[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
H.R. 2833, THE PREEXISTING CONDITION EXCLUSION PATIENT PROTECTION ACT
OF 2007
=======================================================================
FIELD HEARING
before the
SUBCOMMITTEE ON HEALTH,
EMPLOYMENT, LABOR AND PENSIONS
COMMITTEE ON
EDUCATION AND LABOR
U.S. House of Representatives
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN HARTFORD, CT, MARCH 20, 2008
__________
Serial No. 110-85
__________
Printed for the use of the Committee on Education and Labor
Available on the Internet:
http://www.gpoaccess.gov/congress/house/education/index.html
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41-053 PDF WASHINGTON DC: 2008
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COMMITTEE ON EDUCATION AND LABOR
GEORGE MILLER, California, Chairman
Dale E. Kildee, Michigan, Vice Howard P. ``Buck'' McKeon,
Chairman California,
Donald M. Payne, New Jersey Senior Republican Member
Robert E. Andrews, New Jersey Thomas E. Petri, Wisconsin
Robert C. ``Bobby'' Scott, Virginia Peter Hoekstra, Michigan
Lynn C. Woolsey, California Michael N. Castle, Delaware
Ruben Hinojosa, Texas Mark E. Souder, Indiana
Carolyn McCarthy, New York Vernon J. Ehlers, Michigan
John F. Tierney, Massachusetts Judy Biggert, Illinois
Dennis J. Kucinich, Ohio Todd Russell Platts, Pennsylvania
David Wu, Oregon Ric Keller, Florida
Rush D. Holt, New Jersey Joe Wilson, South Carolina
Susan A. Davis, California John Kline, Minnesota
Danny K. Davis, Illinois Cathy McMorris Rodgers, Washington
Raul M. Grijalva, Arizona Kenny Marchant, Texas
Timothy H. Bishop, New York Tom Price, Georgia
Linda T. Sanchez, California Luis G. Fortuno, Puerto Rico
John P. Sarbanes, Maryland Charles W. Boustany, Jr.,
Joe Sestak, Pennsylvania Louisiana
David Loebsack, Iowa Virginia Foxx, North Carolina
Mazie Hirono, Hawaii John R. ``Randy'' Kuhl, Jr., New
Jason Altmire, Pennsylvania York
John A. Yarmuth, Kentucky Rob Bishop, Utah
Phil Hare, Illinois David Davis, Tennessee
Yvette D. Clarke, New York Timothy Walberg, Michigan
Joe Courtney, Connecticut [Vacancy]
Carol Shea-Porter, New Hampshire
Mark Zuckerman, Staff Director
Vic Klatt, Minority Staff Director
SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR AND PENSIONS
ROBERT E. ANDREWS, New Jersey, Chairman
George Miller, California John Kline, Minnesota,
Dale E. Kildee, Michigan Ranking Minority Member
Carolyn McCarthy, New York Howard P. ``Buck'' McKeon,
John F. Tierney, Massachusetts California
David Wu, Oregon Kenny Marchant, Texas
Rush D. Holt, New Jersey Charles W. Boustany, Jr.,
Linda T. Sanchez, California Louisiana
Joe Sestak, Pennsylvania David Davis, Tennessee
David Loebsack, Iowa Peter Hoekstra, Michigan
Phil Hare, Illinois Cathy McMorris Rodgers, Washington
Yvette D. Clarke, New York Tom Price, Georgia
Joe Courtney, Connecticut Virginia Foxx, North Carolina
Timothy Walberg, Michigan
C O N T E N T S
----------
Page
Hearing held on March 20, 2008................................... 1
Statement of Members:
Andrews, Hon. Robert E., Chairman, Subcommittee on Health,
Employment, Labor and Pensions............................. 1
Courtney, Hon. Joe, a Representative in Congress from the
State of Connecticut....................................... 3
Prepared statement of.................................... 4
Additional submissions:
Letter from the Connecticut AIDS Resource Coalition.. 34
Letter from the Juvenile Diabetes Research Foundation
International...................................... 35
Statement of Jennifer C. Jaff, Esq................... 35
Statement of Witnesses:
Davenport-Ennis, Nancy, founder, president & CEO, Patient
Advocate Foundation and National Patient Advocate
Foundation................................................. 8
Prepared statement of.................................... 9
Farrell, John J., founder, J.J. Farrell Associates........... 25
Prepared statement of.................................... 25
Gould, Rita D., retired professor............................ 11
Prepared statement of.................................... 12
Horoschak, Donna, vice president, product policy, America's
Health Insurance Plans..................................... 16
Prepared statement of.................................... 17
Stirling, James, chief executive officer, Stirling Benefits.. 13
Prepared statement of.................................... 15
Tessier, Robert, executive director, Connecticut Coalition of
the Taft-Hartley Health Fund............................... 22
Prepared statement of.................................... 24
H.R. 2833, THE PREEXISTING CONDITION
EXCLUSION PATIENT PROTECTION ACT OF 2007
----------
Thursday, March 20, 2008
U.S. House of Representatives
Subcommittee on Health, Employment, Labor and Pensions
Committee on Education and Labor
Washington, DC
----------
The subcommittee met, pursuant to call, at 2:31 p.m., in
hearing room 1-D, Legislative Office Building, 300 Capitol
Avenue, Hartford, Connecticut, Hon. Robert Andrews [chairman of
the subcommittee] presiding.
Present: Representatives Andrews and Courtney.
Staff Present: Carlos Fenwick, Policy Advisor for
Subcommittee on Health, Employment, Labor and Pensions; Sara
Lonardo, Junior Legislative Associate, Labor; Ken Serafin,
Minority Professional Staff Member.
Chairman Andrews. Ladies and gentlemen, the subcommittee
will come to order.
Good afternoon. It's my privilege to be here in the
undisputable capital city of Connecticut and receive such a
warm welcome thus far.
I want to thank you, Congressman Joe Courtney, in arranging
for this hearing and inviting us here today.
I have had the privilege of serving in Washington for 18
years now. I was very young when I started. I must tell you I
am absolutely weary of theoretical discussions about health
care. I am really tired of it. The next person that comes into
my office and says we need high quality, affordable and
accessible health care, I am going to throw them out of my
office because I have heard those three phrases again and again
and again. I was tempted to say nothing has changed. That is
not true; something has changed. When I was privileged to go to
Washington in 1990 we had about 35 million uninsured Americans.
Today we have 48 million uninsured Americans. It's changed the
wrong way. I made a vow to myself I am going to be rejecting
theory, embracing reality.
What we are here to talk about today, my friend Joe
Courtney has a very valid based idea of how to deal with the
problems of the uninsured. We've done a lot of research on the
uninsured. They are uninsured for various reasons and for
various periods of time. Some because they run up against
lifetime policy limits. There's a lot of belief the remedy to
that is to abolish lifetime policy limits. Other people are
uninsured because they live in a family where the wage earner
is not employed by an employer who can afford health insurance.
We think we had a very good answer for five million of those
children in the Children's Renewal Health Insurance Program
this year, which had broad Democratic and Republican support.
It failed to pass because it was one vote short of the White
House. One vote short of the House of Representatives.
The third idea, which is gaining, is because of Joe
Courtney's efforts. Americans who lack health insurance because
they are unfortunate enough to have a preexisting health
condition. By our research there are about 7.2 million
Americans as we meet this afternoon who are uninsured because
they have a preexisting condition.
Now the law that was passed in 1996 says that those
individuals can be made to wait for about a year before they
can be brought into a health plan. I want you to focus on these
facts. This is a person who has a job, works for an employer
who offers health insurance to his or her employees, but has to
wait for a year because he or she has a preexisting condition.
The idea that Congressman Courtney is championing would take a
huge bite out of that problem.
Our quick research indicates that the Courtney idea could
result in health care for five million people that presently
don't have insurance. This story has a moral dimension and
economic dimensions. The moral dimension is obvious in a
country as large as this one, a person who has breast cancer,
diabetes, HIV or some other condition and is not able to get
health care coverage because of some arbitrary waiting period,
it is outrageous and needs to be fixed.
Beyond that there is the economic dimension. How much
longer are we going to be able to sustain a health care system
where so many people are uninsured but receive health care
anyway. Uninsured people thank goodness, do get health care in
emergency rooms or other settings. The way we pay for it is
irrational. It is a drain on the employees, the employer and
the economy. We need a system where more people get health care
coverage not only morally, but the way we pay for it. So
Congressman Courtney made a very constructive, in my view
pragmatic suggestion how to address this problem.
As the person privileged to be the chairman of the
subcommittee with jurisdiction over this area, I am very
enthusiastic about this idea. I think under the circumstances
this kind of idea can reach out across the political hill, both
Democrats and Republicans, and get the job done. The purpose of
this hearing is to educate the members of subcommittee and
members at large as to the progress we were to make if we were
to take Congressman Courtney's idea, work with both political
parties, get them in the act as soon as we could. I want to
thank Joe.
When I was the junior representative, achievement was
figuring out how the elevators work. Joe has far exceeded that
level of achievement. He is a problem solver. I serve with him
on the Armed Services Committee and he has had an impact. I
serve with him on the Education and Labor Committee. He is a
workhorse, not a show horse. He's one of the members that comes
early, stays for the duration, asks very probing questions and
substantive questions, participates in the deliberations of the
committee in a thoughtful and constructive way. When he
extended the invitation, I accepted. I would thank him for that
and ask for an opening statement.
Mr. Courtney. I have no way to go but downhill. I want to
welcome you to Connecticut, Rob, and for coming to Hartford
today.
He's got a busy schedule back home in New Jersey. It is
exciting for me to be back in my old stomping grounds. I have
lots of friends in the Legislative Office Building to welcome
Rob. As someone who does serve on both of my committees with
Rob, he's without a doubt one of the brightest, most effective
members of Congress. I had the pleasure to get to know him over
the last year or so. Just a couple of weeks ago Rob actually
was on the floor managing passage in the house of the Paul
Wellstone Mental Health Parity bill which was a watershed for
this country. It put the U.S. House of Representatives to a
first time majority vote for a simple, but important concept
for this country which is mental illnesses. Nervous conditions
will be treated exactly the same way as any other physical
ailment that people suffer from. And it was not an easy debate
that was on the floor. It was a very hotly contested issue. It
was again a lot of arguments that were thrown against the bill
from the opposition and Rob did a masterful job in terms of
guiding this legislation through.
It was during the course of the debate with Senator Kennedy
and son Patrick were sitting on the floor a few feet away to
sort of be there for this moment which many people in this
country have been waiting for for an extremely long period of
time. He successfully guided the debate all the way to passage.
If we look back at the 110th Congress sometime down the
line, I think what Congressman Andrews did in terms of getting
passage of the mental health bill would be one of the high
moments of the new congress.
I again want to say it is great to be with a lot of good
friends like my friend Edith Prague who I served together with
on the Public Health Committee and Human Services Committee for
many years. She's been a tireless advocate on health care and
quality, doing good things at the State level and so many
others in the room.
As Congressman Andrews said, this bill is focused on what I
think is the very sort of practical, real issue in terms of our
health care system, also on the work lives of millions of
Americans, which is in a country where the largest number of
people with insurance get it through their employment.
The question of how to make a system that works for people
moving from employment-based health coverage to a new
occupation, which is something that happens all the time in a
very dynamic economy like the U.S. economy, that we have a
system that actually works for people, so that when they make
what is sometimes necessary decisions because of layoff or
because of change in circumstances or because they want to
advance themselves and their families, they don't put at risk
critical health coverage that they or their children or their
spouses depend on in many cases to receive lifesaving health
care access and cure.
In 1996 the Congress passed again another watershed piece
of legislation, the Health Insurance Portability and Access
Act. Again there was a struggle to get that legislation
through. In retrospect HIPAA, as it's called, is an inefficient
inevitable part of the economic and health care landscape. That
didn't just happen, it took a lot of hard work and advocacy for
people to set up the basic structure of portability which
provides guaranteed coverage for individuals subject to some
preexisting condition exclusions.
People are moving from one group health plan to another. We
now have 12 years of experience under our belts as a country to
look at how this is operated and to determine whether or not,
like any law, it needs to be updated or modified based on real
life empirical conditions that suggests we can do better as a
country to make the system work better. That really is what the
focus of this legislation is. As Rob indicated we still have a
health care system struggling in so many ways. Certainly for
the employment-based piece of the system this legislation is
aimed at what I think is a real problem. I think some of the
testimony and evidence is going to bring out today, again solve
a lot of issues for people who want to again advance themselves
and their families, but are many times held back because of
rules that restrict their access to needed health care.
The line up of witnesses that we have here today is, I
think, extremely impressive. I want to thank all of them for
taking the time out of their schedule to join us here today. We
have a diversity of views we have patient, advocate, insurer
prospective payer, etc. All of those points of view need to be
listened to as we move forward to try to improve our health
care system.
Again I am looking forward to a lot of the testimony which
I had a chance to see some of it in advance, certainly open it
up for some question and answer.
Thank you very much, Mr. Chairman, in helping us explore
this issue.
[The statement of Mr. Courtney follows:]
Prepared Statement of Hon. Joe Courtney, a Representative in Congress
From the State of Connecticut
Thank you all for joining us this afternoon. I must say what a
pleasure it is to return to Hartford in the LOB. As co-chair of the
Public Health Committee in the Connecticut General Assembly in the
early 1990s, we tackled many of these issues and it is my privilege to
continue to work on them in Washington, D.C.
