Paul Thissen: Innovation in Action

Report: Minnesota Falls Short on Health Insurance Coverage

Minnesota’s percentage of its population with health insurance ranks near the top nationally, but that insurance may not be affordable or provide adequate coverage, a new study shows.

The report released Thursday by Families USA, “Failing Grades: State Consumer Protections in the Individual Health Insurance Market,” finds that Minnesota consumers lack adequate protection against denial of coverage for pre-existing health conditions and in revocation of health coverage.

The report ranks states on “the length of time insurance companies can exclude coverage for pre-existing health conditions or new applicants for health insurance policies in the individual health care market,” Liz Doyle of TakeAction Minnesota said Thursday in a telephone conference call for reporters her group arranged to present the Minnesota information.

“The report finds that Minnesota ranks very poorly on this trend, in the bottom half of states,” Doyle said. “We are one of 21 states that allow insurers to exclude coverage of a pre-existing condition for more than one year from the time of enrollment.”

The majority of states – 29 – hold insurance companies on their exclusion of pre-existing conditions to less than a year, she said.

Minnesota also falls short in the report with the state not requiring insurers to complete all medical underwriting and resolve all questions at the time of application for an individual health insurance policy, Doyle said.

“Without this requirement, insurance companies in the state can dig further into an individual’s medical history and retroactively limit or revoke coverage when a need for medical treatment arises,” she said.

By law in 16 other states, insurance companies are expected to or required to complete all medical underwriting at the time of enrollment “so individuals aren’t in a situation where several months or years later, the insurance coverage they thought they had disappears once a medical condition arises,” Doyle said.

The report confirms “one thing I hear about around the state, and that’s that our current system really discriminates against our sickest neighbors and friends, those who need care most,” said state Rep. Paul Thissen, DFL-Minneapolis, chairman of the House Health and Human Services Committee.

That includes “those who are forced to either pay more for their coverage if they can’t get it, or by revoking coverage they already paid for after the fact, they lose out as well,” Thissen said. “That really turns health care on its head, and the system we should have on its head.”

The national 50-state survey reveals that insurance companies in most states are not prohibited from denying health coverage to people with pre-existing conditions, refusing to pay for services needed to treat common ailments, adding huge premium surcharges for people with family histories of health problems, and yanking policies and denying payments when consumers face a rash of medical bills, Families USA said.

Minnesota fared well in some areas, Thissen noted, but the report indicates the need for overall reform of health insurance regulation, rather than passing piecemeal regulations.

“What we really need to do is take a look at these specific items that were raised, but part of the strategy of health care reform as we go forward has to be a holistic approach,” Thissen said. “Tinkering with one small thing may have unintended consequences, but if we take a broader approach that sets up a system that … gets meaningful coverage for everybody – coverage for people who are sick and need the coverage the most and coverage that is affordable – those are our goals.”

Dan McGrath, TakeAction Minnesota executive director, said that “access to health insurance coverage is certainly one significant issue, but even those people who have coverage really don’t have the coverage that they need or clearly are unable to access it when they need it.”

The report illustrates the widening cracks in Minnesota’s health care system, McGrath said. “The number of people without health care in Minnesota is staggering – nearly 375,000 people who have no health care insurance whatsoever, which is greater than the population of the city of Minneapolis.”

Those with health insurance, he said, “are paying more out of their own pockets than ever before. Over 1 million people in Minnesota will spend more than 10 percent of their income on health care this year, and 90 percent of those people are individuals with health insurance.”

Guaranteeing health care access to all Minnesotans has been before the Legislature the last two sessions, Thissen said, “which is the flip side of making sure you can’t have denials for pre-existing conditions. There was openness on this from the (Pawlenty) administration on this.”

The challenge is moving the insurance industry in that direction, a challenge that becomes easier if the health insurance pool is large enough, he said.

“All of the things that are raised in this report would be fair game” for legislation, Thissen said. “It would seem reasonable both to folks in the Legislature and to this administration, notwithstanding the sense that it may be anti-regulatory.”

Changes suggested by the report are more so changing the rules to bring more balance and equity than adding regulations over the insurance industry, he said.

Other findings in the survey find that Minnesota doesn’t require insurers to sell coverage to all applicants but does require affordable coverage alternatives for uninsurables, only partially prohibits higher premiums based on health status, and has no provisions requiring insurers to spend at least 75 percent of premiums on health care.

Minnesota insurers average 60 to 72 percent in payouts for health care, Thissen said, but added that companies most recently have been paying out in the range of 85 to 90 percent in claims.

“That’s due in some part to the work done by (former) Attorney General Mike Hatch in the early part of this decade,” he said.

Some of the national findings include:

– Only five states prohibit insurance companies from “cherry-picking” the healthiest consumers and excluding everyone else from coverage.

– In 35 states and the District of Columbia, there are no limits on how much insurers can raise premiums based on an individual’s health status. An additional six states have limits that still allow dramatic variations in premiums.

– In 21 states and the District of Columbia, insurers can exclude coverage for pre-existing conditions, such as cancer and heart ailments, for more than one year.

– In 44 states and the District of Columbia, insurers can revoke an individual’s health insurance policy without advance review by the state.

– In 29 states and the District of Columbia, insurers are allowed to deny legitimate claims of policyholders who are up-to-date with their premium payments by digging back years into their medical history and alleging that they failed to disclose, or should have known about, a pre-existing condition.

– In 45 states and the District of Columbia, insurers do not have to spend at least 75 percent of premium revenues on health care, which allows insurers to retain those revenues for profits and non-health care expenses (such as marketing).

– In 20 states and the District of Columbia, insurers can set and raise premiums without meaningful oversight.

Families USA is a national health care consumer organization, based in Washington D.C. TakeAction Minnesota is a statewide organization that works for social, racial and economic justice, including quality, affordable health care for everyone in Minnesota.