HEALTHCARE OVERHAUL: CALIFORNIA STYLE

September 28, 2009

The Sacramento Bee -

As Congress and President Barack Obama began wading into national health care reform earlier this year, California's leaders were already embroiled in debate over what they could do on their own turf.

Congress might eventually enact changes that address consumer complaints about being denied insurance coverage or being thrown off individual plans, a practice called rescission. Federal lawmakers also might get around to outlawing practices that allow some insurers to charge women more because of their gender, or extra to get maternity benefits.

But like other states, California has the power to pass its own laws to provide relief, absent federal solutions. "It's critically important we do these things, whether it's rescission reform or maternity reform at the state level," said Anthony Wright, executive director of Health Access California.

"Things could change with federal reform," he said, "but we can't wait."

Three key bills that health care advocates lobbied for were approved by the Democratic-controlled state Legislature this year. But the proposals didn't garner Republican support, and the insurance industry opposes them. The bills are on Gov. Arnold Schwarzenegger's desk, awaiting his signature or veto.

More individual policies

More than 2.6 million Californians buy insurance individually rather than through a group, and purchases are growing. Buyers included the self-employed, early retirees, part-timers and young adults who no longer have parental coverage.

One bill stops insurers from charging women more so-called gender rating for coverage they buy on the individual market. Ten states already prohibit it.

Another bill requires that all individual policies include maternity benefits. Right now, if a woman wants to add that coverage, it can cost hundreds of dollars a month extra.

The third bill requires insurers to prove to a review panel that individual-market customers "willfully" lied about health histories before policies can be revoked. Such cancellations, or rescission, of thousands of policies in California for flimsy reasons prompted a class-action lawsuit. A 2007 settlement with state regulators requires insurers to offer some restitution to customers stuck with medical bills.

The insurance industry is urging the governor to veto the bills and insiders are confident he's listening to them. The rescission bill, the industry says, goes too far in its attempt to control insurers.

The gender-related bills, the industry also says, could push some people to drop coverage because they won't want to absorb higher premiums for maternity coverage.

Issue of cost vs. bias

Assemblyman Dave Jones, D-Sacramento, is author of the bill prohibiting gender rating, which for women can result in paying premiums 10 to 25 percent higher than men for identical coverage.

"I am very hopeful," Jones said, "the governor will not march in lock step with those who would discriminate against women." Federal law prohibits gender rating in group policies. It also requires that maternity coverage be offered as a routine matter in employer plans with more than 15 people.

During the 1990s, 10 states, including New York and New Jersey, banned gender rating within the individual market. Two states limit it. Anne Eowan, vice president of the Association of California Life and Health Insurance Companies, which opposes Jones' bill, said gender rating makes sense in the smaller universe of individual plans.

Although it is hard to isolate the impact that banning gender rating has on insurance markets, none of the states that have prohibited it reported a surge in costs, said Richard Cauchi, who tracks state health-related proposals for the National Conference of State Legislatures.

A biological reality

Five states have also enacted laws that require the individual market to include maternity coverage, the other gender-related proposal now before Schwarzenegger. In 1993, Montana's Supreme Court ruled it was gender discrimination not to include maternity coverage in individual health plans.

Schwarzenegger vetoed two previous bills requiring individual-market maternity coverage. He said that "a mandate, no matter how small, will only serve to increase the overall cost of health care."

Opponents, including the National Federation of Independent Business, agree, arguing that a mandate eliminates choices for customers who struggle to find affordable plans and don't need maternity benefits.

They said such bills only add to the affordability problem that the president and Congress are trying to solve. Assemblyman Hector De la Torre, D-South Gate, the maternity bill's author, said opponents are exaggerating cost increases.

A state analysis estimates that the bill would extend maternity coverage to 207,000 women between the ages of 19 and 44, and that on average it would increase premium payments by about $7 a month.

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