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Kansas health insurance law, a proposal
2003-08-05 12:46:22
Below is a proposal regarding health insurance law and policy which I
recently sent to the Governor and Insurance Commissioner of my home state (Kansas). It may be generalizable to other states. It may also be pure drivel. (Insurance really isn't my field). Contact information and some personal information in the original letter has been omitted. I'm interested in comments. ***** Dear Governor Sebelius and Commissioner Prager: Although I'm writing this letter much too late for it to be of any help in resolving my family's situation, I have been impressed for many years by the irrationality of the health insurance system that has evolved in this country. What sound reasons are there for making health insurance, and, hence, health care, an employment perc the availability of which depends on the size and willingness of one's employer? The underlying question I have is, what sound PUBLIC POLICY reason is there that organizations that are not in any way related to employment shouldn't be able to contract with insurance companies to offer group health insurance to their members? Why shouldn't my credit union, for instance, or the credit union service entity to which it belongs, be able to do this? Or, on a broader scale, why is the allowance for organizations to contract for group health insurance for their members and employees (K.S.A. 40-2209(f)(5)) limited to organizations organized for purposes other than that of obtaining insurance? (This limitation in practice limits the provision almost exclusively to employment-related professional organizations). Honorable Governor, I realize that you favor a larger role of government in providing health care. You have made no secret of this. In the absence of the budget crisis, I'd agree with you. However, there is simply no way you are going to accomplish, in the middle of a budget crisis, a health care reform that requires more tax dollars to be spent on health care. I propose opening up group health insurance, with composite ratings, to non-employment-related groups, as one way to make coverage more affordable for those of us who are not employees of large employers or employed in unionized sectors of the economy. I recognize the history of this field. I am aware that, in this country, health insurance grew up as a perc, something employers offered to attract and keep some of their better-paid employees. It spread from there to encompass larger classes of employees at about the same time that (largely under pressure from insurance companies and governments for "financial accountability" -- i.e., no one but the very poor getting services cheaper than they did) health care gradually ceased to be a charitable endeavor and became almost entirely a profit-minded business. But this whole sequence of events was an historical accident, not driven by any overall reasoned public policy. That the present inequitable system is the result of a pure accident is demonstrated by the fact that NO OTHER COUNTRY ON EARTH has developed anything like it. I realize also that there is a historical, legal argument about "insurable interests" that becomes involved in this question. But, I ask, does the whole concept of "insurable interest" properly have any place in discussions of health care coverage? Granted, a stranger shouldn't be allowed to gamble on my life by buying a life insurance policy on me, or on my house by obtaining fire insurance on it. Such arrangements invite fraud. But how is the likelihood of fraud increased if a legal "stranger" (like my credit union, or an insurance buying club of whih I am a member) is permitted to procure group health insurance for me? The only people who make any monetary profit" on health insurance policies are patients (who don't have to pay full price for insured treatment), medical care providers and the insurance companies themselves. A third-party organization which, in a formal sense, is allowed to purchase group insurance for its members will never receive any payments for their illnesses. The potential vice involved in "gambling" insurance contracts simply isn't found in the health insurance field. You are familiar with the insurance industry and insurance laws of this state. In general, as you know, there are only two kinds of health insurance -- employment-based group plans and individual (and individually-rated) policies. (See the summary of Kansas health insurance statutes on this point in Appendix #2 to this letter). Yes, there are a few apparent exceptions--fraternal benefit society lodges and the (undoubtedly very rarely used) allowance for creditors to require ALL of their debtors to obtain health insurance from them. But even the definitions of these exceptions show that an "insurable interest" analysis is in use and prove the point that this "insurable interest" analysis is being used not to guard against fraud but to insure that powerful interest groups keep their percs. (Heaven forbid that anyone outside these groups should be able to afford care in a really serious situation without proving their abject poverty and abjuring all worldly wealth!) A true fraternity, for instance (and, oh yes, it must be a lodge with a ritual!), has been recognized as having a limited insurable interest in its members (although any health benefits MUST be secondary to life insurance). And the creditor obviously has an interest in seeing that payments continue to come in on schedule from its debtors, uninterrupted by unplanned medical expenses. Outside of these very limited exceptions, only the insured or some employment-related group (employer, employer-created trust, contractual multi-employer group or labor union) is recognized as having an insurable interest in a person's health. The probelm is that this analysis has led to very inequitable results. Only wealthy people and young people who have never been anything but perfectly healthy can afford individually-rated policies. Moreover, as things have developed, only people who are employed by large employers, are employed in industries compatible with the formation of multi-employer insurance groups or are members of large unions can generally afford group plans. While Kansas law requires health insurers who do business in this state to write "small-employer group" policies, this provision became a joke within a few years after it was written. Since small-employer groups are rated based only upon the health experience of the relatively few (no more than 50) members of