Chairman Rob Andrews, and the Committee on Education and Labor,
thank you for traveling to Connecticut to explore improving access to
health insurance for the nearly one third of the American population
with at least one chronic or pre-existing medical condition, or an
estimated 1,114,538 Connecticut residents.
I would like to extend my appreciation to our panel of witnesses
who have come today to share their personal stories, experience and
expertise on the subject.
As you may be aware, Connecticut tends to be ahead of the nation
when it comes to quality health care access. For example, the Congress
just passed mental health parity this past month, but parity has been
law in Connecticut since 1999 (PA 99-284; ``An Act Concerning Managed
Care Accountability''). But when it comes to allowing access to
coverage for individuals, even with the most minor preexisting
condition, Connecticut falls behind with the rest of the nation.
What we will explore today is the length of time that individuals
are forced to go without coverage, how deep into their medical records
health insurance companies are allowed to poke around and whether or
not people who need coverage can access it or are required to pay twice
as much to join a state high risk pool. We are answering a fundamental
question--is health insurance about avoiding risk or pooling risk?
For me, the answer is clear. Health insurance is a means to pool
risk so that all individuals can access health coverage that goes
beyond emergency room visits.
That is why I introduced the ``Pre-existing Condition Exclusion
Patient Protection Act of 2007'' (H.R. 2833) to pool risk to ensure
that individuals who suffer from chronic, disabling, and life-
threatening conditions have access to comprehensive, meaningful and
affordable health insurance coverage.
For more than a decade, the Health Insurance Portability and
Accountability Act of 1996 (HIPAA, P.L. 104-191) has provided important
protections to individuals and families when they change health plans
due to job-related or other transitions. HIPAA was designed to help
guarantee the availability and renewal of health insurance coverage by
restricting the circumstances under which pre-existing condition
limitations can be applied to private insurance beneficiaries. Yet,
significant gaps in the laws hamper an individuals' access to care due
to a pre-existing medical condition.
This legislation aims to limit the gaps in the HIPAA coverage by
(1) shortening the amount of time during which an employer could
exclude coverage for pre-existing conditions from 12 months to three
months. Currently, individuals with pre-existing conditions as of a 63-
day break in coverage eliminates any prior creditable coverage, thereby
allowing an employer to exclude coverage for pre-existing conditions
for up to 12 months. This decrease in the number of months in which an
individual is unable to obtain health insurance would ensure that more
Americans receive the health care coverage they need and that the law
is consistent with the requirements for ``state-qualified plans'' under
the Trade Adjustment Assistance Reform Act of 2002.
The legislation also (2) shrinks the permitted ``look-back'' period
from six months to 30 days, thereby reducing the number of individuals
who are caught in the pre-existing condition web. Currently, employers
can restrict coverage for pre-existing conditions based on a six-month
``look-back'' period. When medical recommendations, diagnoses, and
treatments occur during this timeframe, an individual is deemed to have
a ``pre-existing condition'' for the given ailment that was addressed.
This ``look-back'' period is sufficiently long that it likely impacts
all Americans with at least one chronic illness--one out of every three
Americans.
Finally, it will (3) apply the same pre-existing condition
protections afforded to individuals in the group health insurance
market under HIPAA to individuals moving to, and within, the individual
health insurance market. Let me be clear, the legislation does not
mandate that insurance companies uniformly accept every individual for
coverage. It simply says that individuals who would not be subject to
pre-existing condition exclusion in the group market as a result of
having prior credible coverage for over 18 months should not be subject
to a rider or be denied coverage in the individual market.
According to the Small Business Administration, there were an
estimated total of 347,600 small businesses in Connecticut in 2007. As
the number of sole proprietors and small businesses grow, those
employers and their employees need to be able to access complete health
insurance. The ability to provide employees with health insurance is
critical to the ability of these companies to recruit employees and be
competitive in the marketplace. In the National Federation of
Independent Businesses' ``Principles of Health Care Reform,'' the
concept of portability is one of the ten principles. H.R. 2833 will
allow for workers to transition between large corporations, and small
businesses without fear of loosing health coverage. This levels the
playing field between large corporations and small businesses.
This legislation would ensure that the 158 million individuals who
are insured through employer-based private plans and the more than 14
million individuals who are covered by non-group, private plans would
have far better protection when changing jobs or their health care
plans.
H.R. 2833 is aimed at getting at the problem that an individual,
whether in the group or individual market faces, when trying to access
health insurance. Even the American's Health Insurance Plans, which
represents the private insurance companies, has acknowledged the
problem by unveiling their proposal. The Guaranteed Access Plans (GAPs)
would cover uninsured individuals with potentially high medical costs.
It will increase the number of insured by making States responsible,
with help from minimal insurers, to extend coverage to the currently
deemed `uninsurable' or rather, those the insurance company deems
``unprofitable.''
Right now, individuals who qualify for health coverage have no
choice but to forgo coverage until the ``wait period'' is over. Or,
they are lucky enough to be covered right away but face a ``rider'' for
an illness or injury, meaning that a specific ailment or treatment will
not be covered for a set period of time. The beneficiary will be forced
to pay out of pocket for the one thing that they need covered the most.
For individuals who are denied coverage, even the insurance of last
resort has a waiting period. Many states maintain a high risk pool,
such as the Connecticut Health ReInsurance Association. In Connecticut,
the individual must first satisfy all the criteria under HIPAA,
including having 18 months of credible continuous coverage, used up any
eligible COBRA and have applied to the pool within 120 days of loosing
prior coverage (or 150 days if the loss of prior coverage was due to an
involuntary job loss).
If the applicant does not satisfy the HIPAA portability
requirements than they are subject to a 12 month waiting period for
coverage and a six-month `look back' period for determining a pre-
existing medical condition.
Once the applicant is accepted into a state high risk pool, their
premiums will be between 120 to 150 percent higher than the average,
standard market rate. In Connecticut, the average cost per enrollee is
$3,985 annually just for their premiums. This does not include the
thousands in co-pays and additional medical expenses that an individual
may be forced to pay out of pocket. That figure is of course supported
by the $7,202 that the state must pay annually per enrollee.
High risk pools simply transfer the cost of passing along the cost
of insuring individuals with potentially higher medical expenses. The
risk is in fact not pooled by the collective insurance community but
passed along to the taxpayers.
Once again, I would like to thank the committee and the witnesses
for joining us today to explore the role that pre-existing condition
exclusion in creating hurdles for accessing health insurance.
______
Chairman Andrews. I am going to introduce the panel of
witnesses, ask them to proceed. I will tell the panel their
written statements are entered into the record.
I will ask you to summarize your testimony in about five
minutes so we can get to some questions and interaction.
Nancy Davenport-Ennis is a cancer survivor and the Founding
Executive Director of the National Patient Advocate Foundation.
Ms. Davenport-Ennis also established the Patient Advocate
Foundation, a direct patient services non-profit organization,
in 1996. She serves as a Commissioner on the American Health
Information Community to the U.S. Department of Health and
Human Services and is a Co-Chair of the AHIC Consumer
Empowerment Working Group. Ms. Davenport-Ennis holds a BA in
English from Campbell University.
Welcome. We are glad that you're with us.
Rita Gould is a retired professor and diabetes patient who
has struggled with finding and keeping health insurance. When
she needed to cover a six-month gap between the end of her
husband's insurance and the start of her Medicare coverage, she
was told that her diabetes was a serious enough pre-existing
condition to deny her coverage, even though she had never
missed a day of work or been hospitalized because of it. She
had done exactly what the rules suggested she was supposed to
do. When she finally got coverage through Connecticut's high-
risk State pool, the premiums cost $1,300 a month, more than
twice what she paid under her husband's plan. She is going to
tell the consequence of that story. We are glad she's with us.
Frankly, some people may not have such a good outcome. She
received her BS from Central Connecticut State University and a
MS from the University of Bridgeport.
Welcome, Ms. Gould. I am glad you're with us.
James Stirling is CEO of Stirling Benefits, a third-party
administrator of self-insured health plans. Mr. Stirling is
also President of the Society of Professional Benefit
Administrators and formally served on the Business Advisory
Council of the Universal Health Care Foundation of Connecticut.
He was secretary of the Connecticut Benefit Brokers from 2002
to 2007 and is a member of the New Haven Health Care Council
and Milford Legislative Action Committee. Mr. Stirling received
his BA from the University of Massachusetts Amherst in 1985.
Welcome, Mr. Stirling. We are glad you're with us.
Donna Horoschak--did I pronounce your name correctly?
Ms. Horoschak. Horoschak.
Chairman Andrews. Excuse me.
She's Vice President for product policy at America's Health
Insurance Plans. Prior to joining AHIP, Ms. Horoschak spent 20
years with Wausau Insurance Companies, including heading up its
government affairs department and leading the legal team. She
received her undergraduate degree from Southern Illinois
University and law her law degree from the University of
Wisconsin.
Welcome. We are glad you're with us.
Robert Tessier--did I get that correct--is Executive
Director of the Connecticut Coalition of Taft-Hartley Health
Funds. Mr. Tessier previously served as the President of the
Coalition for eight years and was the administrator for the New
England Health Care Employees Welfare and Pension Funds from
2000 to 2007. He served in a similar capacity for the
Connecticut Carpenters Health Pension Annuity and Apprentice
Training funds from 1995 to 2000. Prior to that Mr. Tessier
served as the Legislative Director and Deputy Commissioner of
the Connecticut Department of Labor under then Governor Lowell
Weicker.
Welcome, Mr. Tessier. We are glad you're with us.
Finally, John Farrell founded J.J. Farrell Associates in
1992 and has been representing hospitals and health systems
since then. Prior to founding his company, Mr. Farrell served
as Commissioner of Hospitals and Health Care for two
Connecticut governors. Before beginning his career in public
service, Mr. Farrell was Division Director of Blue Cross Blue
Shield of Connecticut and financial manager for Memorial Sloan
Kettering Cancer Center. In 1995 he helped form United Risk
Assessment and Management, LLC, a health care actuarial firm
which merged with Urix, LLC in 2002.
Welcome, Mr. Farrell.
Before we get started, a word about the light. You will see
in front of us there is a green light, yellow and red light.
When you start the green light will go on. You will start your
oral testimony. When the yellow light goes on you will have
about a minute to summarize. When the red light goes on we will
ask you to quickly summarize. In Washington we have a different
system, we have a trap door underneath the witness. Because we
are in more of a laid back situation, we won't do that. We
would ask you to move on as quickly as you could.
The final thing, to bring focus as to Mr. Courtney's
efforts that bring us here. I was struck by one statistic that
comes from the Employee Benefits Research Institute which is
this, a woman who goes to her physician today and is told that
she has stage two cancer, which is a pretty big deal, pretty
serious has a 90 percent chance of survival over five years if
she has health insurance, but if that same woman goes to the
doctor and is told she has stage one cancer, which is the best
of all bad news, under the circumstances is what you want to
hear. If she has stage one cancer, but no health insurance she
has an 80 percent chance of survival over five years. That is
what this is about. If that woman is your mom or your sister or
your daughter, that is what this is about.
The stark difference between what happens with and without
health insurance is stunning. What we are trying to do here
today is find a way so we can all agree to fix that problem. We
are going to go through the whole panel then go through our
questions.
STATEMENT OF NANCY DAVENPORT-ENNIS, CHIEF EXECUTIVE OFFICER,
NATIONAL PATIENT ADVOCATE FOUNDATION
Ms. Davenport-Ennis. I would like to begin my testimony by
saying to you I am here to speak on the behalf of the patients
we have served for over 12 years. I think our patients more
than 21 million of them represent the aggregate of what's being
seen in America. It is practical issues such as preexisting
conditions that are standing in the way of access to health
care for people in America. Mr. Courtney as you have recognized
we appreciate so much this legislation.
Let me share with you that in 2005 our case managers
reported a very significant uptick in the number of preexisting
cases. We reached out to the graduate school at Dartmouth. We
commissioned a study to confirm what is done at the State and
Federal level and is the issue of preexisting conditions really
driving up the uninsured rolls. At the same time we looked at
chronic diseases which are automatically going to disqualify a
person from applying. You are going to be faced with a
preexisting condition at that point. We also went to our own
database to see what is the type of issue that these people
with preexisting issues are facing. What we saw repeatedly, the
loss of one insurance plan, inability even if they had the
dollars to enroll in another health plan. Then the national
mantra is go seek coverage in a State high risk pool. We spent
a lot of time doing research on that. That is what I would like
to focus on today.
The first myth, namely the State high-risk pools provide
coverage to millions of individuals across the country. Our
research shows that in total, State high-risk pools cover only
about 195,000 people and are not operational in every State. We
have States such as Florida that say they have a high-risk
pool. In 17 years they have not been able to accept an
application, approve fund coverage to get to benefits.
Myth number two, those who qualify for State high-risk
pools are going to get their treatments, benefits and services
covered. We actually worked with patients who sent us a copy of
the letter from the State high-risk pool acknowledging they had
been approved only to find out one week later in a second
letter you're approved, but currently there is no funding
available to fund you into this program or give you access to
health care so you go back to creating a safety net program.
I think myth number three, State high-risk pool coverages
are affordable. For Connecticut the average premiums in a State
high-risk pool is 125 to 150 percent of the average standard
market rate for private health plans anywhere in America. What
does this mean? What it means for a woman 50 years of age
seeking a $500 deductible policy in Minnesota, she would pay
$450, Oregon $560, Texas $737, and Illinois $865. Candidly, the
patients we serve can't afford that. Over and over we see that.
