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Nonconventional coverage and state regulation


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I have read over several insurance codes, and, as I recall, they all had similar provisions which allowed insurers to avoid some, or all, of the state mandated benefits.

The code provision for the Texas Department of Insurance, my home state, is In Title 28, Part 1, Chapter 3, Subchapter S, Rule 3.3081 entitled, Nonconventional Coverage.

It states, "The commissioner may authorize approval of a policy that does not correspond with one of the categories relating to Minimum Standards and Benefits for Accident and Health Insurance Polcies, if such policy is determined to be a type of coverage that is experimental, or will in the opinion of the commissioner fulfill a reasonable public need and is appropriately and prominently described in the outline of coverage."

Then, in Rule 3.3091, it states, "The outline of coverage for policies approved for Nonconventional Coverage shall prominently display, THE POLICY DESCRIBED DOES NOT MEET THE MINIMUM STANDARDS FOR BENEFITS ESTABLISHED FOR BASIC CATEGORIES OF COVERAGE REQUIRED BY THE INSURANCE REGULATORY AUTHORITY OF YOUR STATE."

So, when we discussed recently, and at great length, that insurers had to provide state mandated benefits, doesn't this type of provision allow some flexibility for insurers that wish to "experiment" a little?

Don Levit

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I have read a few states' insurance codes also (AZ, HI, CA, IN, NV, TX, UT). Usually they delegate a certain amount of authority to the Commissioner. All policies have to be submitted to the Insurance Department and approved before they may be offered (except in Notification states, in which case they may have to be withdrawn within 30 days).

Despite the authoridy delegated to the Commissioner, it would surprise me to see more than one or two Commissioners anywhere in the US that would approve a health plan that did not contain benefits mandated by the legislature. It is simply not an appropriate exercise of their discretionary authority unless conforming policies are simply not available in the state.

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I still do not understand or see the connection between "a type of coverage that is experimental" and "flexibility for insurers that wish to "experiment" a little".

How can an insurer "experiment" with "coverage that is experimental"?

This article is somewhat related in that it shows what has happened in your stateof Texas with insurers experimenting with coverage outside of the mandates:

http://www.dfw.com/mld/dfw/news/11595708.htm

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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Thanks for your replies. It is difficult to say how commissioners will react to their authority. It depends probably how committed the particular commissioner is to innovation. I simply wanted to point out that for those companies who wish to pursue "fullfilling a reasonable public need," that the insurers may have more freedom for innovation than they lead the public to believe.

Maybe more affordable plans have not been introduced, because insurers have chosen not to do so.

GBurns, thanks for the article. I agree that simply raising deductibles, lowering benefits, and increasing co-payments is not an arttractive "experiment."

I was thinking along the lines of a limited benefits plan, say one that provides $10,000-$25,000 of benefits a year. In 2-5 years, the family could have $50,000 of benefits, which could serve as the deductible for a catastrophic plan. To my knowledge, this type of coverage is not available, on an indemnity basis, for all types of medical expenses.

Don Levit

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GBurns:

One other comment about the article you posted.

Jennifer Edwards of the Commonwealth Fund said that "the removal of costly benefits and the implementation of high deductibles do lower insurance premiums. But these changes often make plans unappealing to many consumers who can't afford to spend their own money on routine health care."

If the consumer cannot afford to spend their own money on routine health care, how are they supposed to spend any money (theirs' or their employers') on routine premiums?

Don Levit

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1 of the big problems in healthcare is that the employee does not care about spending the employer's money. That is why employer paid premiums are regarded as an entitlement rather than a benefit.

The spending (or not) of their own money is what comes into play with higher deductibles, co-pays and out-of-pocket etc. These they do not want to pay to the extent of even foregoing treatment.

Although it should be "won't" rather than "can't" afford, there are millions who really cannot afford these higher costs.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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GBurns and any others:

If a family cannot afford the total (say, $100), out of pocket costs for a visit to the physician (but can afford the smaller co-pay), how can they afford the total family premiums, which may be $1,000 per month?

Isn't it foolish to have the insurance network, with the smaller co-pays, or no co-pays, for in network usage, if the total premiums are uinaffordable?

Don Levit

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