Families USA Report on the Individual Insurance Market

June 12, 2008| Posted in Health Care

Families USA released today another important report on the state of health care and health coverage in Minnesota: Failing Grades: State Consumer Protections in the Individual Health Insurance Market.

From all across the state, the two concerns that I hear most are that health care is unaffordable and that people cannot get coverage due to a preexisting medical condition.

The bottom line is that Minnesota’s current system discriminates against our sickest neighbors and friends — those who need regular health care most — who are forced to pay more for coverage (if they can get it). I was also shocked that insurance companies have broad latitude to revoke coverage after the fact if a serious medical condition exists. That is a health care system turned on its head.

I should also point out that Minnesota ranks very well on other measures and that is not just a pat on the back. There are serious proposals that the answer to our health insurance crisis is to simply open the door to any insurer who wants to sell its product in the state regardless of state law. This report makes clear the danger of that approach. Minnesotans do and should expect that certain standards be met when it comes to health care and health insurance. This report makes clear the important role that states play in making sure that happens.

One final note: The report criticizes Minnesota for not having a statutory loss ratio in Minnesota of 75% or greater. A loss ratio represents the minimum percentage of premium revenues collected that must be paid out for health care services. For example, a loss ratio of 60 means that an insurance company must pay at least 60% of its premiums to cover health care claims and may legally keep 40% for overhead, administration, etc.

In Minnesota, the statutory loss ratios in the individual market range from 60% to 72%. The reality, however, is that in 2006, Minnesota insurance companies paid out 93% of collected premiums in the individual market to cover health care claims. In 2005, insurance companies paid out 87% of collected premiums on health care expenses. The reports can be found here.