Former Kansas Insurance Commissioner Ken Selzer on new health plans
Kansas Republicans and trade associations, empowered by changes President Donald Trump’s administration made to the Affordable Care Act, are pushing for health plans that are less expensive because they don’t have to cover pre-existing conditions.
One such bill, requested by the Kansas Farm Bureau, passed the Republican-controlled state Senate 28-11 Wednesday. It now heads to the House.
“According to a Gallup poll, citizens are more concerned about rising health premiums than pre-existing conditions,” said Sen. Mary Pilcher-Cook, a Republican from Shawnee who voted for the bill. “We should support lower cost of acquiring health care coverage, so people can have it before they develop what would otherwise be pre-existing conditions.”
Unlike plans under the ACA — commonly called Obamacare — alternatives like the Farm Bureau health plan could exclude people with pre-existing conditions. Such plans also wouldn’t have to cover things like maternity care, mental health and prescription drugs, which are required in ACA plans.
Democrats and patient advocacy groups fear the new plans will leave people in the lurch if they get sick, and cause prices to rise for people with pre-existing conditions who can’t use them.
“For some people it will work out fine,” said Sen. Barbara Bollier, a Democrat from Mission Hills and a retired physician. “But for the people (who get sick) it’s bad and then for everyone else, when you take out healthy people from the market, all our costs go up.”
A number of measures have been introduced in Topeka to expand “association health plans,” which are offered to members of professional trade groups, many of whom are small business owners.
The most extreme example is the bill that would allow Kansas Farm Bureau to sell coverage that not only would circumvent ACA rules but also would not fall under the jurisdiction of the Kansas Insurance Department and therefore not be subject to any state rules either.
Kansas Farm Bureau CEO Terry Holdren told legislators that in a national survey, 65 percent of farmers and ranchers said the cost of health coverage was the top obstacle to being able to stay on a farm. Most farm bureau members don’t qualify for subsidies to defray the cost of ACA plans because some years they have incomes greater than 400 percent of the federal poverty level, which is about $100,000 a year for a family of four.
“Many seek employment off the farm solely for the health care benefit,” Holdren said. “Others join health care sharing ministries or become uninsured.”
Holdren said the farm bureau’s financial services division already sells property, casualty and life insurance plans, and allowing its agents to tailor health plans to individual buyers is estimated to save an average of 30 percent compared to ACA plans.
Supporters of the bill said Tennessee’s farm bureau has a similar plan and it has driven down costs while rarely turning down applicants because of pre-existing conditions.
Several farmers testified for the bill, including Sarah Schmidt, whose family grows corn, wheat and soybeans across four counties near Junction City.
Schmidt said that before the ACA, she, her husband and their four kids paid about $525 a month in premiums for a plan that covered most local providers.
After the ACA their premiums doubled, and many of their providers were out-of-network.
“This has been one of our greatest struggles since coming back to my family’s fifth generation farm,” Schmidt said, “not only financially but also physically and emotionally.”
If the bill becomes law, the Kansas Farm Bureau’s plans would only be available to members. But anyone can join by paying a $50 membership fee, and the group estimates about 42,000 people might buy in to the new health plans. Testimony from the Kansas Chamber suggested that other trade groups might be interested in selling similar plans that would also be exempt from state regulations.
Association health plans have been available for some time, but the ACA required most of them to cover 10 “essential health benefits” (hospitals, outpatient physician visits, emergency services, maternal and neo-natal care, mental health and substance abuse treatment, prescription drugs, lab tests, federally recommended preventative care, pediatric care and rehabilitation).
Now they can get out of those federal requirements.
Lobbyists for Kansas health insurance companies have come out strongly against the Farm Bureau plan, saying it would be impossible for them to compete.
The Trump administration also lifted Obama-era restrictions on “short-term” plans that anyone can buy and that don’t have to provide the essential health benefits.
The plans had been limited to three months and regarded as a sort of bridge for people who might be between employers. Now, under federal law, they can keep the plans all the way up to a year, and be renewed twice for a total of three years of coverage, which makes the plans a more viable replacement for annual ACA plans.
