KHI News Service

Bill would allow sale of ‘mandate lite’ health insurance policies

By Dave Ranney | February 13, 2013

A bill that would allow health insurance companies to develop and market so-called ‘mandate lite’ policies in Kansas was the subject of a legislative committee hearing today.

Senate Bill 163 calls for allowing companies to sell major-medical policies that could, for example, exclude coverage of mental health, pharmacy, chiropractic or allergy treatments.

According to the bill’s proponents, the measure would allow insurance companies to create products for healthy individuals and families who plan on resisting — or who won’t be able to afford — the Affordable Care Act’s requirement that they have adequate health insurance after Jan. 1, 2014.

If consumers don’t have back pain, proponents argued, they shouldn’t have to pay for insurance that includes chiropractic coverage.

Health care policy consultant Beverly Gossage.

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“Some mandates find their ways into a state’s laws as a result of a special interest standing to gain business or profit, (or) a defined user group seeking to receive benefits for little or no payment,” said Beverly Gossage, president of the Greater Kansas City Association of Health Underwriters.

Gossage, a Republican from Eudora, last month announced her candidacy for Kansas Insurance Commissioner. Incumbent Commissioner Sandy Praeger, a Republican form Lawrence, has said she will not seek re-election in 2014.

The bill also stipulates that commissions paid to insurance agents “shall be excluded from all determinations of the medical loss ratio,” a reference to provisions in the Affordable Care Act that limit insurance companies’ administrative costs to no more than 20 percent of their individual-policy premiums; 25 percent of their small-group policy premiums.

No one testified against the bill.

How its provisions would — or would not — meet the requirements of the Affordable Care Act was not discussed.

Sen. Mary Pilcher-Cook, R-Shawnee.

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“There are so many rules and regulations that the federal government has not written yet. They have created a lot of uncertainty in the marketplace,” said Sen. Mary Pilcher-Cook, a Shawnee Republican and chair of the of the Senate Public Health and Welfare Committee. “One of the things this bill will do is provide more certainty for Kansas citizens and Kansas businesses."

Pilcher-Cook has been one of the Legislature's most vocal opponents of the federal health reform law.

Linda Sheppard of the Kansas Insurance Department told KHI News Service later that agency officials believed the "mandate lite" plans likely would not meet federal standards.

“We believe that House Bill 163 would be largely preempted by the Affordable Care Act because it would lead to plans being offered that do not meet what is required under federal law,” said Sheppard, director of the department’s division of accident and health insurance.

The Affordable Care Act, she said, “very clearly says that all companies that sell on the individual and small-group markets have to offer plans - both inside and outside the exchange – that include what’s called the essential health benefits package. So, if you’re an issuer and you’re trying to sell a plan that doesn’t have those benefits, it means you’re selling a plan that doesn’t fulfill the requirements that are in the law.”

Mike Bukaty, an insurance company executive with more than 1,600 individual and small-group customers in the metropolitan Kansas City area, told Pilcher-Cook's committee he thought premiums for ‘mandate lite’ policies would be around $250 a month.

“If I’m healthy, let me take advantage of the underwriting I can get for being healthy,” Bukaty said, speaking hypothetically. “If something happens and I’m not (healthy), I have the safety net of the insurance exchange that I can wait a year and fall back on.”

The federal law requires that each state have an online health insurance exchange operating by Jan. 1, 2014 where people can shop for and compare health plans.

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