the group, even one sick employee makes the plan unaffordable for everyone. (I know this from personal experience). Theoretically, at least, multi-employer trusts would provide an alternative to this. But such trusts seldom, if ever, arise in non-unionized industries for the simple reason that forming one requires many small businesses to cooperate with their competitors in forming one. In some industries, such as private law firms (my field), such cooperation between competing firms might even be considered unethical. Thus, we have a very inequitable system that evolved by historial accident and is supported by no disernible public policy except the protection of the political pressure groups that benefit from the status quo. Change certainly appears needed. I also recognize that any attempt to change the present system will be greeted with advertising campaigns accusing the person who has the gall to attempt that change of being an "ENEMY OF FREE ENTERPRISE!!!" But the insurance market is not an example of free enterprise to begin with. It is very tightly regulated. Insurers can only offer those products state law permits them to offer. My proposal would actually make the enterprise of health insurance freer, by allowing insurers to offer group health insurance to the members of groups not presently permitted to procure such insurance for their members. I urge you to consider presenting my proposal to the next Legislature. Ian Johnson [contact information omitted] URL of my resumé: http://www.christian-oneness.org/authors/ ******** Appendix #1-- my family's situation. When I was first hired by my present employer in 1991, they had a very nice, affordable group health insurance plan, of which I became a member with my family. Over about a year and a half period in approximately 1995, there was a series of four premium increases. After the last of these, the family portion of the premium (my employer paid my individual premium) went past $750 per month, which was then nearly half of my take-home pay. We had to drop the family coverage. In 2001 the employer-paid individual coverage also disappeared. By that time, most of the support staff had spouses employed by large employers and did not need the coverage. I was left alone with the firm's two partners in the "group." But, as my employers disovered to their chagrin, they could not simply pay for my individual continuation coverage. They could only pay if they had a "small employer group." Since then, we have faced paying for treatment [of my children, for several serious conditions], a good part of this being financed using credit cards. Now, my wife has been diagnosed with [a serious but expensively treatable condition], and we don't even have enough credit to pay for the nearly 100% effective treatment... We both work, and make just a *little* too much to qualify for any charitable programs (we've looked into all of them, I think). I'm not sure at this point how we're going to finance going on from here... URL to donate to me: http://www.angelfire.com/weird2/ian_j_site2/pride.html ******** Appendix #2 -- summary of Kansas health insurance laws Fraternal benefit societies, KSA 40-738 et. seq. -Must be associated with lodges that have ritual and meet with at least the prescribed frequency. KSA 40-739. -primary benefit must be life insurance, KSA 40-742(a), but can provide "hospital, medical or nursing benefits" (but not health "insurance") in conjunction with life insurance. K.S.A. 40-742(a)(1)(E). Nonprofit Medical & Hospital Service Corporations, K.S.A. 40-19c01, et. seq. (the traditional nonprofit Blue Cross-type operation). - Generally allow only individual subscriptions, 40-19c06(a) - Groups of "employees" of a single employer may be given a composite rating, K.S.A. 40-19c04(3). - No mention that other kinds of groups are allowed composite ratings; implication is they are not, and that anyone not a member of an eligible group of employees of a *single* employer must be individually rated. - Group subscriptions allowed only to groups permitted under other health insurance laws. K.S.A. 40-19c06(d). Group sickness & accident insurance. K.S.A. 40-2209. - Group eligibility limited by statute to six kinds of groups: employers (or employer-created trusts) for the employees of that employer (K.S.A. 60-2209(f)(1)); labor unions for their members (K.S.A. 40-2209(f)(2)); multi-employer or multi-union trust funds, for their employees or members (K.S.A. 40-2209(f)(3)); creditors for groups containing *all* of their debtors (K.S.A. 40-2209(f)(4)); groups composed of the members and employees of "an association which has been organized and is maintained for the purposes other than that of obtaining insurance" (K.S.A. 40-2209(f)(5)); "any other type of group which the commissioner of insurance may find is properly subject to the issuance of a group policy." K.S.A. 40-2209(f)(6). Nothing in Chapter 40 of Kansas Administrative Regulations suggests that the insurance commissioner has *ever* found *any* other type of group to be properly insurable under 2209(f)(6), or that there is even an established mechanism by which groups of other types may request a determination that they are insurable. Small employer group health care plans. K.S.A. 40-2209b, et. seq. - Applies only to "eligible employees" of small*employers,* as defined. K.S.A. 40-2209d(j) & (u). - Requires coverage to be offered that rates small employer groups as composite groups, rather than individually. - Does not require, or even permit, aggregation of small employer groups. Each little group is rated independently. - Because no aggregation is permitted or required above the single employer level (which will contain at most 50 insured employees, and usually a lot less), this approach started to fail almost from the beginning, and has now nearly completely failed. One or two sick employees in such a small group will make the insurance unaffordable for everyone. - The alternative, if an employer is willing and able to do it (and if the insurer will accept it) is a multi-employer trust under K.S.A. 40-2209(f)(3). But this isn't always practicable. (For instance, I'm not sure a group of small law firms such as the one in which I am employed even could cooperate in a multi-employer health insurance trust consistent with the ethical obligations of the attorney/employers involved to avoid even the appearance of conflicts of interest). ***** If you live in Kansas an support my proposal, please write Governor Sebelius at gvernor@state.ks.us and the Insurance Commissioner at commissioner@ksinsurance.org.
