Portability of Health Insurance
HEALTH CARE TASK FORCE
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10:14 AM -- Portability of Health Insurance
Senator Boyd explained that the Health Care Task Force was required to consider issues related to health insurance portability as a result of legislation that passed during the 2009 legislative session. Dick Cauchi, National Conference of State Legislatures (NCSL), provided an overview of issues related to the portability of health insurance and distributed a packet of information related to portability to the committee (Attachment E). He gave a definition of health portability, which is a health insurance plan or coverage that remains in force, or the eligibility to obtain or buy coverage, despite a change in employment or geographic location. He noted that there is no standard or common legal definition of portability. He discussed the federal Health Insurance Portability and Accountability Act (HIPAA), which provides legal protections that require replacement health policies to cover pre-existing conditions in some cases. HIPAA is guarantee of access to a new set of private market health insurance benefits, not to the same policy or benefits. Mr. Cauchi discussed "elimination riders" permitted for individuals who are not eligible for HIPAA. Thirty-seven states allow health problems disclosed at the time of application to be excluded from coverage by an amendment to the individual health insurance contract. Twenty-two states have 18 month or permanent exclusions. Colorado and 23 other states have shorter 12-month pre-existing exclusion and look-back periods. Four states have six- or nine-month exclusions. Mr. Cauchi explained that some health care coverage is portable, including federal Medicare, Medicaid, and Veterans benefits. He discussed the Consolidated Omnibus Budget Reduction Act (COBRA), which is a federal program that provides temporary continuation or portability of health insurance up to 18 months after leaving a job. Some states, including Colorado, have "mini-COBRA" programs which extend eligibility for continuation for small employers with between 2 and 19 employees. He discussed high-risk pools, which are operated by 35 states, including Colorado.
Mr. Cauchi described state innovations related to portability, including state-mandated cafeteria plans. In five states (Connecticut, Massachusetts, Minnesota, Missouri, and Rhode Island), the use of "health reform" cafeteria plans are mandatory for some employers. Cafeteria plans are tax-advantaged employee benefit plans. The use of cafeteria plans to purchase individual health insurance policies allows for some portability since changing employers may allow the worker to keep the same insurance policy. He discussed health insurance connectors and exchanges, using Massachusetts as an example. Massachusetts created the insurance connector in 2007, and this reform merged the small group and individual insurance markets in that state. Mr. Cauchi stated that the connector creates a "safe world" for small employers in particular because employers are relieved of having to run an insurance plan while still contributing to it and are assured that employees have quality coverage to pick from. Portability of health insurance through the connector is guaranteed by law, and full- and part-time workers are eligible. Mr. Cauchi discussed the Cover Florida Health Care Program, which is intended to provide coverage to residents ages 19 to 64 who are without insurance. He also described the Cover Tennessee program, which is a "three-share" program in which the state, employers, and employees contribute to the cost of the coverage. He discussed federal health care reform legislation. Mr. Cauchi responded to additional questions from Representative Kerr regarding problems with the Massachusetts and Tennessee health insurance plans. He responded to questions from Senator Schwartz regarding COBRA.
Chris Lines, Colorado Division of Insurance, Department of Regulatory Agencies, discussed two handouts distributed to the committee: a table describing Colorado's health insurance markets and portability and a table describing COBRA versus Colorado continuation/conversion coverage (Attachments F and G). Dayle Axman, Colorado Division of Insurance, Department of Regulatory Agencies, described Colorado's health insurance markets and portability options. She discussed the differences between COBRA and Colorado's continuation coverage requirements. Ms. Axman responded to questions from Senator Foster regarding the cost of COBRA, and from other committee members regarding coverage for pre-existing conditions.
