NCPA - National Center for Policy Analysis

OUTSIDE THE COVERAGE UMBRELLA

May 16, 2005

In an effort to make health coverage more affordable, lawmakers in Texas have allowed health insurers to sell consumer choice health plans. But observers say the potential savings from these plans vary widely and it is unclear how much real improvement uninsured consumers have seen.

The consumer choice plans allow insurers to sidestep the state's typical requirements, enabling them to create cheaper, stripped-down health plans. Currently, states impose more than 1,800 mandates on health plans, according to a report from the Council for Affordable Health Insurance.

Although insurers will not reveal specifically how many clients signed up for their plans, some say the elimination of mandatory benefits allows them to slice premiums dramatically. Consider:

  • Unicare estimates the plans are 16 percent cheaper than its traditional offerings. About 35 percent of the people who signed up were formerly uninsured and half of the small employers who bought the plans previously offered their workers no coverage.
  • Aetna's consumer choice preferred-provider organization covers only three doctor visits per year and does not pay for any prescriptions, but the price is 50 percent less than Aetna's traditional PPO.
  • Aetna's consumer choice health maintenance organization, which included annual deductibles for the first time, is 30 percent cheaper than its other HMO.

Jennifer Edwards, director of the state innovations program at the Commonwealth Fund, a private foundation that investigates health care issues, said the removal of costly benefits and the implementation of high deductibles do lower insurance premiums. But, she says, those changes often make plans unappealing to many consumers who cannot afford to spend their own money on routine health care.

Still, many Americans who have few health care expenses stand to gain from insurance that provides them at least some coverage.

Source: Maria M. Perotin, ?Outside the Coverage Umbrella,? Star-Telegram, May 8, 2005; and Victoria Craig Bunce and J.P. Wieske, "Health Insurance Mandates," Council for Affordable Health Insurance, January 2005.

 

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