The fourth myth, the State high-risk pool insurance does
not ban coverage for preexisting conditions. What we know from
our experience is if we are fortunate enough to get a person
enrolled in a State high-risk pool, as we recently did here in
Connecticut with a 45 year old patient who had the financial
ability to pay COBRA until she could get in the plan here in
Connecticut she was able to do that only because she had
resources, but without proof of creditable coverage until the
day she was enrolled, she would have been subjected to the 12-
month preexisting period with no reimbursement for preexisting
disease and would also be subject to the 12 month look back
period.
The fifth myth, high-risk pools are well funded and open to
all applicants. Regrettably, they are not. There is not a
finger of guilt to be pointed to anyone. It is reality. States
don't have the dollars to fund these pools. They are not able
to. They may go to the Federal Government to get a grant. If
they do, the maximum amount the Federal Government contributes
is $1 million to these pools. From our point of view, when we
look at the work we did initially around the preexisting
condition, we went over to meet with our friends over at AHIP
and said let's join together to try to find a solution for the
issue of preexisting conditions. This was about a year ago. At
that point it was not a big problem according to the folks we
met with at AHIP. Now there is a proposal for them to offer
different ways to handle it.
Way number one is to shift that to the States. We are
insisting preexisting conditions be addressed. It's got to be
addressed at the Federal level.
I thank the committee for giving me this opportunity this
afternoon.
[The statement of Ms. Davenport-Ennis follows:]
Prepared Statement of Nancy Davenport-Ennis, Founder, President & CEO,
Patient Advocate Foundation and National Patient Advocate Foundation
Good Afternoon. Mr. Chairman and Members of the Committee, my name
is Nancy Davenport-Ennis and I am the Founder, President & CEO of
Patient Advocate Foundation and National Patient Advocate Foundation. I
am pleased to be here today to provide testimony in support of HR 2833,
the ``Preexisting Condition Exclusion Patient Protection Act of 2007''.
For twelve years, Patient Advocate Foundation has provided direct
patient services to patients throughout the country that have been
diagnosed with a chronic, life-threatening or debilitating illness.
Last year, Patient Advocate Foundation received approximately 6.8
million contacts for information or service from patients seeking
assistance for access to care issues. Of those, 44,572 became full
patient cases involving communications made by Patient Advocate
Foundation staff on behalf of a patient in order to reach positive
resolution.
In recent years, Patient Advocate Foundation professional case
managers have seen pre-existing conditions become a more prominent
barrier for patients to gain and/or maintain their health insurance
coverage. As a result, in May 2005 NPAF commissioned a study by the
Tuck Graduate School of Business at Dartmouth College on pre-existing
conditions and how they contribute to the ``job-lock'' phenomena. I am
submitting a copy of the report as part of my testimony in addition to
several briefing documents NPAF has developed on state high-risk pools.
The report confirmed the issues our case managers dealt with when
assisting patients with pre-existing conditions and provided a basic
analysis of the limited role state high-risk pools play in providing
health coverage to this population of patients.
The Centers for Disease Control and Prevention has estimated that 1
out of every 3 adults is living with at least one chronic condition.
Since chronic conditions such as asthma and diabetes are often
considered pre-existing conditions by insurers, it is very possible
that one-third of the U.S. population could face pre-existing condition
exclusions and waiting periods at some time during their lives.
Through Patient Advocate Foundation's work, we know that patients
with pre-existing conditions may delay care during their waiting period
because they cannot pay for the care out-of-pocket. For other patients,
they are denied insurance coverage altogether because they are deemed
too ``high-risk''. For these patients, there are few options for
receiving necessary care. Oftentimes, these individuals are referred to
their state's high-risk pool.
NPAF commissioned some background work on these high-risk pools,
and we are very concerned about high-risk pools being used as the
blanket solution to providing access to health insurance for patients
with pre-existing conditions who are locked out of the insurance
market. What we found is there are many myths about state high-risk
pools:
Myth No. 1. State high-risk pools provide coverage to millions of
individuals across the country. The reality is that in total, state
high-risk pools cover only about 190,000 individuals and are not
operational in every state. Only 34 states have high-risk pools and
with a total uninsured population around 47 million, high-risk pools
are barely impacting the number of uninsured. That's less than \1/2\ of
1% of the uninsured are able to access high-risk pools (Kaiser Family
Foundation, December 2006).
Myth No. 2. Those who qualify for a high-risk pool can get their
treatments, benefits, and services covered. Again, the reality is that
some high-risk pools have long waiting lists and admittance is not
guaranteed. Many states are unable to accept every eligible individual
because of funding constraints.
Myth No. 3. State high-risk pools coverage is affordable. The
reality is that average premiums in a state high-risk pool are 125 to
150 percent of the average, standard market rate for private health
insurance. Due to the fact that these premiums are actually higher than
the average, standard market rate, individuals who were unable to
obtain prior health insurance due to cost restrictions are still unable
to obtain coverage through a state high-risk pool (The Commonwealth
Fund).
Myth No. 4. High-risk pool insurance doesn't ban coverage for pre-
existing conditions. In fact, most state high-risk pools have look-back
and waiting periods for coverage. Most high-risk pools exclude coverage
for a pre-set period of time, based on a pre-existing condition, for an
average of six months. Waiting periods are implemented to prevent
individuals from applying for coverage once they have a condition and
then releasing the coverage once the condition has been remedied (The
Commonwealth Fund & Kaiser Family Foundation).
Myth No. 5. High-risk pools are well funded and open to all
applicants. The truth is that high-risk pools are under-funded in most
states. A majority of pools are funded through assessments placed on
insurers, premiums collected by individuals enrolled in these pools,
and general state revenues. Very little funding for state high-risk
pools comes from the federal government. The State High Risk Pool
Funding Extension Act of 2006 provided seed grants to states that
wished to implement a high-risk pool. These grants were set at a
maximum of one million dollars, not nearly enough to provide
comprehensive health care coverage to the population of individuals
with pre-existing conditions who need access to health insurance. New
applicants are not always accepted in high-risk pools either. An
example is that in 1991, Florida stopped accepting new applicants to
its high-risk pool. Although it has been over 17 years since Florida's
high-risk pool accepted new members, Florida is considered to have a
high-risk pool (The Commonwealth Fund).
The state of Connecticut created a high-risk pool in 1976 to help
individuals who are unable to acquire health insurance due to pre-
existing conditions. As of December 31, 2006, 2,523 individuals were
enrolled and the average premium paid by the patient (not including
state contribution) for a 50 year old male was approximately $717 a
month. The Connecticut Health Reinsurance Association, as the risk pool
is referred, implements a 12 month pre-existing condition waiting
period and is governed by a 6 month look-back period for pre-existing
condition. Both of which are consistent with the HIPAA statute. In
addition, the Connecticut high-risk pool imposes a lifetime maximum of
$1 million for enrollees which could effectively leave a patient
without any option for health coverage once that limit is reached
(Kaiser Family Foundation).
The Connecticut risk pool has worked for some patients like the 45
year old woman diagnosed with breast cancer three and a half years ago
that contacted Patient Advocate Foundation. The woman had been
prescribed oral adjuvant therapy for a period of five years and had
continued her COBRA coverage but it was about to terminate when she
contacted Patient Advocate Foundation. She had previously attempted to
obtain coverage through private insurance but as a result of her cancer
diagnosis, which was considered a pre-existing condition, an
exclusionary rider would have been placed on her health coverage plan;
this rider would have left her virtually uninsured for her cancer
treatment and related care services. Fortunately, the Patient Advocate
Foundation case manager assigned to her was able to assist the patient
in applying for coverage through the risk pool through which she later
obtained coverage. Since this patient was very well informed, and had
adequate financial resources, she was able to continue her COBRA
coverage in order to maintain creditable coverage so that she wouldn't
be subject to a pre-existing condition waiting period. I commend the
state of Connecticut for its dedication to providing individuals with
pre-existing conditions coverage through a high-risk pool; however, as
I'm sure you are aware, there are many other Connecticut residents that
find themselves unable to access health coverage through the risk pool
for a variety of reasons, one being the high cost of coverage.
We have also found that the application and enrollment process for
high-risk pools is also fraught with many barriers. In most states,
individuals applying to high-risk pools must provide proof of rejection
from health insurance coverage, proof that an individual is presently
insured with a rider attached or has health insurance that is rated,
proof that an individual is presently insured with a higher premium, or
proof that an individual is eligible for the portability option under
HIPAA. Such enrollment requirements are particularly burdensome for
patients struggling with chronic and life-threatening illnesses that
should be focusing their attention on their treatments and recoveries.
In December 2007, America's Health Insurance Plans, the trade
association for many of the country's largest health insurers,
recommended that states should create Guarantee Access Plans to provide
coverage for uninsured individuals with the highest expected medical
costs. In return, health plans would limit rescission actions and grant
coverage to a certain percentage of applicants not eligible for the
Guarantee Access Plan. NPAF applauds this acknowledgment that there are
currently serious barriers in the individual market particularly for
patients with pre-existing conditions. While their proposal appears to
be a step forward in the effort to prevent denial of benefits based on
health status, NPAF is concerned that the plan places too much
responsibility on states, who are already burdened with expanding
uninsured populations and funding obstacles associated with operating
high-risk pools.
In closing, while there are some patients who are benefiting from
state high-risk pools, generally these risk pools are under-funded,
have long wait lists, and exclude coverage of pre-existing conditions
for a set amount of time. We strongly believe that reform at the
federal level is necessary for individuals with pre-existing conditions
so that they are able to access health insurance coverage in a timely
manner.
______
Chairman Andrews. Thank you for your testimony and personal
experience. That is motivating. Thank you for your efforts.
Ms. Gould, welcome to the committee.
STATEMENT OF RITA GOULD, RETIRED PROFESSOR
Ms. Gould. I feel strongly about H.R. Bill 2833, that it
pass. I want to thank Congressman Courtney for going to this
length to see it does pass. I am here to support it 100
percent.
My situation is probably very similar to a lot of people.
For example, I contacted AARP when I was in need of solo
insurance for a six-month period. And I completed a very
detailed application. And I was very honest. And a month later
I was told I was rejected because I had Type II diabetes and my
medication was too costly. My question was to them why did you
bother to have me fill out the application when you knew I was
going to be rejected. I looked into other solo insurance plans
and found they didn't exist or they had similar stipulations. I
also have a friend who sells health insurance and she couldn't
find any company to insure me. She also confirmed that
insurance companies reject many people with less complicated
medical issues than diabetes.
My only option was going without insurance or being in a
pool of high-risk ``Uninsurables'' through the Connecticut
Reinsurance Program. I chose the latter. However, this was
extremely costly. It was $1242.21 per month, more than my
mortgage and more than twice what I had been paying monthly on
COBRA which was already a financial stain. In addition to the
premium I had $30 office visit co-pays and prescription co-
pays. Last year I paid almost $11,000 out-of-pocket in premiums
and medication costs. I am not poor. I worked all my life and I
do think that I was certainly discriminated against and people
like me were discriminated against. Type II diabetes, also
called non-insulin dependent diabetes, is the more common form
affecting 90 percent to 95 percent of the 21 million people
with diabetes.
And we are not all fat couch potatoes. I have been affected
by this disease for 15 years. Again, I never missed work
because of it, nor have I been hospitalized. I am a very
productive member of society, doing volunteer work and I am
still working at Central Connecticut State University in the
teacher education program.
Believe it or not, I am not a fan of universal health care.
But I do believe much can be done now to help people in such
similar situations. This bill will not help me, but I feel very
strongly about it. In fact, I should be home making ravioli for
Easter, but I am here because I truly believe that Mr.
Courtney's bill must be passed.
I could go on and on, but I think I am just going to stop
here and give everybody else a chance.
I think I said what I need to say. There are a lot of
people in situations in this State that need your help and
again I agree with my colleague here, it needs to be on the
Federal level. And I will do whatever I can to help get this
bill passed. Thank you.
[The statement of Ms. Gould follows:]
Prepared Statement of Rita D. Gould, Retired Professor
I contacted newly elected Congressman, Joseph Courtney in February
2007 after being refused solo medical insurance for a six-month period
(March 1, 1007--September 1, 2007). Up until that time, I was covered
under COBRA for the maximum time allowed on my husband's United
Technology Corp. insurance. I was allowed to remain on his insurance
for five years after his retirement at 65 and then on COBRA. However,
there were no company options to cover me for that six-month period
until I turned 65.
I contacted AARP and completed a very lengthy, detailed application
for their solo plan. After a month, I received a letter telling me that
my application was refused because I had Type II diabetes and that my
medication was too costly. Panicked, I looked into other health plans
and found that solo plans either didn't exist or had similar pre-
existing stipulations. I have a friend who sells health insurance, but
she could not find any company to insure me. She confirmed that
insurance companies reject many people with less complicated medical
issues than diabetes.
My only option was going without insurance or being placed in a
pool of ``Uninsurables'' through the Connecticut Reinsurance Program. I
chose the latter; even though the monthly cost of this insurance was
$1242.21 per month--more than my mortgage and more than twice what I
had been paying monthly on COBRA, which was already a financial strain.
In addition to the premium, I had $30 office visit co-pays and
prescription co-pays. At this time, my husband was retired and I was an
adjunct professor in the teacher education department at Central
Connecticut State University. Could I afford this? Not really. Was I
angry? To say the least. I appreciated Congressman Courtney's office
staff, namely Dorothy Grady, listening to my plea and subsequently
organizing a neighborhood meeting at my home with the congressman and
some neighbors to discuss healthcare concerns.
