House Bill 2005: Health Insurance Regulation Reform

Background

Our health care system is the most expensive in the world.  Yet as a system, it fails to come close to providing the best health care in the world.  Medical costs currently consume 16 percent of our national income and are expected to grow to 20 percent by 2015.  This has become a heavy economic burden that adds significantly to the cost of virtually every product and transaction in our economy.  Many employers are trying to shed this cost by shifting the cost of health insurance to their employees or by abandoning health insurance coverage altogether.  Thus, a growing percentage of people living in the United States are uninsured, while health insurance companies continue to make substantial profits. 

Despite Medicare, the Veterans Administration, and the Children’s Health Insurance Program, there are still approximately 800,000 adult Pennsylvanians, below age 65, that do not have any health insurance and are not eligible for government-funded insurance.  Many access health care via emergency rooms, which they utilize when medical problems are acute.  If they suffer from a chronic disease, often a medical professional does not manage their treatment.  The un-insured often cannot fill their prescriptions or, if they do, they cannot afford to take prescription drugs in the recommended dosages.  They are usually forced to pay retail prices for both medical treatment and medications which they often cannot afford.  When costs pile up, many choose bankruptcy as the way out.

House Bill 2005 would give the PA Insurance Department increased authority to regulate rates and insurance products.  The intent of this legislation is to insure that the price of insurance will only go up as the cost of medical services increases.  Insurance companies would be restricted in how much they could spend on administration, advertising, and profits, as companies will be required to spend 85% of premium revenue on actual medical care.  Increased regulation would also make it easier to shop for insurance.  All providers would be required to sell a standard policy so that people can more easily compare rates.       

It is also the intent of this bill that insurance reform would ensure that people have access to coverage regardless of a pre-existing condition.  Medical history and gender will no longer prevent people from obtaining affordable coverage.  Instead, small businesses will pay for their group policies based on a “community rating” that takes into account the average age of their workforce and geography.  This community rating will enable small employers to have less volatile health care costs from year to year.  Everyone who cannot currently get affordable insurance because of a pre-existing illness or injury will benefit from HB 2005, even people who are purchasing