Senate Medical Insurance Preemption Bill Advances

See this story by Ron Brownstein in the LA Times. Some excerpts:

The battle over healthcare moved to a new front Wednesday as Senate Republicans advanced a bill that would change the way health insurance was sold nationwide.

On a party-line vote, a Senate committee approved a bill that would preempt state laws that require insurance policies to cover specific services, such as maternity care and supplies for diabetics.

California, which mandates that insurers cover 23 specific treatments and procedures — including mammograms and second opinions — would be one of the states most affected by the legislation.

Sponsors of the bill said overriding state coverage rules, as well as state laws regulating insurance pricing, would allow insurers to offer less-expensive plans. They say it would prompt more small businesses to purchase insurance for workers.

"Today's vote is the first major step in 15 years to get affordable health insurance for small businesses and working families," said the bill's sponsor, Sen. Michael B. Enzi (R-Wyo.).

Enzi heads the Health, Education, Labor and Pensions Committee, which approved the bill, 11 to 9.

Critics, including the panel's Democratic members, charged that the legislation would undermine state protections meant to guarantee that insurance policies provide adequate health coverage at affordable prices.

California Insurance Commissioner John Garamendi warned that the bill would lead to "an ever-increasing number of people who are uninsured … and for those with insurance, the benefit package is certain to be dramatically reduced."

* * *

The broader fear is that younger and healthier workers will gravitate to the lower-cost plans. If that happens, plans offering more comprehensive benefits would be left caring for a disproportionate share of older and sicker Americans. That could unravel the concept of collective risk-sharing between the healthy and the sick, and raise premiums for more comprehensive plans to unaffordable levels.

Opponents contend that another provision of the legislation could compound that risk. The section would override laws in California and other states limiting how much insurers could vary the premiums charged to small businesses based on the health of workers.

Under the California law, for instance, the most expensive policies for small businesses can cost only about 22% more than the least expensive, according to figures from Garamendi's office. But his office has calculated that under Enzi's bill, insurers would be permitted to vary their prices by five times as much as that.

This bill is very bad news for people with disabilities and anyone with a serious health condition. But at the end of the day, it will be difficult to solve these problems without some form of universal health care.