Consumers denied relief on health insurance
The Kentucky General Assembly closes with no changes in health care reform
From Kentucky Citizen Digest, Nov, 1997

There is bad news for Kentucky families who saw their health care premiums go through the ceiling after the passage of health care reform legislation in 1994: Here we go again.

When the Kentucky House of Representatives voted down a bill designed to address problems in the Kentucky health insurance market on October 15, it ensured that rates for people who buy insurance for themselves or their families on the individual market would go up again. It also meant that Kentuckians covered by group plans will see their rates rise as well.

The vote on the final day of the special session of the legislature called by Gov. Patton to deal with the crisis in health insurance was 50-49. Although the 50 votes were in favor of a bill that could have benefited consumers, 51 votes were needed for passage, and so lawmakers adjourned without taking action.

The number of Kentuckians in the individual insurance market is estimated at about 165,000. These consumers bore the brunt of the rate increases caused by the 1994 law. That law prevented insurance companies from charging sick Kentuckians any more than three times as much as healthy people for their policies. It also forced insurers to offer certain government-approved policies.

Because of this law, almost all of the approximately 45 companies that offered health insurance prior to the passage of the law stopped selling policies in the state. Today, only Anthem/Blue Cross and Kentucky Kare sell health insurance on the individual market.

With little competition for business, insurance rates for many healthy people skyrocketed. Because of these high rates, many Kentuckians were forced to pay more for policies with fewer benefits — or went without insurance entirely.

The whole point of the 1994 law was to make health care more widely available and cheaper. The result, ironically, was the exact opposite.

The failure of lawmakers to address the issue is not only bad news for those who buy their insurance on the individual market. As many as 700,000 Kentuckians had group policies that, since 1994, have not had to come under the same rules as individual policies. Companies that offered group policies could still take a person’s health into account when charging them for their insurance. On October 15, however — the last day of the failed special legislative session — all that changed. Now Kentucky families with group policies will likely see the same rate increases borne by thosewith individual policies.

The premium notices will come in the mail in January or February — just as legislators settle down in Frankfort for the 1998 regular session. They will undoubtedly hear from many of their constituents.
 

Key Family Foundation Contacts: Kent Ostrander, Executive Director Martin Cothran, Senior Associate Policy Analyst