Oklahoma insurance commissioner Kim Holland says health bill is flawed

By DerrikKyle on February 26, 2010, 10:30 pm

State Insurance Commissioner Kim Holland has several concerns about the health care bill being debated by the Senate and doesn’t think it would contain costs or induce a significant number of the uninsured to purchase coverage, according to a letter the Democratic commissioner wrote Sen. Tom Coburn.Holland was critical of a key part of Senate Democrats’ health care legislation — a government-run health care plan that would compete with private plans. As currently written, the Senate bill would allow states to opt out of the so-called public option, and Holland said Oklahoma likely would not participate.First, she said, if the reimbursement rates for doctors and hospitals were low, as they are in the Medicaid and Medicare programs, there would be more cost-shifting to private plans.Moreover, she said she shares the concerns of many opponents of a public option — that it would potentially allow the federal government “to assert an unfair advantage that would adversely affect our insurance markets and further stress our health care delivery system.”The Senate today began its second week of debate on its health care bill, which Democratic leaders hope to pass by Christmas. A fight is expected early this week on an amendment to prevent public money from being used for abortion services, either in a public option or from private plans if public subsidies are involved.The Senate bill would require individuals to purchase health insurance, and Holland lauded that goal. But she said the penalties in the Senate bill for those who don’t buy insurance aren’t high enough to force compliance.”The penalty is $95 the first year, increasing to $750 in year three,” Holland wrote. “This penalty is inadequate to induce a large-scale take up of health coverage among Oklahoma’s uninsured. Even with generous premium credits, the absence of a strong non-compliance penalty will not encourage the desired and necessary take-up among the young and healthy to offset the greater risk and cost of the older and unhealthier.”She said the Oklahoma Health Care Authority has estimated there are nearly 600,000 uninsured working Oklahomans and nearly half are between the ages of 19 and 32.”There is no indication that most of those uninsured would voluntarily enroll in any health benefit plan,” she wrote Coburn.If only older people with health conditions have an inducement to buy coverage, she said, the Senate bill won’t lead to lower premiums for coverage.”Data shows that the number one driver in health insurance premium costs are increased medical costs and utilization. As you know, on average, between $0.80 and $0.90 of every premium dollar for a comprehensive health plan is spent directly on benefits to policyholders,” Holland wrote.”Of concern to us are reports from the (Congressional Budget Office) and others that the Senate reform plan will reduce premium costs. In actuality, we believe premium costs will rise substantially if adverse selection is allowed to occur and if the cost of medical care is not addressed. While the generous premium subsidies contemplated by the bill will indeed reduce an individual’s expense in financing their health care needs (a strategy we agree is necessary to ensure affordability), health insurance premiums will not be lower.”Coburn, an Oklahoma Republican who opposes the Senate bill, called Holland’s letter “a fairly strong indictment from somebody who cares about the people of Oklahoma and what is going to happen in health care.”

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