Reforming the Health Insurance Industry (HB 2005)

To lower health insurance costs and stop insurance company discrimination against individuals who are sick and in need of medical care, HB 2005 would enact major changes in insurance industry practices.

• When pricing group policies for employers with 50 or fewer employees, insurance companies would be required to use a “community rating” that reflects age of the workforce and geography but NOT medical history or gender.
  
  
• Insurance companies would not be allowed to disqualify people from insurance due to pre-existing conditions, even if individuals are not part of any group and are buying insurance on their own.
  
  
• Premiums could vary somewhat based on age, geographic location in the state, wellness incentives, and in some cases, the occupation in which one is engaged. However, the difference between the most expensive and the least expensive premium for a particular policy could not be more than 2:1.
  
  
• Insurers would be restricted in how much they could spend on administration, advertising, and profits; 85 percent of premium revenue would have to be spent paying for medical care or be refunded to the policy holders. 
  
  
• The PA Insurance Department would have increased authority to regulate rates and insurance products; currently it is one of only three state insurance departments in the United States lacking that authority.
  
  
• All insurance companies would be required to sell a standard policy so people can more easily shop and compare rates.

After these changes are in place, health insurance rates would be much less volatile than they are now. Rate changes from year-to-year would be based in part on the insurer’s experience with many thousands of people rather than just one individual or one group of employees. All rate changes would be subject to Insurance Department review,

This approach (known generally as “community rating”) reflects the traditional insurance concept of “shared risk”. It makes sure everyone has access to health insurance coverage, even those individuals who are seriously ill and almost certain to need expensive medical care. To pay for this, everyone pays a little more in their monthly insurance premiums.

To read the bill, click here.