Kansas Insurance Commissioner Sandy Praeger says she’s all for doing away with the “pre-existing condition exclusions” that health insurers have long used to deny coverage to those who need it most.
But, she said, there’s a problem.
The new federal health reform law, Praeger said, assumes that if everyone is required to have coverage, health insurers will be able to cover pre-existing conditions and stay in business.
“You can’t get rid of the pre-existing condition exclusion and not require everyone to have coverage,” Praeger said Wednesday, addressing a meeting of the Kansas Mental Health Coalition.
But there’s nothing to stop someone – young adults, especially – from paying the relatively inexpensive tax penalty instead of buying insurance as the law mandates and then waiting until they’re sick to buy insurance.
“The way (health reform) is written now, they can do that,” Praeger said. “That’s going to drive up everybody else’s costs, it needs to change. It’s not workable.”
Praeger said she’s also troubled by a “rating factor” in the health reform law that says an older person’s premium can’t be more than three times what a younger person is expected to pay.
An older person’s health care costs are considerably more than a young person’s so insurance companies, she said, will have to raise young people’s premiums to cover their costs.
Praeger also warned that as the law now reads, many young people who have health insurance now will see their premiums increase when the initiative takes effect in 2014.
“I think we’re going to be driving young people out of market,” she said.
Praeger said she lobbied for a 1-to-5 rating factor and a phase-in of the premium increase but was unsuccessful on both counts. AARP, she said, supported the 1-to-3 rating factor.
Praeger, a Republican, played a key role in the health reform debate when it was before Congress, representing the National Association of Insurance Commissioners. On Tuesday, she was one of five state commissioners invited to take part in a White House meeting that included President Obama and the chiefs of 15 major health insurance companies, including Tom Bowser, chief executive of Blue Cross Blue Shield of Kansas City.
She said the individual mandate should be restructured but not be eliminated. Republican attorneys general in more than 20 states are suing the federal government, asserting that the individual mandate is unconstitutional.
“I do not want to see it repealed,” Praeger said. “We’ve come too far to finally be talking in a rational way about making improvements that are long overdue.”
Praeger, a past president of the National Association of Insurance Commissioners, said she was confident her concerns would be addressed prior to 2014, when the mandate and other major elements of the reform package are scheduled to begin.
“There are problems,” she said, “but we have a couple years to work through them.”
Asked if the states' efforts to overturn the health reform would succeed, Praeger said she had been assured by Obama that they would not.
“The president said yesterday it’s not going to be repealed,” she said.
Responding to other questions, Praeger said that under reform, insurance companies will be allowed to charge smokers higher premiums.
“I’m OK with that,” she said.
Reform, she said, should be a boon for those who suffer mental illness.
“it’s no longer a pre-existing condition,” Praeger said. “You can’t be excluded from coverage and your co-pays and deductibles have to be compatible with medical and surgical.”