Type II diabetes, also called non-insulin dependent diabetes, is
the most common form of diabetes, affecting 90%-95% of the 21 million
people with diabetes--and we are not all fat couch potatoes. I have
been affected by this disease for 15 years and have never missed work
because of it nor have I been hospitalized. However, that didn't matter
to AARP. In 2007, the cost of my insurance premiums and prescription
drugs was $10,872! By the way, when it came time for me to select a
Medicare supplement, AARP and others wouldn't stop soliciting me. My
diabetes hadn't disappeared.
In all 45 years of my professional working life, I have willingly
paid my fair share toward caring for the less fortunate, believing that
it is my moral and Christian obligation to do so. But being denied
insurance because of having a bad gene, made it quite evident that
welfare recipients aren't the only ones discriminated against. The
government is not doing enough to extend medical coverage to hard-
working citizens like me at a reasonable cost or from preventing people
from going bankrupt because of an uninsurable pre-existing condition.
As an educator, I have witnessed what the Department of Education
did to dilute the American educational system, so it is not surprising
that I am NOT a proponent of universal healthcare and believe that if
medical care is expensive now, wait until it is ``free.'' However, I
applaud Congressman Joe Courtney for tackling the difficult subject of
insurance companies' right to deny coverage to consumers regarding pre-
existing medical conditions. He is enthusiastic and sincere about
helping his constituents in what can constitute a fight for their
lives, and I sincerely hope that his bill is passed.
While passage of this bill will help many people, in order to make
a real difference in healthcare, you need to address the Employee
Retirement Income Security Act of 1974--ERISA--in its entirety. This
act allows insurance companies to do basically whatever they wish.
Perhaps the standards for these voluntarily established health plans in
private industry should be more stringent in order to protect
employees. The COBRA amendment was necessary, but when people lose
their jobs, they usually don't have enough money to pay the COBRA
premiums. Further, HIPPA is a noble effort but it isn't working. If the
idea of HIPPA is privacy, why am continually inundated with diabetes
newsletters and information about purchasing diabetic supplies from
sources I've never contacted? Let's face it; once your name is in a
computer, anyone in the world can access it easily. And when will there
ever be parity for mental health coverage? Discrimination is alive and
well in healthcare.
Even as a diabetic, I am still a productive member of society. As
much as I believe Medicare might like it, I am not dead yet, nor am I
here to make Congress's job easy. I should be home today making ravioli
and Easter bread, but I believe wholeheartedly that Congressman
Courtney's bill must be passed and will do whatever I can to see that
it does. This bill won't help me, but it may help at least 21 million
others. I truly believe that it is high time the inequities and
discrimination within the medical coverage system cease. If Congressman
Charlie Wilson single-handedly can wage a war with the Mujahideen
against the USSR, just think what 100 congressional representatives
working together for the welfare of Americans' health can do. I
sincerely hope they are up for the challenge?
______
Chairman Andrews. Ms. Gould, thank you. We wish you'd
brought some of the ravioli with you. We regret keeping you
away from your kitchen. Thank you for sharing your story.
Mr. Stirling, welcome to the committee.
STATEMENT OF JAMES STIRLING, CHIEF EXECUTIVE OFFICER, STIRLING
BENEFITS
Mr. Stirling. Thank you, Mr. Courtney, for setting this up.
And, Congressman Andrews and your staff, thanks for making sure
we got here. I appreciate you coming to Connecticut instead of
having this in Washington.
For the record, my name is James Stirling. I am delighted
to be able to testify on H.R. 2833.
When HIPAA required group health plans to modify their
preexisting condition periods in 1996, many groups dropped
their limits altogether. They did this because number one,
groups do not like denying coverage to those employees who need
it. Number two, HIPAA made the cost of administering their
credible coverage statements not worth the claim savings.
HIPAA gutted the preexisting condition provision except for
these five or six million people. I think H.R. 2833 will
continue that trend in the group market, but it may have some
unintended problems with the individual market.
H.R. 2833 treats all plans equally, regardless of if the
plan is self-funded, fully insured, or collectively bargained.
This keeps the playing field level. With a 30-day look back,
three-month limitation many more group plans will drop their
pre-ex entirely. Employees will be able to move more fluidly
from one employer to another, thus reducing ``Job Lock'' and
will have positive consequences even if it does cost the plan
some more money. Indeed, those costs will be passed on to the
sponsor who will pass them on to their employees either by
lower wages, higher contributions, or they will be forced to
raise the prices for their goods and services.
So the question for the group market really is, how much
will such a bill cost employees and consumers ultimately? So
long as all plans are treated the same, I come to conclude the
answer is not too much. In 1986 some thought that COBRA was so
onerous it would end employer-sponsored coverage. It did not
whatsoever. The same with HIPAA. But the group market adapted.
The individual market will also adapt.
But there are some more significant unintended financial
consequences. Individual plans are inherently prone to adverse
selection. To make a profit, maybe that is the key point here.
Selection carriers utilize several tools to make a profit. They
can limit coverage for preexisting conditions, reduce benefit
levels, increase rates for new policies, or increase premiums
at renewal.
H.R. 2833 dulls one of these tools. And to continue
profits, carriers will have to sharpen the others. I am afraid
that may have a sting all of its own. This does not mean this
approach should be abandoned, but we should be cognizant of
this potential consequence and the rates will likely increase
to cover the preexisting conditions of a minority of
policyholders. That said, the individual market reforms must
continue.
I believe we are at the point where defined benefit pension
plans were 20 years ago. Then employers defined what pension
benefits employees received, just like employers now define
what health benefits their employees receive today. Now 20
years later, the employee controls the investments in their
portable 401(k)s. With some reforms, a parallel shift may be
under way with our nation's health programs.
To your point Chairman Andrews, entire peoples coming in
higher access, low cost plans across the board, similar to how
Social Security provides a base for retirement savings, Federal
and State governments could provide health care with employer
and individual plans building on that base.
For this option to develop we will need to make the
individual market function more like the group market. And H.R.
2833 moves us in that direction. But we will need to go further
than your bill shows. Perhaps, with some combination of
community rating, broad based pooling and carrying health
credits forward from one plan to another similar to the way you
carried forward credits from a previous plan.
At its heart, H.R. 2833 is an insurance reform bill. I must
conclude no amount of insurance reform will by itself be able
to make the cost of our health care system sustainable. Until
we find ways to pay for health instead of paying for
healthcare, we will only be tweaking at the edges.
H.R. 2833 will increase parity for all types of plans and
that is a good step.
Thank you for opportunity to share my views. And thank you
for furthering the work in this area.
[The statement of Mr. Stirling follows:]
Prepared Statement of James Stirling, Chief Executive Officer, Stirling
Benefits
For the record my name is James Stirling. I am CEO of Stirling
Benefits, Inc. a Third Party Administrator (TPA) of group health plans
located in Milford CT and Chairman of the Board of the Society of
Professional Benefit Administrators (SPBA) in Washington, D.C. Thank
you for this opportunity to testify on HR 2833.
When HIPAA required group plans to modify their pre-existing
condition periods in 1996, many groups dropped their limits altogether.
They did this for two reasons: 1) groups do not like denying coverage
to employees that need it, and 2) the cost of administering the
credible coverage statements was not worth the claim savings compared
to their pre-HIPAA plan provisions. This bill will further this trend
in the group market, but may have unintended consequences in the
individual market.
HR 2833 treats all plans equally, regardless if the plan is self
funded, fully insured or collectively bargained. That keeps the playing
field level. The result will likely be that many group plans will drop
their pre-ex clauses entirely, continuing the trend started with HIPAA
portability provisions in 1996. Employees will be able to move more
fluidly from one employer to another. This reduction in ``Job Lock''
will have positive consequences for our dynamic economy, even if it
does increase costs for plans.
There will be added costs. Insurance carriers or administrators
will shift the added cost to the plan sponsors. Employers will pass
these on to their employees via lower wages or higher contributions, or
increase the cost of their goods and services to pay for the increase.
So the question for the group market is: how much will such a bill
cost employers and ultimately consumers? I think the answer is not too
much. In 1986, some thought that COBRA was so onerous that it would end
employer-sponsored coverage. It did not. We heard the same predictions
with HIPAA portability a decade later, but group coverage continues. In
the group market, this bill will have a minimal overall cost impact.
The individual market will also adapt, but there may be more
significant unintended consequences. Individual plans are inherently
prone to adverse selection. To offset that selection carriers utilize
several tools to make a profit. They can limit coverage for pre-
existing conditions, reduce benefit levels, increase rates for new
policies, or increase premiums at renewal. By dulling one of these
``tools,'' they will have to sharpen the others. The remaining tools
may have a sting of their own. This does not mean this approach should
be abandoned, but we should be cognizant of this potential consequence
and seek to combine the pre-ex modifications with other needed reforms.
I'm in favor of reforming the individual market. I believe that we
are at the point where defined benefit pension plans were 20 years ago.
Then, employers defined what pension benefits employees received, just
like they define health benefits today. Now, the employee controls the
investments in their portable 401(k)'s. With some reforms, a parallel
shift may be under way with our nations health programs. Similar to how
Social Security provides a base for retirement savings, the government,
could provide basic health coverage to all legal residents, with
employer and individual plans building on that base.
For this option to develop we will need to reform individual market
to create a viable, alternative to employer-sponsored coverage. Steps
that make the individual market function more like the group market, as
this bill does, are in the right direction. But we will need to go
further, perhaps with some combination of community rating, broad based
pooling, and carrying health credits forward from one plan to another.
At its heart, this is an ``insurance'' reform bill. I must conclude
that ``insurance'' reform, by itself, will not do enough to make the
cost of our health care system sustainable. Until we find ways to pay
for ``health'' instead of paying for ``healthcare,'' we will only be
tweaking at the edges. H.R 2833 will increase parity for all types of
plans, and that's a good step. To help those with ongoing health
conditions, over the long term, we will need a more significant
overhaul, not just of insurance laws, but the way care is delivered. We
must find ways to align all our interests to pay for health, not just
healthcare.
Thank you for the opportunity to share my views, and thank you also
for all that you do to serve the public good.
______
Chairman Andrews. Thank you for your thoughtful
contribution.
Ms. Horoschak, glad you're with us.
STATEMENT OF DONNA HOROSCHAK, VICE PRESIDENT OF PRODUCT POLICY,
AMERICA'S HEALTH INSURANCE PLANS
Ms. Horoschak. Thank you. I am Donna Horoschak with
America's Health Insurance Plans.
A little about our organization. Our members offer a broad
range of health products both in the commercial marketplace and
also have demonstrated a strong commitment to participation in
public programs.
We appreciate this opportunity to testify today and we
commend the subcommittee for holding this meeting examining the
implications of these issues both for consumers and for the
health insurance marketplace.
Our written testimony focuses on proposals AHIP has
endorsed for expanding coverage to all Americans, our members,
including that directly address the circumstances of uninsured
persons who have preexisting medical conditions. Our written
testimony also discusses the survey findings on the individual
health insurance market, a survey that we conducted as well as
research findings on the unintended consequences of a NPAF and
in the absence of universal coverage.
I would like to focus my testimony today on our proposals
which are designed to insure no one falls through the cracks of
the health care system while recognizing both the private and
public sector and public programs have a role in meeting this
challenge.
In two, our proposal includes a comprehensive set of
targeted policy proposals that would expand eligibility for
public programs and enable all consumers to purchase health
insurance with pre-tax dollars, provide financial assistance to
help working families afford coverage and encourage States to
develop and implement access proposals.
More recently we announced a proposal for reforming the
individual health insurance market through a new strategy that
calls for shared responsibility between the public and private
sectors. This three-part initiative includes first a strategy
that States can implement now to guarantee access to health
insurance coverage to all Americans and seek coverage in the
individual market, including those preexisting medical
conditions. Under our approach, we are urging States to
establish Guarantee Access Plans to provide coverage for
individuals who are not eligible for other coverage and have
the highest medical costs, that is costs that exceed 200
percent of the average claim cost. If an individual is not
eligible for coverage under those provisions through Guarantee
Access Plan, then they would be eligible for a guarantee issue
policy in the private sector market that would be a premium
capped at 150 percent of the standard rate.
Further when a Guarantee Access Plan is first established,
a one-time open enrollment period should be held for uninsured
individuals where they would be able to enroll in the program
without application of any preexisting condition exclusion.
Our proposal also encourages States to create a sliding-
scale premium subsidy program with additional financial
assistance for those with the highest health care costs and to
fund Guarantee Access Plans from a broad base of sources to
ensure that coverage remains affordable for those who are
currently insured.
Second, our members support a series of operational reforms
to give consumers peace of mind when purchasing individual
health care coverage and this includes limiting the use of the
preexisting condition exclusions, restricting rescission
actions and establishing a new third-party review process for
preexisting rescission conditions and rescission decisions.
For example, we are recommending that if an applicant for
an individual health insurance policy makes a complete and
accurate disclosure of a preexisting medical condition and then
a policy is issued to that individual, then the insurer cannot
later apply a preexisting conditions exclusion to that
condition at a later date that was disclosed in the
application. In addition, to make sure the applicants make
appropriate disclosures, we would support a proposal that would
require health insurance plans to make sure that applications
are clear and understandable.
Furthermore, to make the process transparent, we would also
support an independent third-party review anytime a claim is
denied because of a preexisting conditions exclusion. Some
could concentrate into the group insurance market. We have
discussed this. We anticipate they will also consider looking
at this in the group insurance market as well as the individual
insurance market. That when they do that they will consider the
impact these changes could have in both of those markets.
