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EDITORIAL: EDITORIAL: Retro Health Insurance: 41 AGs Reject This Federal Oversight

Posted on: Wednesday, 3 May 2006, 18:00 CDT

By The Sacramento Bee, Calif.

May 3--In the guise of helping small businesses gain access to health insurance, the U.S. Senate plans to vote soon on a bill that would undermine comprehensive health coverage for 85 million insured Americans. S. 1955 would pre-empt existing state laws on coverage, rates and regulation of health insurers and impose a weaker federal standard.

That's why 41 state attorneys general, including California's, oppose the bill. That's why state insurance commissioners, including California's, also oppose the bill. What's needed now is a resounding "no" from the Senate.

The whole idea of insurance is to spread out costs and risks among healthy people and those with injuries or illnesses, including chronic illnesses such as diabetes that require long-term treatment.

The U.S. tried the S. 1955 model in the 1970s, and it left 398,000 workers with $123 million in unpaid medical bills. By 1982, Congress was holding hearings on insurance scams and returning oversight of health insurance to the states. Now, Congress is poised to repeat past mistakes.

The California Department of Insurance analyzed S. 1955 and found it "cripples" the states' regulatory oversight of health insurance. The department said S. 1955 would eliminate state protections that prevent insurers from selling coverage only to healthy people and redlining workers who are ill. Moreover, new plans would not have to meet the stringent solvency standards that California and other states apply to insurers. Workers would be at risk if a company went under.

For small businesses that have healthy workers, this bill could reduce costs. But it does nothing for small businesses that have a mix of healthy, less healthy and older workers, who will "pay significantly more" in premiums, according to the department's report. In short, S. 1955 separates some small businesses from others and undermines the concept of insurance pooling risk.

As the insurance department noted, the bill won't ease the burden of the state's 6.6 million uninsured or significantly reduce small business costs. The 41 attorneys general concluded it would fail consumers.

At a time Americans worry about their lack of health insurance or about illness that could jeopardize their health coverage, why would the Senate even consider removing consumer protections?

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Copyright (c) 2006, The Sacramento Bee, Calif.

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

Source: The Sacramento Bee

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