In our current insurance system, the task of protecting consumers who purchase coverage through the individual and small group markets is, by and large, left to the states. States are free, for example, to set requirements for what benefits must be covered, how much insurers can charge, and whether insurers may deny coverage to certain people. These laws vary widely from state to state, and some states have much stronger consumer protections than others.
Both Interstate Health Insurance and Association Health Plans are proposals that will allow insurance companies to circumvent the strong consumer protections that some states have established. Insurers will be able to locate their corporate headquarters in the state with the weakest consumer protections, thereby allowing insurers to avoid complying with the stronger consumer protections in other states. Furthermore, they create an opportunity for insurers to defraud consumers by creating confusion about which state can go after insurers who violate laws and treat consumers unscrupulously.
These proposals will result in higher premiums for “thinner” coverage—coverage that does not include important benefits (such as maternity and diabetes care) that some states require insurance plans to cover. These proposals, like HSAs, will encourage adverse risk selection. Younger, healthier consumers are likely to purchase low-cost barebones plans from states that allow them, leaving older individuals, women, and people with health conditions behind to face higher premiums.
More on Association Health Plans from Families USA
Next: Republican proposals will do nothing to protect people with insurance or help people who can’t afford coverage.
[Back to Summit Watch main page]