Third, our proposal also outlines five critical steps that
States would need to follow if they seek to achieve universal
participation by requiring their citizens to have coverage. If
the State takes these steps and achieves universal
participation, then health insurance plans could then guarantee
coverage to all applicants without regard to preexisting
medical conditions.
Thank you again for this opportunity to testify. Americans
Health Insurance Plans and members stand ready to work with us
to develop solutions for extending health insurance coverage to
all Americans.
[The statement of Ms. Horoschak follows:]
Prepared Statement of Donna Horoschak, Vice President, Product Policy,
America's Health Insurance Plans
Mr. Chairman and members of the subcommittee, I am Donna Horoschak,
Vice President of Product Policy for America's Health Insurance Plans
(AHIP), which is the national association representing approximately
1,300 health insurance plans that provide coverage to more than 200
million Americans. AHIP's members offer a broad range of health
insurance products in the commercial marketplace and also have
demonstrated a strong commitment to participation in public programs.
We appreciate this opportunity to testify on the needs of
individuals who seek health insurance coverage following the onset of
medical problems. We commend the subcommittee for examining the
implications of these issues both for consumers and for the health
insurance marketplace.
Our testimony today will focus on proposals AHIP has endorsed for
expanding coverage to all Americans, including solutions that directly
address the circumstances of uninsured persons who have preexisting
medical conditions. Our proposals are designed to ensure that no one
falls through the cracks of the U.S. health care system, while
recognizing that both the private sector and public programs have a
role to play in meeting this challenge. For tens of millions of
Americans, the need to repair the health care safety net is a deeply
personal issue requiring bold solutions that can be implemented in a
timely fashion. We are committed to working with members of Congress to
advance meaningful reforms that provide affordable coverage options for
all Americans.
Other issues we address in our testimony include survey findings
about the current state of the individual health insurance market and
research findings on the unintended consequences of enacting certain
health insurance reforms in the absence of universal coverage. These
findings provide important insights into the strengths of the current
system and lessons learned from state reform initiatives over the past
15 years.
Solutions for the Uninsured and Those With Preexisting Conditions
AHIP and our members have outlined a number of promising solutions
for addressing the needs of individuals with preexisting medical
conditions and high health care costs, while also confronting the
broader issue of the uninsured.
In November 2006, AHIP announced a proposal for expanding access to
health insurance coverage for all Americans. Our proposal includes a
comprehensive set of targeted policy proposals that would expand
eligibility for public programs, enable all consumers to purchase
health insurance with pre-tax dollars, provide financial assistance to
help working families afford coverage, and encourage states to develop
and implement access proposals.
More recently, in December 2007, AHIP announced a proposal for
reforming the individual health insurance market through a new strategy
that calls for shared responsibility between the public and private
sectors. This three-part initiative includes a plan to guarantee access
to health care coverage to all Americans, new initiatives to give
consumers peace of mind about individual health care coverage, and
steps for states to take if they are considering a requirement for
universal participation.
State Guarantee Access Plans
First, AHIP is proposing a strategy that states can implement now
to guarantee access to health insurance to all who seek coverage in the
individual market, including those with preexisting medical conditions.
Under this plan, we are urging states to establish Guarantee Access
Plans to provide coverage for uninsured individuals with the highest
expected medical costs. If an individual is not eligible for coverage
through the Guarantee Access Plan, health plans would then provide
coverage to that individual on a guarantee issue basis with premiums
capped at 150 percent of the standard rate.
We are recommending that when a Guarantee Access Plan is first
established, a one-time open enrollment should be held for uninsured
individuals to obtain coverage with no preexisting condition
exclusions. Our proposal also would make coverage available in the
Guarantee Access Plan without preexisting condition exclusions for
individuals who maintain continuous coverage. We further recommend that
Guarantee Access Plans should be available to individuals who are not
eligible for employer-sponsored health coverage, a government program,
or other coverage and, additionally, whose claims costs are expected to
be 200 percent or more of the statewide average.
Guarantee Access Plans would offer a range of coverage options with
varying premiums, resulting from different levels of cost-sharing.
Premiums would be equivalent to 150 percent of standard market rates,
and coverage options would reflect benefit packages available in the
private market.
Under AHIP's proposal, if an individual is declined coverage by the
Guarantee Access Plan, all health insurance plans would guarantee
coverage until each plan's total individual enrollment reaches a
predetermined level (e.g., 0.5 percent of enrollment). When all health
insurance plans have reached the predetermined level, the level would
be raised and all plans would again guarantee coverage until they meet
the new level.
Health insurance plans also would provide assistance with the
enrollment process for the Guarantee Access Plan. This includes
informing individuals about the availability of coverage under the
Guarantee Access Plan and, at their request, transferring information
to the Guarantee Access Plan application.
Finally, to keep coverage as affordable as possible, our proposal
calls on states to allow health insurance plans to offer features such
as pharmacy programs that promote both value and safety; disease
management, preventive, and care coordination programs that bring
evidence-based care into everyday practice; and new benefit design and
payment incentives that reward quality and value. We also encourage
states to create a sliding-scale premium subsidy program with
additional assistance for those with high health care costs and,
additionally, to fund the Guarantee Access Plans from a broad base of
sources to ensure that coverage remains affordable for those who are
currently insured.
Operational Initiatives by Health Insurance Plans
Second, AHIP's proposal includes a series of operational reforms to
give consumers peace of mind when purchasing individual health care
coverage. This includes limiting the use of preexisting condition
exclusions, restricting rescission actions, and establishing a new
third-party review process for preexisting conditions and rescission
decisions.
Specifically, our proposal recommends that if an applicant for
individual health insurance makes a complete and accurate disclosure of
a preexisting condition and is issued a policy, health insurance plans
should not apply a preexisting conditions exclusion to that condition
at a later date. In addition, to make sure that applicants make
appropriate disclosures, our proposal emphasizes that health insurance
plans have a responsibility to make applications clear and
understandable.
Furthermore, to increase transparency in how preexisting conditions
exclusions are applied, our proposal for reforming the individual
health insurance market also calls for a new third-party review
process, established by state legislation, to allow consumers to
challenge claim denials based on a preexisting conditions exclusion.
This process should include timeframes for reaching a decision, with
expedited review available for emergency situations, and the
participation of at least one medical professional and one attorney on
the independent review panel.
Our initiatives have been developed with the goal of enhancing
peace of mind for consumers who purchase coverage in the individual
health insurance market and for consumers who have had a claim denied
under a preexisting conditions exclusion in their policies. Unlike
pending proposals that would make piecemeal changes to the parameters
for preexisting condition exclusions, these steps provide a strong
foundation upon which Congress can enact more comprehensive reforms.
Constructing an Individual Mandate for Coverage
Third, AHIP's proposal outlines five critical steps that states
would need to follow if they seek to achieve universal participation by
requiring that every citizen in the state have health care coverage. If
a state takes these steps and achieves universal participation, health
insurance plans could then guarantee coverage to all applicants,
without regard to preexisting medical conditions.
While AHIP is not advocating an individual mandate, we have
explored this issue and have identified five critical steps that states
should take as part of any strategy for achieving universal
participation:
develop an insurance coverage verification system;
enforce the requirement to purchase and maintain coverage;
establish an automatic enrollment process and be prepared
to provide backstop funding if individuals do not fulfill their
responsibility to purchase coverage;
create a premium subsidy program for moderate- and low-
income individuals and families, while also providing additional
assistance for those with high health care costs; and
fund coverage initiatives from a broad base of sources.
The establishment of a universal participation program, based on
these steps, could avoid the unintended consequences that have hampered
many well-intentioned efforts by states to assist those pursuing
coverage in the individual health insurance market.
Collectively, these proposals reflect our members' strong
commitment to ensuring that no American falls between the cracks of
public and private programs and that individuals can have their
disputes reviewed by an objective third party.
Survey Findings on Individual Health Insurance Market
In December 2007, AHIP released a new survey of the individual
health insurance market. The findings of this comprehensive survey
indicate that individually purchased health insurance is more
affordable and accessible than may be widely known and that it offers a
broad array of benefits.
According to the survey, 89 percent of applicants who went through
the application process were offered coverage in the individual market.
Forty percent of these offers were at standard premium rates and 49
percent were offered at lower (preferred) rates. Even among those in
the 60-64 age category, 71 percent were offered coverage and 74 percent
of these were at standard or preferred rates.
Nationwide, annual premiums averaged $2,613 for single coverage and
$5,799 for family plans in the 2006-2007 period. As shown in the table
on the following page, premiums varied by state, reflecting a variety
of factors, including premium rating and underwriting rules,
differences in health care costs, demographics, and consumer benefit
preferences. Premiums were significantly higher in states with
``guaranteed issue'' and ``community rating'' requirements that place
restrictions on premium variation and underwriting. However,
approximately 95 percent of the policies surveyed were sold in states
where the average annual premium was under $3,400 for single coverage
or $7,200 for family coverage.
INDIVIDUAL MARKET, AVERAGE ANNUAL PREMIUMS BY STATE
[Single Coverage, 2006-2007]
------------------------------------------------------------------------
State Average Annual Premium
------------------------------------------------------------------------
MASSACHUSETTS.................................. $8,537
NEW JERSEY..................................... $5,326
NEW YORK....................................... $4,734
RHODE ISLAND................................... $4,412
PENNSYLVANIA................................... $3,949
MAINE.......................................... $3,686
LOUISIANA...................................... $3,377
NEW HAMPSHIRE.................................. $3,368
NEW MEXICO..................................... $3,362
CONNECTICUT.................................... $3,326
NEVADA......................................... $3,118
NORTH CAROLINA................................. $3,080
SOUTH CAROLINA................................. $2,981
FLORIDA........................................ $2,949
SOUTH DAKOTA................................... $2,914
MONTANA........................................ $2,866
TEXAS.......................................... $2,782
WYOMING........................................ $2,688
NATIONAL....................................... $2,613
ARIZONA........................................ $2,591
CALIFORNIA..................................... $2,565
WEST VIRGINIA.................................. $2,540
COLORADO....................................... $2,537
KENTUCKY....................................... $2,537
MISSOURI....................................... $2,518
NEBRASKA....................................... $2,505
INDIANA........................................ $2,504
ILLINOIS....................................... $2,499
OHIO........................................... $2,498
MISSISSIPPI.................................... $2,489
OKLAHOMA....................................... $2,435
MINNESOTA...................................... $2,424
GEORGIA........................................ $2,419
KANSAS......................................... $2,363
VIRGINIA....................................... $2,359
DELAWARE....................................... $2,346
NORTH DAKOTA................................... $2,316
TENNESSEE...................................... $2,221
MARYLAND....................................... $2,208
ALABAMA........................................ $2,208
IOWA........................................... $2,202
ARKANSAS....................................... $2,153
WASHINGTON..................................... $2,015
IDAHO.......................................... $2,006
MICHIGAN....................................... $1,878
UTAH........................................... $1,574
OREGON......................................... $1,297
WISCONSIN...................................... $1,254
------------------------------------------------------------------------
Source: America's Health Insurance Plans.
NOTE.--Results from Alaska and the District of Columbia, where the
responding companies reported fewer than 500 policies in force, are
included in the national totals but are not reported separately.
AHIP's survey also demonstrates that consumers in the individual
market were offered a wide range of benefits, including mental or
behavioral health, prescription drugs, preventive, and maternity
benefits. Some level of behavioral health coverage was included in nine
out of ten policies purchased. Coverage for complementary and
alternative therapy was also quite popular, while vision and dental
coverage were chosen much less frequently.
INDIVIDUAL MARKET, SPECIFIC BENEFITS PURCHASED, 2006-2007
[PPO/POS and HSA/MSA]
------------------------------------------------------------------------
Percent of Policies in Survey
---------------------------------------
Coverage Included in Policies PPO/POS HSA/MSA
Purchased ---------------------------------------
Single Family Single Family
------------------------------------------------------------------------
Adult Physicals................. 66.2% 67.1% 73.2% 74.8%
Allergy......................... 71.9% 73.7% 84.5% 90.4%
Annual Ob/Gyn Visit............. 95.8% 94.1% 87.0% 82.1%
Bariatric Surgery............... 35.8% 35.0% 23.0% 15.9%
Cancer Screenings............... 94.1% 93.9% 90.0% 81.4%
Complementary & Alternative 70.0% 71.1% 75.3% 61.3%
Therapy (Chiropractic,
Naturopathy, Acupuncture, etc.)
Complications of Pregnancy...... 100.0% 100.0% 100.0% 100.0%
Dental.......................... 14.0% 8.5% 6.2% 4.0%
Fertility treatment............. 26.7% 26.7% 5.1% 3.2%
Inpatient Behavioral Health..... 93.8% 79.1% 89.5% 89.4%
Outpatient Behavioral Health.... 94.3% 84.3% 86.8% 83.3%
Normal Delivery................. 57.7% 59.5% 51.6% 40.3%
Oral Contraceptives............. 78.8% 76.6% 53.5% 46.8%
Inpatient Substance Abuse....... 85.0% 80.2% 86.2% 87.4%
Outpatient Substance Abuse...... 84.1% 78.5% 82.5% 80.8%
Vision.......................... 7.6% 17.8% 7.0% 4.2%
Well-Baby Care.................. 88.0% 86.8% 80.2% 74.0%
Well-child visits............... 89.7% 88.5% 85.8% 79.4%
------------------------------------------------------------------------
Source: America's Health Insurance Plans.
