HB 1243 would OK limited HMO coverage
By Richard Haugh
An amended bill allowing health maintenance organizations to sell limited-benefit health plans was approved by the Senate Health and Human Services Committee March 12 and sent to the full Senate.
House Bill 1243, sponsored by Rep. Spencer Swalm, R-Centennial, and Sen. Gail Schwartz, D-Snowmass Village, would authorize HMOs to sell the limited-benefit plans to uninsured Coloradans who earn too much money to qualify for Medicaid.
The plans offer basic coverage of doctor visits, routine care and medications. Total benefits under the plans could not be less than $30,000 per year, but could be more. Similar plans sold in other parts of the country have annual limits of less than $100,000 — and limits of $30,000 to $50,000 are common.
Monthly premiums for limited-benefit plans often are one-quarter to one-third less than comprehensive medical insurance coverage. Proponents say basic coverage plans are better than no coverage. But critics say the plans give a false sense of security.
“This is the Swiss cheese of coverage,” Ed Kahn, with the Center for Law & Policy, said in testimony against the bill. “The holes are as great as the coverage.”
The Colorado Medical Society, which represents many of the state’s physicians, also opposes the plan. Bruce Madison, M.D., representing the medical society, said if the bill becomes law, it will defeat the purpose of health insurance. While it may cover minor care, it is worthless for catastrophic care and for treatment of chronic conditions, he said.
“This is basically like buying insurance to cover a flat tire on your car, but having no insurance if you total the vehicle,” he said. “It may be better than nothing, unless you get sick. Then, it’s worse than nothing.”
Kahn warned of another risk: To save money, employers could be tempted to stop offering comprehensive plans and switch to offering only the cheaper insurance — what he called a race to the bottom for insurance coverage.
In fact, that has happened in other states, said Kelly Shanahan, policy director for the Colorado Consumer Health Initiative, which opposes the bill. She said a recent study of similar plans in Texas showed that 89 percent of those who signed up for limited-benefit plans were already insured.
Cindy Palmer, a top executive with the San Luis Valley HMO in Alamosa, urged lawmakers to pass the bill. She pointed out that the bill would become a pilot program that would expire in two and a half years.
“Give us time to test the waters on this,” she said. “This will put our employers back into the insurance market.”
The bill received a number of amendments on the Senate side, including restricting plans to employers that haven’t offered health coverage in the previous 12 months and to enrollees who have been uninsured for at least 12 months. The plans also could be offered only in counties with populations of less than 25,000.