Archive for the ‘medical debt’ Category

ACA Protections Go to Campus

Thursday, March 3rd, 2011

Earlier this month, the U.S. Department of Health and Human Services (HHS) released a new proposed rule that takes an important step toward ensuring that students who purchase a health plan through their university or college will be able to benefit from the same basic consumer insurance protections in place for all individual market plans under the Affordable Care Act (ACA). The proposed rule represents an important victory for the more than one million students who are enrolled in these plans because the plans have historically varied widely in terms of both premiums and benefits — creating incredible hardships for some students.

For example, our partners at Young Invincibles have chronicled the stories of real students who have faced serious difficulties while covered by a student health plan including:

  • – A student with a plan that covered a maximum of $500 annually for over-the-counter prescriptions—leaving her without adequate coverage for her Type 1 Diabetes.
  • – A student with a plan that did not cover the amount of chemotherapy and testing her doctor determined was necessary during treatment for a rare form of cancer called Ewing’s Sarcoma—leaving her with $80,000 in medical debt.

For more stories like these collected by Young Invincibles, click here.

Thankfully, the proposed rule would ensure that students across the country have more protections than ever before because the following ACA individual market provisions would apply to student health plans issued after January 2012:

  • – Insurance companies would no longer be allowed to impose lifetime dollar limits on benefits in student health plans.
  • – When student health plan enrollees get sick, insurance companies would no longer be allowed to drop coverage because of an unintentional application error.
  • – Insurance companies would be prohibited from denying or excluding coverage for students under age 19 because of a pre-existing condition. In 2014, this would apply to students age 19 and over as well.

By proposing to apply these protections to student health plans, HHS is essentially saying that it does not consider student health plans to be so unique that they deserve to play by entirely different rules than other individual market plans.

HHS deserves quite a bit of credit interpreting the ACA in this way because there is language in the law that emphasizes that that the statue should not be applied in a way that would prohibit a college or university from offering a student health plan. Because HHS needs to pay attention to this part of the law as well, the proposed rule attempts to limit the way in which other consumer insurance protections apply to student health plans. For instance:

  • – Insurance companies, for their student health plans, would not be required to follow the Health Insurance Portability and Accountability Act’s guaranteed availability and renewability rules. To do so would require student health plans to be made available to individuals who are no longer students.
  • – Even though the ACA largely prohibits cost-sharing for preventive services, administrative fees charged by colleges and universities to fund student health services (including preventive services) would not be considered cost-sharing and would remain permissible under the proposed rule.
  • – Insurance companies would have more flexibility than other individual market plans as they phase-out annual dollar limits on benefits for student health plans. For policy years beginning anytime from January 1, 2012 to September 23, 2012, annual limits could be no less than $100,000. Student health plans would then be required to follow the same rules as other individual market plans, including a complete elimination of annual benefit limits starting on January 1, 2014.

The bottom line is that HHS has proposed to apply as many of the individual market consumer insurance protections as is permissible under the ACA to student health plans and this will make a enormous differences in the lives of many students enrolled in these plans.

Still hungry for more analysis about the new student health plans proposed rule? Check out this post at The Commonwealth Fund Blog and this post over at the HealthAffairs Blog.

— Patrick M. Tigue, Children’s Health Care Coordinator
New England Alliance for Children’s Health

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Mini Meds: The Insurance Industry Swindle

Monday, December 6th, 2010

Is a few thousand dollars worth of health care coverage really insurance? Senator Jay Rockefeller (D-WV) raised this question at a December 1 hearing appropriately entitled Are Mini-Med Policies Really Health Insurance? As chair of the Senate Commerce, Science and Transportation Committee, he is questioning the value of these mini-medical plans. The Senator should be praised for his continued work on health reform, and especially so for focusing a spotlight on limited benefit plans.

You may recall the dust-up in September when McDonalds Corporation threatened to drop coverage for their employees if they were required to comply with the Affordable Care Act’s (ACA) new consumer protections. These protections included the elimination of lifetime caps on benefits, an increase in allowable annual caps and a requirement that insurers use 80-85 percent of premium dollars to pay for the medical care, called a medical loss ratio.

The ACA included this provision to ensure insurance companies were not spending excessively on overhead or profits, and to ensure basic consumer protections in health insurance. McDonalds and other companies offering mini-medical plans said these standards were too tough to meet.

Mini-medical plan carriers claim their affordable coverage, while limited, is better than nothing. Perhaps, but it is not a certainty.

