Thank you for allowing us to submit this statement for the record. Families USA is the national organization for health care consumers. Our mission is to ensure that all Americans have access to high-quality, affordable health care. We are deeply concerned about the impact of the Health Care Choice Act on consumers' ability to obtain health coverage. We look forward to working with the Energy and Commerce Committee on finding better approaches to improving access to health coverage for more than 45 million uninsured Americans.

The Health Care Choice Act, like the Association Health Plan (AHP) proposal that has been before Congress for many years, would undermine critical consumer protections and make it harder for many consumers to access health care. It would allow insurance companies to offer individual health insurance in states with the fewest consumer protections and to market and sell their products to consumers in all 50 states.

Although most people who have private health insurance in this country get it through their employer, in 2003, 26 million people-nine percent of the population-relied on the individual market for coverage.1 Many people who are not offered coverage by their employer, who own their own businesses, who are early retirees, or who are in between jobs, may turn to the individual market for coverage.

The Health Care Choice Act moves us in the wrong direction. The individual market needs more consumer protections, not fewer. Currently, individual policies are often unavailable to people who are not in perfect health. When such policies are available, premiums are expensive, and benefits are often very limited. The Health Care Choice Act would make these problems worse.

There are five ways in which the Health Care Choice Act will harm consumers and will adversely affect states' abilities to regulate insurance.

1. Insurance companies will be able to sell products from the states with the fewest consumer protections. Because the Health Care Choice Act allows insurers to sell policies to consumers in all 50 states by following the regulations of only one state, they will choose to issue their policies in the states with the fewest consumer protections.
2. Older and sicker consumers will lose access to health coverage. Insurance companies will flock to states where they can cherry pick, leaving older and sick consumers to face higher prices and, eventually, a death spiral, where premiums skyrocket uncontrollably and cannot be sustained. For example, seven states have laws that require insurers in the individual market to charge similar premiums for young and old, healthy and sick individuals. If people in a state with rating protections are allowed to buy insurance in a state without rating protections, the youngest and healthiest will be more likely to buy coverage in a state that has fewer protections because they can get a cheaper deal in that state. This will leave only the older and sicker individuals in the state with more protections, making the cost of health insurance in that market unsustainable. No part of this proposal guarantees the offer of coverage for older and sicker people or holds down the cost of coverage for these vulnerable consumers.
3. Insurance companies will be able to sell more bare-bones products, and more consumers will be underinsured. Currently, many states require insurers to provide a comprehensive package of benefits that includes critical preventive services like cervical cancer screening, diabetes education and treatment, prostate cancer screening, mammography, and well-child care. Under the Health Care Choice Act, the rights and protections granted by many states will be undercut by a small number of states that have fewer-or no-protections. Insurance companies will flock to issue policies in states that don't require such services and will be able to sell bare-bones policies across the country. There are already more than 10 million Americans with health insurance who are paying more than a quarter of their pay check on health care-we don't want more.
4. Plans will face a greater risk of insolvency, which will lead to more consumers with unpaid medical bills. The risk-based capital approach outlined in Sec. 2797 (1) works best when combined with strong statutory minimums. Under this bill, insurance companies will be able to issue polices in states with minimal statutory minimums and sell them to residents of all 50 states. If plans become insolvent, more people will go without needed health care or will have medical bills that they cannot pay, which leads to increased health care costs for everyone. 
5. States' ability to enforce their laws and assist consumers with problems will be in jeopardy. Under this proposal, an insurance company could set up shop in one state and sell policies to residents in any other state. The state where the company set up shop would be asked to monitor and regulate the sale of insurance across all of the states where it has sold policies. The capacity of a single state to protect the residents of all the other states where residents are purchasing insurance is very limited. In addition, this bill would require a state to become an expert in the laws of all 50 states in order to safeguard its own consumers, a task currently beyond the scope of state insurance departments' authorizing legislation. Further, because of jurisdictional problems, states may be unable to assist residents with problems.

The Health Care Choice Act moves us precisely in the wrong direction. It undermines consumers' access to health coverage by leaving older and sicker consumers alone to face significantly higher prices (or be left without coverage altogether). It allows companies to sell bare-bones products with limited consumer protections, and it opens the door to insolvency.

1. Current Population Reports, Income, Poverty and Health Insurance in the United States: 2003 (Washington: Census Bureau, August 2004) p. 53.