Health Insurance Reform in Washington State
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GLADIS SPENCER: (talking to her bedridden mother) I’m going to turn you, maybe turn you on your back now, okay?
ROD MINOTT: Gladis Spencer of Tacoma, Washington, says she rarely leaves home nowadays. The retired phone operator is too busy caring for her 75-year-old mother, who recently suffered a stroke. Now Spencer has worries about her own health care. Last Fall, her insurance carrier sent this letter announcing it planned to raise her premiums from $142 a month to $195, almost a 28 percent jump. Spencer, who lives on a fixed income and suffers from diabetes, fears she may no longer be able to afford health insurance.
GLADIS SPENCER: I’m scared, because if I lose my health insurance, I can’t buy my insulin. I mean, you know, I would have to go–I’d have to pay it out of pocket, and that’s, that’s going to be more.
ROD MINOTT: Since last Fall, thousands of Washington State residents like Spencer have seen rates on their individual policies skyrocket between 20 percent and 34 percent. The state insurance commissioner was so irritated at what she saw as price gouging that she filed suit to block the rate hikes.
DEBORAH SENN, Health Insurance Commissioner: These are very, very high rate increases, and it is a concern that they will produce rate shock, people will fall off the system. So certainly for families who are trying to hang on and trying to keep their health insurance, it is a crisis.
ROD MINOTT: But the insurance company said it was the state, itself, which was responsible for the high rates. They point to reforms passed by the legislature in 1993 that greatly restricted insurance companies’ rights to refuse new or continuing coverage to those with preexisting medical conditions or to those who change jobs. Insurers say the reforms brought a flood of new subscribers into the so- called individual insurance market where policies are bought by individuals and not offered through an employer. By one estimate, up to 34,000 people, many of them thought to be very ill and previously uninsurable, signed up. Insurers like Pierce County Medical say that influx has left the company no choice but to raise their rates by as much as 34 percent on individual policies. Don Sacco is president of Pierce County Medical.
DON SACCO, Pierce County Medical: In 1994, when the reforms went into effect, our market grew by 40 percent. In 1994, the people who came to us are costing us twice as much in benefit payments as the 14,000 individuals who were enrolled prior to 1994.
ROD MINOTT: Sacco says that translated into $11 million in losses last year to Pierce County Medical. But Insurance Commissioner Senn says reform was needed.
DEBORAH SENN: Well, the biggest complaint you heard from people, and I heard it traveling around the state, is that I cannot change jobs, because I’m afraid I’m going to lose my health care coverage, I have been kept from having coverage at all because I’ve been sick but the insurers are very unhappy that they have to take people who have been sick in the past, are very unhappy that they have to take people who make claims.
ROD MINOTT: Senn points to examples like Melissa Kurtz, who suffers from a rare birth defect that causes bones to fracture easily. Kurtz says prior to reform, fear of losing health insurance kept her from changing jobs.
MELISSA KURTZ: I was not allowed, I was not able to transfer insurances because I “had a preexisting condition” because I had a disability, you just feel trapped, and angry and scared, because there are certain things that I need. I’m not a high user of health insurance but you never know when you’re going to go out and get hit by a car or fall out of your chair or have a ball hit you in the head. You know, these things happen and to not have health insurance or have your basic needs covered is very frightening.
ROD MINOTT: But those who feel they are now paying the cost of extending insurance to those with serious medical problems are angry at Senn.
BRIAN McCULLOUCH: People here need to be able to purchase health insurance. And the biggest impediment right now to that are the cost increases. And frankly, Commissioner Senn, you created this crisis.
ROD MINOTT: At a recent town meeting, critics argued that the reforms have forced many insurers to freeze or abandon selling individual policies.
BRIAN McCULLOUCH: And you’ve increased costs by driving companies out of the state and by increasing loss ratios for the companies that are domiciled here. You’ve caused the contraction of the market. 67 percent of the carriers running individual health insurance in this state are gone.
MARGARET SENN: The legislature took away the tools that we had in place to protect the marketplace, so the only response to this criticism is, well, shall we turn the clock back and go back to a system where we basically said to sick people, no, you can’t have insurance, that only well people could buy health insurance, because that’s literally the alternative that’s being proposed.
ROD MINOTT: Senn says the conflict could have been avoided if the entire health care reform package passed in 1993 was still in effect. But in 1995, the legislature overturned provisions that would have phased in universal health coverage by 1999 and required all employers to offer health insurance to workers. Premium rates would have also been capped.
MARGARET SENN: We had passed the most progressive health care reform package in the country, and then our House flipped and, uh, we had an extraordinarily conservative House, many of whom ran against health care reform, so there was very much an effort and a motivation to repeal as much of health care reform as possible.
ROD MINOTT: Senn says it was particularly harmful for insurance reform when the legislature did away with a provision known as community rating, where the risk and cost of health care are spread among the largest pool of people possible. In other words, everyone pays the same premium, regardless of age or health. Senn says community rating would keep insurance rates affordable.
SPOKESMAN: We need to be concerned about increased costs for all of our citizens.
ROD MINOTT: State lawmakers continue to debate how to stabilize insurance rates, but so far, they have failed to agree on a remedy.
GLADIS SPENCER: I didn’t want to put her in a nursing home.
ROD MINOTT: Many, like Gladis Spencer, say they can’t afford to wait. Spencer says she may be forced to give up her retirement.
GLADIS SPENCER: (talking to mother) There you go.
GLADIS SPENCER: So I worked many, many years sick, ill, you know. Now my body is, is not as–it’s not what it used to be, but I feel like I shouldn’t have to go back to work in order to pay for an insurance.
ROD MINOTT: Absent any solutions, there is concern others will soon join the ranks of the 600,000 uninsured in Washington State.
GLADIS SPENCER: (talking to mother) Do you feel uncomfortable?