Illinois Gets Failing Grade on Protecting Consumers Purchasing Individual Health Insurance
Based on a report published in June 2008 by Families USA, it’s hard to find a state that does less than Illinois to protect consumers purchasing individual health insurance.
Families USA is an advocate for universal health care and a frequent critic of the insurance industry. But its research is well-respected. Families USA’s latest analysis explores the extent to which consumer protections are available for people who purchase individual insurance. This is the kind of policy people buy when they’re between jobs, working for themselves or employed by a company that doesn’t offer employer-sponsored group insurance.
Illinois has adopted a “hands-off” regulatory policy toward individual insurance, according to the report, which is based on a survey of insurance commissioners in all 50 states. There’s no guarantee here that insurance companies sell coverage to all applicants, a policy known as “guarantee issue.”
Admittedly, this isn’t common: only five states (Maine, Massachusetts, New Jersey, New York and Vermont) require insurance companies take all comers, including those with pre-existing conditions.
Nor are there any restrictions here on companies’ ability to raise premiums based on an applicants’ health status. In other words, even if policies are available in Illinois, the price may be out of sight.
By contrast, Maine, Massachusetts, New Jersey, Oregon, New York, Vermont, and Washington won’t let insurance companies vary premium prices for consumers based on their health. Minnesota and New Hampshire allow premium prices to rise a maximum 25 percent.
Often, insurers will sell policies to consumers with pre-existing conditions but exclude covering for those conditions for a specified period. Many states have regulations that limit how long these exclusions can last, typically requiring full coverage after six months to one year. Illinois doesn’t.
Half the states also limit the period of time that insurers can go back in someone’s medical history looking for evidence of pre-existing conditions that can be excluded from coverage. Illinois has no such limitation.
Illinois is among 44 states that don’t intervene when insurance companies decide to limit or revoke coverage for individual policyholders. The state gets credit, however, for ensuring policyholders have the right to appeal when coverage is revoked. Similarly, Illinois guarantees that consumers’ disputes with insurers will be reviewed by a third party and that reviewers’ decisions will be binding.
For its part, the insurance industry often argues that state regulation tends to drive up the cost of coverage and impair consumers’ access to affordable policies. But there’s growing conviction in health policy circles that individual insurance is ripe for an overhaul.
Families USA doesn’t indicate which states are “best” or “worst” when it comes to protecting individual insurance policyholders in its reports. But high marks go to Connecticut, Massachusetts, which recently overhauled its insurance market and enacted universal coverage, New York, and Oregon, among others.