“Insurance-Like” Products Erode Protections for Pre-Existing Conditions
May 4, 2021
By: Jamie Dudensing
Today, the Texas House is scheduled to hear two bills that would allow “insurance-like” products that would create instability in the market, drive up premiums, and expose Texans, particularly those with pre-existing conditions, to significant liabilities.
HB 3924 would authorize a health coverage product from the Farm Bureau, and HB 3752 would do the same through Texas Mutual. While these organizations could create health insurance plans under the existing process, the proposed legislation would create coverage that is exempt from all state and federal health insurance laws, including protections for pre-existing conditions and comprehensive coverage requirements. By rejecting people with a history of illness, charging them more, and/or limiting coverage for their pre-existing conditions, these plans drive up costs for those who are left behind.
A recent report from 30 leading patient advocacy groups, including the American Cancer Society and American Diabetes Association, details how “insurance-like” plans harm patients and insurance markets. 9-in-10 Texans think health plans should be required to cover pre-existing conditions.
You can watch Monday’s legislative briefing about how these “insurance-like” products are harmful. The presentation slides are also available.
Texas does not need to try out this sort of “coverage” as an experiment. Instead, we can look at the results of allowing it in another state.
Tennessee’s version of the Farm Bureau plan has denied coverage for preexisting conditions and left patients uncovered. Insurance-like plans not only discriminate against pre-existing conditions, they also drive up costs and destabilize the insurance market by “cherry picking” participants. By covering only healthy individuals, it leaves a sicker population in the insurance market and raises the risk and premiums for everyone else.
The results are clear. Tennessee has one of the most unstable individual insurance markets in the country, and the situation was so dire the Tennessee Insurance Commissioner characterized the exchange market as “very near collapse.” All three of the major issuers in the state increased rates in 2017 by more than 40%.
In contrast, the individual market in Texas has stabilized over the last four years. The benchmark premium in the individual market has stayed at around $430 a month for the past three years, and 86% of Texans now live in a county with a choice of three or more plans. The benchmark premium has also remained cheaper than employer coverage. We are also experiencing a steady increase in new health insurance plans entering Texas, creating competition. Texas is now the fifth most competitive market in the nation and is 18th for lowest premiums.
The Texas Legislature should protect Texans with preexisting conditions and maintain important consumer protections.