Research Findings on Previous State Initiatives Yielding Unintended
Consequences
Last year, AHIP commissioned research that yielded important
lessons about the unintended consequences that can result when certain
health insurance reforms are enacted in the absence of universal
coverage. In September 2007, we released a report by Milliman Inc. that
examined eight states--Kentucky, Maine, Massachusetts, New Hampshire,
New Jersey, New York, Vermont, and Washington--that enacted various
forms of ``community rating'' and ``guarantee issue'' laws in the
1990s.
The Milliman report found that these initiatives, when enacted
without universal coverage, can drive up health care costs for
consumers, limit access to coverage, and have unintended consequences
for healthy persons. The report also found no significant decrease in
the uninsured population in states that implemented these initiatives.
As a result, several states that initially implemented community rating
and guarantee issue laws have since repealed or modified their laws
with the intent of stabilizing the insurance marketplace and providing
consumers more choice and access to coverage.
The experience of New Jersey is particularly noteworthy. In the
early 1990s, the state legislature enacted a package of reforms that
included community rating, guaranteed issue, and standardized plan
requirements. Initially, these reforms briefly increased the number of
carriers participating in the individual market and the number of
persons buying individual coverage. Over time, however, these reforms
led to dramatic rate increases for the standardized plans. By 2007, the
number of carriers participating in the state's individual market had
declined to only seven and the number of persons buying coverage in the
individual market had dropped to approximately 80,000 annually--
significantly below the 220,000 persons who purchased individual health
insurance coverage in New Jersey in 1995.
These and other findings of the Milliman report are well worth
considering in any congressional debate about preexisting conditions.
The clear lesson for policymakers is that any reforms that give healthy
people incentives to delay purchasing coverage will lead to unintended
consequences for the broader population and diminish access to high
quality, affordable health insurance. Instead of pursuing piecemeal
reforms that have been tried before by states and create the unintended
consequence of exacerbating existing problems, Congress should consider
the challenge of ensuring that individuals with high health care costs
receive coverage as part of broader policy changes that would bring
meaningful relief to health care consumers.
Conclusion
Thank you again for this opportunity to testify. AHIP and our
members stand ready to work with you to advance solutions for providing
health insurance to uninsured persons with preexisting medical
conditions. We also look forward to participating in a serious debate
on the broader challenge of extending coverage to all Americans to
ensure that no one falls through the cracks.
______
Chairman Andrews. Thank you very much for your views and
positive ideas.
Mr. Tessier, welcome to the subcommittee.
STATEMENT OF ROBERT TESSIER, EXECUTIVE DIRECTOR, CONNECTICUT
COALITION OF THE TAFT-HARTLEY HEALTH FUND
Mr. Tessier. Good afternoon. Thank you, Representative
Courtney, it's good to see you again.
Our coalition is a coalition of 17 jointly-sponsored labor
management sponsored health funds. We are, taken together in
the State of Connecticut, the second largest private payer of
health care. Our member funds spend about $100 million on
health care services every year. I can't so much speak to the
problem. You, the committee, you, Representative Courtney have
identified the problem. I can speak to what our experience is
and tell you that for health funds that may be slightly
different. Maybe different in some ways from the commercial
insurers. We have a mix of funds that have preexisting
condition exclusions that are applied. Funds that don't have
them, never had them. Some funds, as James testified earlier,
had such exclusions, but have since dropped them. Essentially
what I'm here to testify today is that this has not been a
significant cost for our funds.
I have spoken to the administrators for all the large funds
and several of the small funds. We are all funds that are very
cost conscious. As you know, health care costs have continued
to rise dramatically. Our funds get their funding through the
collective bargaining process; the cost of health care has been
the most controversial and difficult subject in collective
bargaining for many years. We don't have extra money sitting
around that we can waste. We have exhausted the areas where we
can find savings. This has not been an area where funds have
been able to say no, we need this. There is a significant
problem here we need to be able to deny coverage. Our funds are
not in the business of denying coverage in the first place.
After discussion with those funds, I'm here to testify it's not
as significant--on occasion it is a problem, but not something
there is a great deal of savings for us.
Are we different than commercial insurers? Yes. In some
ways we are different in that access to our membership, for
instance, with the building trades funds typically come after
people serve in apprenticeship programs or through it; they
have a longer relationship with both the union employer and the
fund. So we don't have a problem--I have not seen a problem
with employees that have a heart attack then look for work as a
carpenter or operating engineer or something. It doesn't work
that way.
Also when they become eligible for coverage there is not
the kind of election that occurs with many employers. People
don't have a coverage problem.
People have coverage it's automatic. It's not an election
the individual makes.
We are different in other ways--we are not different in
other ways in the service industries. Access to the coverage
and funds is very similar, to wit, the commercial insurance.
Again there seems to be very low turnover of our membership in
the funds even in the service industries, but there is some
there again. It is still not a problem. The funds I know that
do not have a preexisting condition exclusion, in fact, are in
the service industry. Something that may be of interest to you
on this issue, I will shed some light.
We had a recent study done of our membership, all the
coalition funds membership by our data analysis firm. And for a
12-month period our funds spent $1.3 million on medical
treatments directly and specifically identified as related to
members with diabetes. Members and their dependents with
diabetes. The fascinating thing was when we looked at other
comorbidities over that 12-month period, we were 13 million
essentially a 10 to 1 ratio. What we found fascinating those
comorbidities covered the full range almost every body organ or
problem there could be. It strikes me that it's impossible to
identify and exclude things that could be related to a
particular illness, a chronic disease that are being paid for
already. So my point is that the existing exclusions are really
only touching a piece of it and why do that? It's so arbitrary
as to be patently unfair.
Thank you.
[The statement of Mr. Tessier follows:]
Prepared Statement of Robert Tessier, Executive Director, Connecticut
Coalition of the Taft-Hartley Health Fund
On behalf of The Connecticut Coalition of Taft-Hartley Health
Funds, Inc. (``Coalition'') and its members, I am writing to express my
support for H.R. 2833, the ``Pre-existing Exclusion Patient Protection
Act of 2007.'' Before I go any further, allow me to share some
background information regarding the Coalition and its members that may
be helpful.
The Coalition is a non-stock membership corporation under
Connecticut law, and it is operated on a ``not-for-profit'' basis. The
Coalition was incorporated in June of 1992, and the Internal Revenue
Service has confirmed that the Coalition is a tax-exempt organization
under Section 501(c)(6) (business league) of the Internal Revenue Code
(``Code''). In general, the Coalition's members are tax-exempt, multi-
employer health and welfare funds which are governed by various federal
laws, including ERISA and the Taft-Hartley Act of 1947. Each of these
Coalition member funds has an affiliation with a specific labor union,
and each is normally tax-exempt under Code Sec. 501(c)(9) as a
``voluntary employees' beneficiary association'' or VEBA.
The Coalition currently has seventeen member health funds, the vast
number of which are located in Connecticut and cover Connecticut
residents. I would estimate that Taft-Hartley Health Funds--the
majority of which are Coalition's members--represent approximately
200,000 total covered lives in the state, consisting of active
employees, retired individuals and their eligible dependents.
On a personal level, I have extensive experience with labor unions
and their associated employee benefits plans. Prior to becoming the
Coalition's Executive Director in January of this year, I was the plan
administrator of the Connecticut Carpenters Benefit Funds for five
years and the New England Health Care Employees Benefit Funds for eight
years. I was also the Coalition's President from 2000 through 2007.
Coalition funds are established and funded pursuant to the terms of
collective bargaining agreements negotiated by the sponsoring unions
and respective employers and/or employer groups. The individual health
funds are independently managed and the plan of benefits for each fund
is established by their board of trustees. They provide comprehensive
health coverage and often include non-health benefits such as life
insurance, disability and scholarship benefits. These not-for-profit
health funds are unique in the health care marketplace in that they are
both payor and consumer. Under federal law (ERISA) these funds exist
for the sole and exclusive benefit of the participants and my
experience is that when the funds are able to achieve savings, those
savings are returned to the participants in the form of increased or
improved benefits.
Taken together, Coalition member funds represent the second largest
purchaser of health care services in Connecticut, after state
government. Member funds spend approximately $100 million on health
care services each year. The Coalition's mission is to use the combined
strengths of our members to secure the best possible health care at the
lowest practical cost. Through various joint-purchasing initiatives we
have succeeded in saving our member funds millions of dollars every
year. We've established positive relationships throughout the industry
and helped stabilize the volatile and escalating costs of health care
for both our members and their employers.
Some Coalition member funds do have pre-existing condition
exclusion provisions in their plans and some do. Some funds had these
exclusions and subsequently eliminated them in the interest of offering
equal coverage to all participants. Funds that have such exclusions
have indicated that denials of claims for this reason are rare
occurrences. To the extent that our funds have members who are
medically compromised, i.e. who are denied coverage because of a
preexisting condition, those members may represent a safety hazard to
co-workers on the job, especially in the construction industry.
While there may be some costs associated with shortening the amount
of time that an employer could exclude coverage and shortening the
permitted ``look-back'' period, surely the benefits of increasing
access to health insurance coverage outweigh such costs. For these
reasons, the Coalition supports the ``Pre-existing Exclusion Patient
Protection Act of 2007'' (H.R. 2833) and urges its passage.
______
Chairman Andrews. Thank you. That is a point of view I had
not thought about, that body of evidence. That is very
interesting.
Mr. Farrell, welcome to the subcommittee.
STATEMENT OF JOHN FARRELL, FOUNDER, J.J. FARRELL ASSOCIATES
Mr. Farrell. Thank you, Mr. Chairman and Mr. Courtney. I
would like to support H.R. 2833. I think the bill helps protect
patients whose clinical and financial condition is compromised.
It reduces the cost shift to those with private insurance. It
will also as well limit the broad latitude often exercised by
health insurers in denying benefits under the umbrella of a
preexisting condition.
My comments today will focus on the financial aspects of
this issue. Really using the Connecticut health delivery system
as an example.
It's not uncommon for people with chronic medical
conditions to also experience a deterioration in their
financial well-being. When one enters that situation, there are
two possibilities. Either care is postponed or denied, or they
seek immediate healthcare. In this case it's the hospital
delivery system which renders that care.
In Connecticut it is essentially a non-profit community-
based delivery system with 31 hospitals. There is no government
hospital system.
It is very important for us in this State and in a study we
did about three years ago for the Universal Health Care
Foundation of Connecticut, we showed 12 percent of hospital
costs are shifted from those who cannot pay, that goes right to
the insurers. As you're looking for real examples here I will
give you an example of our largest employer which is the State
of Connecticut. The State of Connecticut pays in excess of $800
million dollars a year for healthcare. Three percent represents
a subsidy of those that can't pay. As we look at this mostly
through those insurance cross-subsidies there are also other
subsidies in this State, there are distressed hospital pools
funded out of Federal levels. One starts to look at exactly
what we are talking about. There is a reimbursement system
today. It is a convoluted system. It's insufficient and
ineffective. When that patient does receive care through the
emergency room, their outcome is compromised from the
beginning. The emergency room is a poor place to receive health
care other than in a tragic accident. We did studies that show
for a major cancer center in an emergency setting that person's
outcome is compromised. I look at that as a very significant
issue for us.
As we also look at the individual market, the effects of
that, I think it is important to recognize now other facts. The
individual market is a community rated market. It's not my
direct experience. We wonder why our rates are going up 20
percent. Nobody got sick last year. There is very little choice
for the small employer today.
As you look at that, I think that is very important to
recognize in this. I think the effort selection is overrated.
Again I support this bill very much. I think it is a
constructive first step as you look at this.
[The statement of Mr. Farrell follows:]
Prepared Statement of John J. Farrell, Founder, J.J. Farrell Associates
I would like to thank you for the opportunity to note my support
for H.R. 2833. This bill helps protect patients whose clinical
condition has compromised both their medical and financial well-being.
I believe this bill will reduce the cost shift to those with private
insurance. It will also limit the broad latitude often exercised by
health insurers in denying benefits under the umbrella of a pre-
existing condition, with minimum additional financial impact upon
private payers.
My comments will be from a financing perspective using the
Connecticut health delivery system as an example.
It is not uncommon for people with chronic medical conditions to
also experience a deterioration of their personal financial resources.
In addition, the physical and logistic demands their medical condition
makes it harder to maintain consistent employment.
To appreciate the financial impact of HR 2833, I believe it would
be helpful to view the issue from an individual's perspective. What
happens, for example, when a new employee with a preexisting chronic
condition, without health insurance is in need of care?
The answer is straight forward, they either postpone care until
coverage begins, or they seek immediate care. If they choose the former
option, the employer ultimately picks up the expense, now possibly
increased by the cost of complications. More likely they seek care,
without the financial resources to pay the full cost of care.
The Cost Shift
In Connecticut, the health care delivery system is anchored by 31
acute care hospitals. It is essentially a non profit community based
delivery system. Each hospital, functions as a safety net, caring for
all patients irrespective of their coverage status, including the
indigent and uninsured. This system, while under mounting pressure,
works relatively well when compared to other states.
The health facility rendering this uncompensated care shifts this
unmet cost to private payers, including self insured employer groups.
This is commonly referred to as the ``cost shift''. Approximately 12 %
of each hospital bill is attributable to the cost shift.
While HR2833 would increase the amount directly paid by the health
insurer, it would correspondingly reduce the amount of cost shift. On a
net basis there would be little additional cost.
Development of Health Insurance Premiums
It should also be noted that the aggregate health care experience
of a population is utilized in the establishment of community health
insurance rates. In simple terms the experience of the previous period
is used to set prospective rates. The historic expense of caring for
chronically ill patients are included in the aggregate plan wide costs.