2003-08-05 20:04:35
Ian Johnson news:57beaa06.0308051146.5ce1beb5@posting.google.com... > Below is a proposal regarding health insurance law and policy which I > recently sent to the Governor and Insurance Commissioner of my home > state (Kansas). It may be generalizable to other states. It may also > be pure drivel. (Insurance really isn't my field). Contact > information and some personal information in the original letter has > been omitted. I'm interested in comments. > > ***** > > > Dear Governor Sebelius and Commissioner Prager: > > Although I'm writing this letter much too late for it to be of any > help in resolving my family's situation, I have been impressed for > many years by the irrationality of the health insurance system that > has evolved in this country. What sound reasons are there for making > health insurance, and, hence, health care, an employment perc the > availability of which depends on the size and willingness of one's > employer? > > The underlying question I have is, what sound PUBLIC POLICY reason is > there that organizations that are not in any way related to employment > shouldn't be able to contract with insurance companies to offer group > health insurance to their members? Why shouldn't my credit union, for > instance, or the credit union service entity to which it belongs, be > able to do this? Or, on a broader scale, why is the allowance for > organizations to contract for group health insurance for their members > and employees (K.S.A. 40-2209(f)(5)) limited to organizations > organized for purposes other than that of obtaining insurance? (This > limitation in practice limits the provision almost exclusively to > employment-related professional organizations). The limits on organizations contracting for medical services was a prime goal of the AMA. At one time fraternal organizations (lodges) did and could contract with doctors to provide medical care. All that was made illegal after much lobbying and now all we have is fee-for-service. See Paul Starr's book "The Social Transformation of American Medicine" for the specific laws and steps which made this possible. Capitalism and the Doctors: Doctors opposed corporate (i.e. capitalist) enterprise in medical practice not only because they wanted to preserve their autonomy, but also because they wanted to prevent the emergence of any intermediary or third party that might keep for itself profits potentially available in the practice of medicine. It was "unprofessional," the AMA stated in a section of its code of ethics adopted in 1934, for a physician to permit "a direct profit" to be made from his work. The making of a profit from medical work "is beneath the dignity of professional practice, is unfair competition with the profession at large, is harmful alike to the profession of medicine." Not that the AMA believed it was wrong for doctors to make a profit from their work. Nor did it reprimand the physician owners of medical groups for making a profit off the work of other doctors. The AMA opposed any one else, such as investor, making a return from physicians' labor. The AMA was saying, in short, that there must be no capital formation in medical care (other than what doctors accumulated), that the full return on physicians' labor had to go to physicians, and consequently, by implication, that if medicine required any capital that doctors themselves could not provide, it would have to contributed gratis by the community, instead of by investors looking for a profit. begin 666 free market.txt M#0H-"B @($-A<&ET86QI M(")U;G!R;V9E M(&$@<&AY M;F]T('!R;W9I9&4L#0II="!W;W5L9"!H879E('1O(&-O;G1R:6)U=&5D(&=R M871I M;"!T:')O=6=H(&AE('-U I end begin 666 free market.txt M#0H-"B @($-A<&ET86QI M(")U;G!R;V9E M(&$@<&AY M;F]T('!R;W9I9&4L#0II="!W;W5L9"!H879E('1O(&-O;G1R:6)U=&5D(&=R M871I M;"!T:')O=6=H(&AE('-U I end begin 666 free market.txt M#0H-"B @($-A<&ET86QI M(")U;G!R;V9E M(&$@<&AY M;F]T('!R;W9I9&4L#0II="!W;W5L9"!H879E('1O(&-O;G1R:6)U=&5D(&=R M871I M;"!T:')O=6=H(&AE('-U I end
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