Kelly Esselman, Mountain States Employers Council, Inc., began her presentation related to health insurance portability issues for employers. She stated that it is important to understand the connection between employers and insurance, stating that employers want to do the right thing and provide health insurance to their employees, but some regulations impede this. She discussed HIPAA, noting that it only applies to the group market. She stated that HIPAA does have some provisions that ensure that employers can renew their coverage, but does not restrict premium increases when coverage is renewed. She discussed special enrollment periods provided under HIPAA, and explained the provisions of COBRA and the cost of coverage provided through COBRA. She noted that the federal stimulus act, the American Reinvestment and Recovery Act, provided money to subsidize the cost of the coverage obtained through COBRA. She stated that a lot of individuals are not eligible for the subsidies because they qualify for other group coverage, such as coverage through a spouse's employer. She discussed the events that are not considered qualifying events to become eligible for COBRA, including if an individual is transferred to a position without benefits, or if an employer goes out of business. She stated that efforts related to portability, including HIPAA and COBRA, have addressed issues related to access to coverage, but not the cost of the coverage. She emphasized the importance of also considering cost when developing legislation related to portability.
Dr. Robin Baker, The Bell Policy Center, introduced herself and distributed handouts related to nongroup health insurance (Attachment H), the adequacy of health insurance benefits (Attachment I), and the affordability of health care (Attachment J). A copy of her testimony was also distributed to the committee (Attachment K). She noted that the nongroup or individual health insurance market is increasingly being looked at as a solution to the cost of health insurance, but that the market has problems related to equity. Dr. Baker noted that individuals overwhelmingly prefer employer-based health insurance coverage. She stated that nongroup coverage is primarily used as a bridge between employer-based plans. She discussed the costs of nongroup coverage, including the unfavorable tax treatment of nongroup plans. Dr. Baker noted that inconsistent coverage leads to a number of problems. She described some ways to increase the portability of health insurance, including extending the state's mini-COBRA law, requiring health insurers to cover decisions of prior health insurers, allowing children to stay on their parent's coverage longer, using cafeteria plans, and other options.
Dede de Percin, Colorado Consumer Health Initiative, discussed how portability relates to continuity of health care. She discussed the various ways in which employers provide health care coverage to their employees, including through medical, dental, vision, and workers' compensation insurance. She discussed the barriers individuals may face in obtaining health insurance coverage. Ms. de Percin discussed rescission with regard to individual health insurance policies, stating that policies are at times rescinded if the covered individual failed to disclose certain medical conditions at the time the coverage was issued.
Vanessa Hannemann, Colorado Association of Health Plans, noted that there hasn't been evidence of the rescissions described by Ms. de Percin in Colorado. She noted that many health insurance rules are meant to address situations in which individuals do not purchase health insurance until they are sick. She discussed the ways in which federal health care reform legislation is attempting to address portability issues. She noted that the national association of health insurers, America's Health Insurance Plans, supports guaranteed issue of coverage as long as individuals are required to purchase health insurance, and emphasized that the insurance industry is supportive of health care reform.
Jamie Scholl, Colorado State Association of Health Underwriters, began his presentation related to the portability of health insurance. He distributed a concept paper regarding the viability of long-term funding for CoverColorado (Attachment L). He discussed issues associated with access and affordability of health insurance. Mr. Scholl noted that access to health insurance is not a problem in Colorado. He emphasized that coverage of pre-existing conditions is not a problem as long as individuals are not "standing on the sidelines" and only purchasing health insurance when they are sick. Mr. Scholl discussed the cost of coverage in the individual and small group markets, and in CoverColorado. He distributed a document on health care options in Colorado (Attachment M). Mr. Scholl discussed the use of federally-qualified health care centers to provide care to individuals without health insurance and asked the committee to focus on the affordability of health insurance. He responded to questions from the committee related to the coverage of pre-existing conditions and the affordability of health insurance. Mr. Scholl responded to questions from Representative Massey regarding implementing a system of guaranteed issue for individual insurance policies, stating that CoverColorado would become obsolete, but that individual rates would increase. He responded to questions from Representative Frangas regarding funding sources for CoverColorado.
The committee recessed.