One of the enlightening stories that Kansas Insurance Commissioner Sandy Praeger told here Thursday grew out of testimony she made to a Senate committee.
The subject was “rating reforms.” The health care bill Congress passed and is now law stipulates that insurance companies may charge older people more by a ratio of three-to-one.
She told the committee that wasn’t steep enough and she would rather see a five-to-one ratio: allowing a company to charge a 70-year-old five times more than a 25-year-old for a policy. A gray-haired senator grew incensed. “You mean you want companies to charge old people more,” he asked indignantly.
With her practiced charm, she patiently explained that the rate differential companies now use was already much greater than five-to-one and that a three-to-one ratio would be hard on insurance companies because older people use so much more health care than do the young.
The story is worth repeating because it demonstrates how profound and pervasive the ignorance is about health care cost fundamentals.
In addition to reforming how rating differentials are determined and applied, the new law will make other changes between now and 2014 that will make coverage available to everyone; will ban limits on the amount of medical benefits an individual may receive; will establish four coverage tiers based on coverage categories and cost sharing that will make comparison shopping easier and ensure that coverage is comprehensive; and will require the young to pay a penalty if they elect to go without insurance.
Penalties on the uninsured and on larger firms that do not offer insurance to their employees become necessary when everyone be-comes eligible for insurance.
Otherwise, the uninsured would wait until they got sick before taking out a policy. If a policy can be purchased by a mom-to-be on her way to deliver, insurance companies will go broke.
COMMISSIONER Praeger said, in answer to a question, that she be-lieves her office will be able to handle the additional work that an expanded Medicaid program will require without hiring many more because it has state-of-the-art computer equipment and is, as a matter of fact, providing technical advice to other state insurance departments.
The Kansas department also has an enviable reputation for being fair to the insurance industry and individual insurance agents and for helping individuals and businesses resolve issues they have with their insurance coverage quickly and equitably.
Her presentation in Iola explained the fundamentals of the new law clearly and answered all questions asked — even when the answer had to be, “I don’t know yet.”
Did you miss it? A pity.
— Emerson Lynn, jr.
