conditions; how much would consumers have to pay for coverage; can insurance companies deny coverage for pre-existing problems; and what rights are there to appeal when coverage is revoked.

Daniel Smith, president of the American Cancer Society Cancer Action Network (ACS CAN), said the individual insurance market regularly fails people battling cancer and those with a history of cancer, both in gaining access to life-saving cancer screenings as well as treatment.

"There needs to be a floor set of standards that nobody can fall under," Pollack said, adding that these standards should be established nationwide and not based on one's state of residence.

The Health Insurance Portability and Accountability Act of 1996 provides protection for consumers who had coverage and then changed or lost their jobs. Pollack said there are still limitations to this law, such as in the areas of premiums and affordability.

Smith said it is not just about being covered, but about getting adequate standards. Those standards—availability, affordability, adequacy, and administrative simplicity—were part of a nationwide public education campaign that ACS and ACS CAN began last fall.

Connecticut Attorney General Richard Blumenthal, who joined Thursday's press conference by phone, said he has "zero tolerance for health insurance abuses" and has worked closely with health care advocates against it.

Connecticut is one of the few states that received the most number of full and partial credit scores for various categories on the survey's scorecard, including coverage revocation, affordable coverage alternatives for uninsurables, advance review of proposed premium rates, and objective standards to define pre-existing conditions. Other states with high scores include Washington, New York, Oregon, and New Hampshire.

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