These costs are spread among the broader population and every party
paying community rates effectively absorbs a portion of this cost.
Thank you for this opportunity to provide the committee with my
views on this important legislation.
______
Chairman Andrews. Thank you. I think it is true the issue
is how we are paying and who is paying, not whether we are
paying. These costs are being absorbed by the system. The
question is whether they are being absorbed in a rational,
efficient way, or irrational inefficient way. I would like to
ask my friend and colleague if he would like to question the
panel first. There is no trap door.
Mr. Courtney. Thank you, Mr. Chairman and the witnesses for
all their thoughtful testimony here today. I want to start off
some of the questions. I am sure the Chairman will jump in as
well. Starting with you, Ms. Davenport.
Can you describe the foundation--what kind of people are
looking for help from your organization maybe just you don't
have to do an exact case study, but a typical person that
you're helping and how they pump up into this problem.
Ms. Davenport-Ennis. Let me take the calendar year of 2007
when we had 6.8 million people in America who reached out to
us. They had been diagnosis with a chronic debilitating, life-
threatening issue. They were facing obstacles to access,
prescribed health care. It was not able to be resolved in their
local community, sometimes not even at their State level.
Eighty percent of those people were in some form of
insurance. They may have been underinsured, but they were in
some form of insurance. Twenty percent were completely
uninsured. When we started peeling the layers back to see why
are you uninsured, what brought you to this point, why you need
us today, what we saw we saw families that had been forced to
leave one job in one community and move to another location.
Often to take care of a senior family member, so they get to
the new location, they are trying to buy insurance for their
family. They have a seven-year old son who has chronic asthma.
Every plan they try to get into, some said there will be a 12
month pre-ex for this child with asthma, or the family has a
situation where the husband is insured. The husband goes in for
an examination and is told you're healthy as can be.
That is in 2005. In 2006 he decided he wants to improve his
insurance policy. And so he went back to this health insurer,
he upgraded it, improved it. Six months later he went to a
doctor, he had a strange place on his tongue only to find six
months after that that it was a squamous cell carcinoma. Within
four months after the diagnosis he received a letter saying we
are going to rescind your coverage. You didn't correctly fill
out your application to start with.
You had a preexisting condition. There is nothing in his
health records or examination that could have suggested to him
in 2006 he had preexisting condition. The people who come to
us, some of them are in financially desperate conditions. About
16 percent of the uninsured that come to us are at the Federal
poverty level or below.
Then you had another slice, the next 30 percent, are still
in a low/middle income or upper low range of income, but they
have been hit with a diagnosis of life threatening illness,
there is no recourse for them. When we try to get them into
Medicaid sometimes they are over the limit, they can't qualify,
we go to the State high-risk pools. We can't get them enrolled
there. So the patients come to us with a number of different
issues always in play. Pre-ex ultimately even if we can find an
insurance plan for them ends up being the Achilles heel, having
genuine insurance.
What happened to the 31 year old woman in Texas? We got her
into the Health Insurance Plans, but if she relapses there is
not going to be any benefit. Our plan at end of the day, who
does she have insurance with. One in three Americans live with
probably the same thing. A suggestion to all of us, no matter
what we have to forego, we have to get insurance. I hope that
gives you some insight as to who is calling us.
Mr. Courtney. You talked about cancer patients. Are there
other sort of large types of illnesses or conditions that you
see a lot of? I guess, there are other chronic conditions.
Ms. Davenport-Ennis. We do. We serve every chronic
debilitating and life-threatening condition in the country. You
go to large pockets, anyone who's had a cardiac condition
diagnosed even if it is as simple as a prolapsed valve, they
are on medications, run five miles a day, healthy. If they have
to leave the insurance policy they are in now and try to get
insurance in another policy that becomes a preexisting
condition.
We have a lot of Americans that have kidney disease even
before they are moving into dialysis, even when it is a
diagnosis. If they try to get insurance, leaving the insurance
they are in can be extremely difficult. You look at patients
that have Parkinsons and HIV-AIDS even if they are not actively
in the process of advanced disease and the disease is being
controlled with medication, if they try to move from one job to
another they are locked in. They are not going to get in
another policy without preexisting condition.
One of the things I would say to you on behalf of every one
we served, for young Americans who really want to start a
business maybe they have already been in business, for these if
they are diagnosed with a preexisting condition many of those
dreams are dashed. They can't find insurance in the individual
market. They are not going to be in the group market if they
are starting a new company as a rule. So often we see people
that have been in business for themselves. They have had to go
out of business, become employed by an employer that is large
enough they take all comers. They may have a pre-ex period for
them or they simply can't make the change.
Mr. Courtney. Thank you. Mr. Stirling, I want to follow-up
on one of your observations. I think Bob echoed it to a degree.
Just because there is the HIPAA pre-ex time period that
exists under Federal law, that doesn't necessarily mean
employers or Taft Hartleys or groups have necessarily exercised
their rights to use it. Maybe--obviously there is going to be a
debate here about whether or not this law is going to be just
totally unaffordable or upset the market in a way that is too
large a ripple effect covered by other insurance. We do have
some real life experiences where people don't use it and are
still able to function. Could you follow-up?
Mr. Stirling. It was our experience in 1996 when HIPAA came
out, about half our group plans dropped their preexisting
clause. Part of the reason there was a big debate about HIPAA
getting one bite of the apple. If you didn't have a great 63
days, there was no preexisting condition carried forward. Only
if you didn't have continuous coverage up to that point. Back
to that point in the debate if you go back 10-12 years ago.
That was a huge change in the industry. But it hasn't eroded
the ability of employers to offer plans. There are a lot of
things that have driven up costs. This may have been one. This
might be a very thin slice of the pie. Half dropped their
preexisting condition. In the ensuing 12 years another half
dropped. Only about a quarter of plans we administer as a
third-party administrator still have preexisting condition. If
this law passes the rest will drop. There still would be a thin
slice of the pie. Employers want to provide benefits to their
employees. They don't like the fact Bob and Sally, Bob sitting
next to her, Bob has coverage, Sally doesn't. In the group
market this will not have an earth shattering effect.
Mr. Courtney. Ms. Horoschak, I want to thank you for your
testimony today. When I was working in this building the
Connecticut Risk Pool was something we spent a lot of time
working on in the mid 1990s, the last wave of health care
reform plan was going on. What I am trying to understand
again--I want to say AHIP stepping forward saying they want to
work on this issue, I think is a very positive thing and I
really appreciate that is a contribution that will, as Mr.
Anderson said, something we can work together on. What I am
trying to understand, the Guarantee Access Plans you would have
administered by the States, is this really just extending to
the other 16 States that don't have a risk pool or do you see
it different than the risk pools operating now in approximately
30 States?
Ms. Horoschak. I think we view this as qualitatively
different. There are two reasons for that. The first is most
high-risk pools today don't have the kind of qualification and
eligibility requirement we are talking about. That is to say
they only accept the individual with the highest health care
costs. So we would have the Guarantee Access Plan only cover
those individuals who have 200 percent or more of average claim
costs. And if a person doesn't get coverage in the private
market and goes to the Guarantee Access Plan and makes an
application, doesn't have high enough costs then they go back
to the private market where they get a guaranteed issued
policy. So that is how it works.
The second thing that I think is qualitatively different
than the way many high-risk pools operate today, we expect the
insurers, private market insurers to provide more assistance to
individuals to apply to their Guarantee Access Plan. One of the
other things we hear, it is very difficult to apply to the
high-risk pool and the agents are not as willing as they might
be because there are very limited fees paid for that
assistance. Our approach, if the individual requests and of
course, the individual plan gets the individual's consent, they
would assist the individual with the application process.
Mr. Courtney. Would you sort of visualize again each State
on a State-by-State basis would have to implement this
proposal?
Ms. Horoschak. The way our members decide on the approach
was to, of course, look to those States that don't have a high-
risk pool to begin with. That would be the starting point. But
beyond that to also look at States that currently have high-
risk pools and have those either amended or in some way altered
to incorporate the new features we are talking about. Then of
course, perhaps, in a State like Florida where their high-risk
pool was in effect since the early 1990s as mentioned earlier.
Chairman Andrews. I would like to thank everyone on the
panel for their testimony. We will try to get into couple of
specific fact patterns we are talking about today.
Let's say, we have a person working for Bank A, she leaves
the bank she gets a job at Bank B. She is now a new employee.
Three months prior to starting employment with Bank B she is
diagnosed with Type II diabetes. As I understand the law today
is that Bank B can decline including her in their health
insurance plan for a year. Does anyone disagree with that? Mr.
Stirling, what does the law say?
Mr. Stirling. It depends on facts and circumstances of that
transition from Employer A to Employer B. Under the current
HIPAA requirements if she was continuously employed at Bank A
for more than 12 months and if when she went to Bank B she had
a break of no more than 63 days from when she left A went to B,
when B picks her up B would be prohibited----
Chairman Andrews. Let's say, she had a 70-day break.
Mr. Stirling. They would look back and say how many months
was she continuously covered in Bank A. We would look back,
offset the amount of preexisting limitations .
Chairman Andrews. What if the preexisting condition
manifested itself after she started working for Bank B.
Mr. Stirling. No, it would look back to see if she has a
preexisting condition. But the preexisting condition would be
offset by those months that she worked for Bank A.
Chairman Andrews. So that would go towards the 12-month
window?
Mr. Stirling. Yes, sir.
Chairman Andrews. How come it didn't help Ms. Gould?
Mr. Stirling. You were looking for an individual policy at
that point.
Ms. Gould. I was looking for coverage for a six-month
period after I was no longer eligible on COBRA through United
Technologies.
Chairman Andrews. Ms. Gould was under a private sector plan
through her spouse. She tries to enroll in the AARP plan. She
was unable to do so because of her diabetic condition.
Ms. Gould. I would like to add when it became time for me
to select a medicare supplement, AARP was one of the many
companies beating down my door to get my premium money. Why? If
they didn't want me six months prior, why are they wanting me
now?
Chairman Andrews. I would suggest there was a significant
flaw in Medicare Part B that Mr. Courtney is not responsible
for nor I. I want to ask Ms. Horoschak about how we would
address the kind of problem we have here today. The first is
the Guarantee Access Plan. The State Guarantee Access Plans
simply offer a premium. There is no subsidy built into it.
What, perhaps, to a person in Connecticut the data in your
testimony indicates the individual market premium is $3,326. In
my State it's $5,326. If someone is offered insurance under the
Guarantee Access Plan that doesn't necessarily mean they get
it, does it?
Ms. Horoschak. Obviously, you put your finger on a very
important issue which is affordability. That is why our
proposal has two different subsidies. One is low and moderate
individuals up to 300 percent of the Federal poverty level
considering up to 400 of FPL. Second subsidy----
Chairman Andrews. How much would that subsidy be worth to a
person in Connecticut? Let's say, single person. It wouldn't be
$3,300 because Ms. Davenport's testimony indicates it would be
125 or 150 percent of that. What about a single person in
Connecticut that's facing a $4,000 premium? How much would that
subsidy that you're proposing be worth to them?
Ms. Horoschak. We have not established specifics as to
amounts. We have talked about a sliding scale subsidy then an
additional subsidy.
Chairman Andrews. Where would the money come from for the
subsidy?
Ms. Horoschak. We always call from broad-based funding. We
would work with other stakeholders to work out what that is.
Chairman Andrews. I think people in this room understand
far better than I do, the State budget should come up with the
subsidy. It's not a Federal subsidy that you're proposing.
Ms. Horoschak. No. Although we support Federal dollars to
assist the States with high-risk pools and Guarantee Access.
Chairman Andrews. I think the proposal is well thought out,
well-intentioned. States are facing fiscal problems. There is a
rare governor that would take on new obligations. I think the
Connecticut legislators would echo that. So I would think that
the hope of a subsidy is not terribly well-founded. People
would simply have the right to buy a premium they can't afford.
Which doesn't solve the problem.
I want to ask you about the administrative changes that
you're proposing that I think have some merit. If there were
full disclosure prior to someone taking employment as I
understand it, full and complete disclosure, are you proposing
that the look back would be abolished? What are you proposing?
Someone comes clean with their entire medical record before
they start working with the employer, what are you proposing?
Ms. Horoschak. That particular portion is limited to the
individual market where the application process is a little bit
more important. Because you can't be turned down coverage in a
group insurance----
Chairman Andrews. If an application was proposed, would you
support the same change for the group market?
Ms. Horoschak. I don't see the two as analogous. Right now
people don't fill out the long type of application that is
required for an individual policy. So our proposal was intended
to get at that process if the application--we would require
ourselves, so to speak, to have a clear and understandable
application. If a person gives all the answers in a complete
and accurate way and we furnish them a policy then we don't
have a right to impose a preexisting----
Chairman Andrews. I understand that. I also understand the
significant majority of Americans get their insurance through
employers, therefore, your proposal is not really relevant to
them, is it?
Ms. Horoschak. That particular portion is not.
Chairman Andrews. If I understand Mr. Courtney's bill it is
a lot more concise. I think what it says if you're one of the
people caught in the the trap of this preexisting condition
world, three months is it. That is it. It is sort of a three-
month period where you're sort of new to the job. We don't want
to disenroll people in a hurry. That is it. Three months you're
covered.
If I understand Mr. Courtney's proposal, also the look back
period is significantly shortened as well. So--look, one of the
witnesses I think said it very well. I think it was Mr.