According to a survey of employers done by the consulting firm Mercer, the median annual cap for mini medical plan benefits is $7,000. This amount could easily be exceeded after a short hospital visit. However, misleading plan design and language actually makes these stated limited benefits even more diminished.

For example, mini-meds typically cap hospital, physician, diagnostic, and preventive care benefits. They also limit payments toward hospitalization by establishing a per day maximum rate. The effect of limiting reimbursement to $250 for each day’s stay in a hospital allows mini-med plans to further limit their financial exposure, but means that consumers are left with the bill.

Such trickery lets mini-med plans keep more of the premium dollar while those covered by such plans incur medical debt if they get sick. Many of the estimated 1.4 million Americans with mini-meds were double-crossed. Through The Access Project’s work on medical debt, we have encountered many people who were deceived into believing that their plans offered a modest cushion of protection. Those who got sick learned, after the fact, that they had even less coverage than outlined in bold letters on their policies.

The industry has all but admitted that mini-med plans have not been straightforward about coverage limitations. Just this week, an industry trade group representative noted that federal regulators will require mini-medical plans, next year, to inform enrollees about plan limits. He went on to say the industry supports this increased transparency.

An Act of Congress was literally required for them to take this step. A clear warning that these faux insurance plans offer little or no protection should be a requirement. However, the best protection for Americans is full and prompt implementation of the ACA. Once this is a reality, real insurance protections will be extended to all Americans.

- Mark Rukavina, Guest Blogger
Executive Director, The Access Project

 

 

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Can Medical Bills Ruin Your Credit?

Friday, May 21st, 2010

Ever been puzzled by bills from a doctor or hospital?  Not sure which services you were supposed to pay for and the amount owed?  Unclear on whether to pay the provider or wait for your insurance company to do so?  If you answered yes to any of these questions, you are not alone.

A recent study found that nearly 40 percent of Americans do not understand their medical bills.  Nearly one-third of respondents admitted to letting a medical bill go to collection, as a result.

And though millions of Americans believe that medical debt is not used in calculating a credit score, it often is.  (A credit score, to refresh, is a three-digit number used by banks and other lenders to determine the likelihood that a borrower will repay a loan.) Even paying off a medical bill in collection does not prevent medical debt from being used as a factor in a credit score.

In fact, an estimated 31 million Americans have medical accounts in collection on their credit reports.  So the widely-misunderstood consequences that medical debt have on credit scores, and whether those consequences are fair, or reasonable, are important ones.

A study published in the Federal Reserve Bulletin found that more than half of accounts in collection are medical accounts.  The study raised questions about the predictive value of such accounts since such accounts often involve disputes with insurance companies over liability for the accounts or because the accounts may not indicate future performance on loans.

This current system is stacked against consumers.  It penalizes the sick and injured.  Even when one pays off a medical collection bill in full, current law allows for that account to remain on a person’s credit report for up to seven years. (One mortgage lender’s recent simulation to remove zero-balance medical accounts from a group of credit scores saw the clients’ scores increase by 50 to 100 points.) Such inaccuracies in credit reports slow America’s economic recovery.  They increase the cost of a loan or result in an outright denial. It’s a system that harms hardworking Americans.

A recent hearing and new bill suggest that Congress is working to change this unfair and all-too-common practice.  (Here’s the link to the hearing and testimony.)

At this hearing before a House Financial Services Subcommittee,  several industry representatives testified that they did not believe that medical debt had predictive value or bearing on a client’s future overall creditworthiness. However, the dominant scoring agency, FICO, admitted that medical debt is used in their scoring algorithm.

Rep. Mary Jo Kilroy, a Committee member from Ohio, has introduced  legislation – HR 3421,  The Medical Debt Relief Act -  to address this important problem.  Her bill requires medical accounts that have been fully paid or settled – accounts with a zero balance -  to be removed from a credit report within 30 days.  This proposal enjoys bipartisan support and has more than 90 co-sponsors in the House. And momentum is growing: Sen. Jeff Merkley (D-OR), a member of the Senate Banking Committee, is reportedly planning to introduce a Senate bill within the next week.

By passing HR 3421, Congress would protect families and ensure them that they will no longer be compromised after doing the right thing and paying their outstanding medical bills.  This straightforward proposal will provide relief for millions of Americans and Congress should act promptly to ensure its passage.

–Mark Rukavina, director of The Access Project

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