Kansas law is still stricter than that, but lawmakers are also considering a bill to loosen it to match what the feds allow.
House Majority Leader Dan Hawkins, a Republican from Wichita, said that’s also intended to help people who can’t find an affordable option on the Obamacare exchange.
“Instead of buying the ACA plan, they can buy a short-term plan for half that,” Hawkins said.
But patient advocacy groups have concerns about expanded association plans and short-term plans.
Kari Rinker, a spokeswoman for the MS Society, said that before the ACA, association plans had “a long history of fraud and insolvency which have historically harmed small employers and individuals the most.”
“Many of these plans collected premiums for health insurance coverage that did not exist and did not pay medical claims — leaving businesses, individuals, and providers with millions of dollars in unpaid bills,” Rinker said. “For people with chronic illnesses or disabilities such as MS, the results have been disastrous.”
Dana Bacon, a spokesman for the Leukemia and Lymphoma Society, said short-term plans often have fine print that allows the insurer to look back into a person’s medical history to find things that could justify denying claims.
“When the time comes to put it to use, some really bad things can occur,” Bacon said. “If you buy them, it’s buyer beware.”
Some states still prohibit the short-term plans, which critics have labeled “junk insurance.”
The Kansas Insurance Department has remained neutral on the bills. Vicki Schmidt, a former Republican state senator who is now the state’s insurance commissioner, said her role is to provide information to lawmakers, not “engage in policy debates.” But she encouraged consumers to look over plans carefully and make sure they know what they do and don’t cover.
A nationwide analysis of short term-plans by the Kaiser Family Foundation found that almost half didn’t cover mental health and 70 percent didn’t cover prescriptions. None covered maternity care.
“Quite honestly I find these very discriminatory against women,” Bollier said. “People don’t like to hear that terminology, but I haven’t found a single man yet needing maternity coverage, but it takes both to make the child.”
Democrats and patient groups said that even if everyone knows the limitations of the coverage they’re buying, people with pre-existing conditions or people who need things like maternity care will still be harmed by something called “adverse selection.”
That’s when healthy people leave the ACA markets for things like association plans or short-term plans. The people left behind, for whom those plans aren’t a viable option, then end up paying higher premiums.
Most will be shielded somewhat from price increases by the federal subsidies, but Bacon said “subsidies are only going to do so much to buy it down,” and the Trump administration is also considering changing who’s eligible for subsidies.
Democrats in Congress have accused Republicans of trying to sabotage the ACA with such measures.
Rep. Jason Probst, a Democrat from Hutchinson, said Democrats in state-level office are starting to suspect the same is happening in Topeka this year.
“There are some here that think part of the motivation is to destabilize the ACA altogether and create these low-cost alternatives that kind of siphon off healthy people and make the (ACA) marketplace plans so expensive that people can’t afford them,” Probst said.
While most Republican-led efforts have focused mainly on assisting people who shoulder the full burden of rising premiums because they make too much to qualify for subsidies, Democrats have asked why Hawkins and other GOP leaders have refused to consider expanding Medicaid under the ACA, which would extend coverage to Kansans who don’t make enough to qualify.
Democrats have also introduced legislation to address another threat to the ACA: a federal lawsuit brought by Republican attorneys general that would overturn it. The suit, which is currently on appeal, could cause a worst-case scenario for people with pre-existing conditions: a return to the days when it was nearly impossible for them to find coverage, at any price, in the individual market.
Probst and 17 other Democrats have sponsored a bill that would require health insurers to cover anyone who applies for an individual policy. Probst called it a state-level “safety net” in case the lawsuit prevails.
Rep. Tom Cox, a Republican from Shawnee and vice chair of the House insurance committee that is handling many of the health care bills, said protecting Kansans with pre-existing conditions should be “ a hard line we should all get behind.”
But lawmakers are also seeking creative ways to lower costs.
“Everyone’s dealing with two different levels: We want more coverage and more protections but we also want lower rates and premiums,” Cox said. “Problematically, those two often conflict. You can have more protections and mandates but your costs are going to go up. And then there are people trying to figure out ways to circumvent around the system.”