Stirling, there will be costs. There is no free lunch here. If
the individuals that Mr. Courtney's plan would protect are
protected, someone is going to pay for it. It would be in the
form of premiums spread throughout the health care system or
wages, what have you. I think that the cost is so relatively
small and the payers are so relatively large, that is the
fairest way to do this. I think Mr. Courtney's way is the
fairest way.
I think we have had alternatives offered in good faith.
That is how you get legislation passed.
I am appreciative of that. I've heard two alternatives, one
is we are sorry, you're on your own to pay a guaranteed
premium. You can't afford this which shifts the costs to people
like Ms. Gould which doesn't work. The other is, well, States
should come up with these subsidies, out-of-State income tax,
State sales tax at a time when State governments are stretched
beyond their max. The prospects for them doing this is zero in
most places in the country.
We have a controversy in our State where our governor
inherits an enormous budget. One possibility is raise tolls on
the Garden State Parkway. Everybody is against that. And a
budget raise of a couple million dollars. I don't think there
is a person in this room, very few people in the Congress, who
would say someone like Ms. Gould shouldn't have health
insurance, period. The question is how do you pay for it?
I heard really three options here. Option one is she pays
for it out of money she doesn't have. That isn't working.
Option two, we Federal legislators say States will. The way we
do lot of things like No Child Left Behind and lot of other
things. That doesn't work very well either.
Third is to say as often happens, this is a requirement
spread among the payments in the health insurance system. It is
a modest amount. It would do a lot of good. I think there is a
good argument it might pay for itself, the comorbidities that
Mr. Tessier talked about, some would be avoided. So I think the
third way is the best way. We can't say it is not without
costs, but I think as Mr. Stirling said it's probably a pretty
minimal cost which is why I think Mr. Courtney's legislation is
the right way to go.
Joe, did you have some follow-up questions?
Mr. Courtney. Real quick. I wanted to go back to Ms.
Davenport. The question discussed earlier who's in and who is
out based on calculation of the creditable coverage plan. I saw
you kind of reaching for the microphone a little bit in terms
the hypothetical Mr. Anderson was posing, Bank A and B. How
effective is that creditable coverage reduction of exclusion
under the existing law? It's a difficult place for Americans to
find themselves in.
In the example of going from Bank A to Bank B at least the
employee was going from group to group. Heaven forbid if you
got to go from individual to individual market. Because when
you're at that point that 63-days comes in your life, you roll
to day 64 you don't have creditable coverage. We have 106
professional case managers in the United States who are solving
these issues everyday and trying to get insurance for someone
that has reached that 63 days of creditable coverage. It is
extremely difficult. And normally the only way we are going to
get it is to get them into a State high-risk pool, yet we
shared that against 48 million uninsured Americans, we have
only been successful in getting 180,000 Americans in the State
high-risk pools. Our experience is that is not working.
So the 63 days, let me share with you we work with AHIP on
a lot of issues. One of the things we did was go over to meet
with Carmelo Vaskino and several of her representatives because
the 63-day requirement is so important in the lives of people.
Many people don't realize it, if you breached day 64 you've
jeopardized everything you worked for. Can we have that 63
period in bold on the front of policies and post cards sent out
so the consumer, that way the insured would know what it means
to their future. I think when we were examining what happened
with HIPAA, I had the privilege of working with Senator Kennedy
and Nancy Kasenbaum on that legislation. We sat down. There is
a segment that's not going to be addressed here and market you
have to look at to try to bring some improvement. Our
experience in the example, Mr. Anderson gave is heart
wrenching, that breached that 63 period, didn't have enough of
creditable coverage to offset that period, offset pre-ex, make
sure they are insured.
Chairman Andrews. Let me explain how the subcommittee is
going to proceed. We are going to call on you, I am sure, for
further comment and analysis. The subcommittee is considering
some legislation to piecing together the number of legislation
that would reduce the number of uninsured. Looking at the
lifetime limit whether it should be modified or repealed. I
think it should be repealed, but we have to debate it.
Second, is look ERISA waivers. Presently Federal law bars
obligation to that. For example, Maryland a few years ago
passed a statute that required employers larger than 100,000
employees, who did not insure their employees to contribute to
Maryland's Medicaid fund to pay the cost. That was struck down
by the Federal courts as a violation of the preemptive
provision of the ERISA statute. We are taking a look at that to
see if it it should be modified.
Third, I think Mr. Courtney's idea fits that discussion
very well because it is a very practical approach to reducing
the number of uninsured. The way we work on these things is we
try to circulate drafts among both majority, and minority
members of our committee. I, for the record, think the minority
should be invited to do so. Nothing is going to happen without
the minority participation and knowledge.
I wish to extend my appreciation to the participants for
their excellent preparation and testimony. We will be calling
on you. I did want to thank Joe for taking the lead on this
issue. Again it's rare legislators that choose to get into the
weeds on something like this. This is not an issue that will
get you on the front page of the newspapers. Given the front
page, the newspapers in our region, I don't think either one of
us wants to be on the front pages in my State, or New York.
This is not the kind of issue that gets you a lot of media
coverage, but gets people health insurance and to understand it
the way Mr. Courtney has is very encouraging. He's educating
members of the committee on this.
We will leave the record open for comments.
I have to read this script.
As previously ordered, members will have 14 days to submit
additional materials for the hearing record. Any member who
issues to the committee follow-up questions in writing or to
the witnesses should coordinate with the majority staff within
14 days without objection, that is accepted.
We want to thank our hosts in Connecticut for their
hospitality. Joe, we would like to thank you.
The hearing is adjourned.
[Additional submissions by Mr. Courtney follow:]
[Letter from the Connecticut AIDS Resource Coalition
follows:]
March 20, 2008.
Hon. Joe Courtney,
215 Cannon House Office Building, Washington, DC 20515.
Dear Congressman Courtney: The Connecticut AIDS Resource Coalition
(CARC) is pleased to sign on in support of H.R 2822. ``Pre-existing
Condition Exclusion Patient Protection Act of 2007'' to ensure that
individuals who suffer from chronic, disabling, and life-threatening
conditions have access to comprehensive, meaningful, and affordable
health insurance coverage.
Incorporated in 1989, CARC is Connecticut's only statewide
organization whose sole mission is to ensure that people with HIV/AIDS
have the housing and services they need to live their lives in dignity.
Clearly, legislation that eliminates pre-existing condition clauses
would be of great benefit to people living with HIV/AIDS. If passed,
this landmark legislation would enable people living with HIV/AIDS to
access life-saving insurance, thus preventing them from having to rely
on public assistance or from becoming so ill that their only option was
expensive hospitalizations or other institutions such as nursing homes.
Many people may not change jobs or even attempt employment for fear
of being turned down to a pre-existing condition such as HIV/AIDS. Yet,
quality coverage is essential for people with HIV/AIDS if they are to
maintain any semblance of good health.
We applaud you for taking this bold step and look forward to
working with you on this and other issues that impact the lives of
people with HIV/AIDS.
Peace,
Shawn M. Lang,
Director of Public Policy.
______
[Letter from the Juvenile Diabetes Research Foundation
International follows:]
------
[Statement of Jennifer Jaff follows:]
Prepared Statement of Jennifer C. Jaff, Esq.
I want to begin by thanking Representative Courtney for introducing
this historic legislation, as well as for convening today's event.
I am Founder and Executive Director of Advocacy for Patients with
Chronic Illness, Inc., a 501(c)(3) tax exempt organization that
provides free information , advice and advocacy services to patients
with chronic illnesses in many areas of law, including health
insurance. Because everyone we serve has a chronic illness, every one
of them by definition has a pre-existing condition.
We receive several calls a week from patients across the country
who want to know how to find health insurance that covers their pre-
existing condition.
Because of the Health Insurance Portability and Accountability Act
(HIPAA), people with insurance through their employers do have coverage
of their pre-existing conditions, although they may have to wait as
long as twelve months before coverage kicks in. HIPAA defines a pre-
existing condition as one for which medical advice, diagnosis, care or
treatment was recommended or received within the six months before the
enrollment date in the plan. H.R. 2833 would shorten the duration of
the permissible waiting period from twelve months to three months, and
the ``look-back'' period--the period we look to in order to determine
whether a condition is pre-existing because treatment was recommended
or received during that period--from six months to thirty days.
These are critically important improvements on the status quo, to
be sure. However, the most dramatic benefits of this legislation will
be felt by people who do not receive health insurance through their
employers and who have pre-existing conditions that preclude them from
purchasing individual insurance.
Currently, in most states, individual insurance is nearly
impossible to obtain if you have a pre-existing condition. Some states
have what are called ``high risk pools,'' which are designed for people
with chronic illnesses, although many have pre-existing condition
waiting periods of up to twelve months. Some states have ``guaranteed
issue'' policies, which are policies that insurers are required to
offer if they choose to do business in the state, although in many
cases, these plans do not cover pre-existing conditions. Very few
states have really good alternatives; some have no alternatives at all.
If you have a pre-existing condition, are self-employed or
unemployed, and need health insurance, in most states, you are out of
luck. If you are a young adult with a pre-existing condition who no
longer can be covered under your parents' policy and you do not have
insurance through a job, you are out of luck. If you are unable to work
due to your pre-existing condition but you are not yet on Social
Security disability and, thus, Medicare, you are out of luck.
While writing this testimony, I heard from the mother of a young
boy with Crohn's disease whose father applied for health insurance for
the family, and the insurer refuses to cover the young son because he
has a pre-existing condition. This child is out of luck, too.
This is not a Connecticut problem; this is a national problem. Its
impact on the lives of the chronically ill cannot be underestimated. I
get phone calls from people who work, who struggle to stay on top of
their mortgage payments, and who cannot afford to go to a doctor
because they don't have insurance, and can't get insurance because
their employer doesn't offer coverage and their pre-existing condition
precludes them from finding an individual plan. People forego medically
necessary care every single day in this, the richest country in the
world, because they cannot afford to pay for the health care and cannot
find insurance that will cover their pre-existing condition.
Nearly half of all uninsureds report having a chronic health
condition.
1.2 million Americans with diabetes report that they are
uninsured, and more than half of these report having an unmet need for
health care or prescription drugs.
3.6 million Americans report having arthritis-related
illnesses but have no health insurance, and again, more than half of
these report having an unmet need for health care or prescription
drugs.
More than 1.7 million Americans with heart disease are
uninsured, as are 2 million adults with asthma.
As one would expect, the statistics show that the chronically ill
do not get the health care they need.
Nearly 38 percent of chronically ill adults indicate that
they have skipped medical treatment or did not fill a prescription, as
compared with 22 percent of healthy people.
Only 20 to 25 percent of diabetics receive critical
glucose monitoring tests.
Two-thirds of patients with high blood pressure receive
recommended care.
Fewer than half of patients with heart disease receive
proper medication.
Fewer than half of schizophrenic patients receive
appropriate medication.
Over 27 percent of the uninsured with chronic conditions
report that they have not seen a doctor in 12 months.
Thirty-eight percent of the chronically ill uninsured lack
a usual source of care, and those who do rely less on private doctors
(as opposed to clinics) than the insured.
Almost half of the uninsured chronically ill forego needed
medical care or prescription drugs.
In 2003, of the 3 million uninsured chronically ill, 42 percent
went without needed care, 65 percent delayed care, and 71 percent
failed to get needed prescription drugs, all because of cost concerns.
A great deal of this would be avoided if individual insurance was
available to the chronically ill.
To make matters worse, even if you can find an individual policy
that will cover your pre-existing condition, your insurer may closely
monitor your healthcare usage and retroactively claim that you had a
pre-existing condition, taking back any payments they have made on your
behalf, leaving you without insurance although you've paid the premium.
We've all read about this happening in California, where it took
class action litigation to stop insurers from retroactively cancelling
policies. But it happens more often than you may realize.
I had one case in which a woman underwent some community-based
psychotherapy and then suffered a traumatic event that resulted in a
lengthy psychiatric hospitalization. Although her doctors clearly
stated that her hospitalization was triggered by the trauma she
endured, the insurer took the position that she had a psychological
problem warranting psychotherapy before the traumatic event, so her
psychiatric problem was pre-existing and, thus, the hospitalization
would not be covered. Although ultimately I succeeded in winning this
case, we are one of only two organizations in the entire United States
that does free insurance appeals. What happens to the people who don't
find me?
I wish I could adequately describe the heartache chronically ill
patients suffer when they don't have insurance through work and can't
get insurance on their own. People lose their jobs because they forego
medical care, and then things spiral downhill from there to the point
at which they lose their houses, even their cars. I know every trick in
the book--ways to help patients obtain free prescription drugs, free
clinics, hospital charity care--if there's a resource out there, I know
about it. But nothing takes the place of insurance for a person with a
chronic illness.
Those of us who need insurance the most can't get it. H.R. 2833
will change that. It will enable people to get the care they need to
stay employed, to remain a contributing member of society. It will
eliminate many of the bankruptcies that result from medical debt. It
will keep families together in their homes. It will stop punishing
people because they got sick.
It's incredibly difficult to be sick in America. We have to
coordinate care among our various doctors, keep track of our
medications, master laws like ERISA, HIPAA, COBRA, the Americans with
Disabilities Act, Section 504 of the Rehabilitation Act, fight for our
rights in the workplace and in school, all while holding our families
together and trying to remain afloat in a sea of medical debt. H.R.
2833 is a dramatic and critical step towards easing the burden on the
chronically ill.
On behalf of the thousands of patients we serve, I thank
Representative Courtney for taking the lead in this critical effort.
Thank you.
______
[Whereupon, at 3:51 p.m., the subcommittee was adjourned.]