A proposal to give North Carolinians cheaper options for health care coverage cleared the state Senate Thursday after a last-minute amendment to address concerns that only the healthiest would benefit.
The bill, which would allow certain nonprofit organizations to offer health benefit plans, could be voted on in the House as early as Thursday evening.
Those who support the bill, including the N.C. Farm Bureau, are careful to say the product described in the legislation is not health insurance. But it would pay for medical expenses and is designed to appeal to those who can't afford health insurance.
Opponents say allowing such plans will let the Farm Bureau and other nonprofits cherry-pick the youngest and healthiest customers from the Affordable Care Act, which would turn the ACA into a high-risk pool with exorbitant prices. Critics also said it offers no consumer protections.
"For the folks who are struggling now, it will only get worse," said Brendan Riley, a health policy analyst with the N.C. Justice Center.
Health benefit plans are controversial because they allow the organizations to reject applicants with cancer or other pre-existing conditions, or charge older or seriously ill people much higher fees. These plans also can cap lifetime financial benefits and, because they are not regulated, are not required to meet financial solvency requirements that guarantee they will have sufficient funds to pay customers' medical bills. They also don't have to cover mental health benefits or preventive health services, unlike health insurance regulated under the ACA.
Such plans were largely outlawed as "junk" insurance by the ACA, which passed Congress in 2010 and began requiring most Americans to have health insurance starting in 2014. The federal mandate to have health insurance was lifted this year.
On Thursday, the Senate still had to vote on the bill for a third time as a procedural requirement. As opponents urged House members to reject the bill when it comes to them for a vote, the Senate revised the language to say that health benefit plans can't discriminate among members, but it can still refuse to cover a specific pre-existing condition. That change did not appease critics as it also does not restrict the plans from charging higher prices for people with costly illnesses.
"Maserati may not refuse to sell me a car but it makes no difference if I can't afford it," Riley said. "People with pre-existing conditions can still be priced out of coverage."
Under the bill, only organizations that have been in existence for a decade and have statewide memberships would be eligible to offer the health benefit plans that would compete with health insurance. But because anyone can join some of these organizations it raises the prospect that thousands of people would become members for the cheaper health benefits. An annual membership in the N.C. Farm Bureau is not limited to farmers, for example, and costs just $25 a year. A membership in the N.C. Realtors Association is open to non-realtors and costs several hundred dollars a year.
Sen. Ralph Hise, the Mitchell County Republican who added health benefit plans to the bill, said this week that health benefit plans are much-needed for people "who are forced into not having insurance because they can't afford $36,000 a year for them and their spouses." Individual health insurance plans sold by Blue Cross and Blue Shield, the state's largest health insurer, have tripled in cost in recent years for some customers, so that the cost of monthly premiums and an annual deductible can be comparable to the cost of a new automobile over the course of 12 months.
Opponents of the bill include the March of Dimes, American Heart Association, American Lung Association, National Multiple Sclerosis Society and the American Cancer Society Cancer Action Network, which say health benefit plans discriminate based on health status and would drive up costs for the sickest members of society. Blue Cross and the N.C. Department of Insurance, which regulates health plans, said the proposal requires more analysis.
"It is important to ensure that a product that is not regulated by the State protects against potential risks such as inadequate coverage and insufficient capitalization," Durham-based Blue Cross said in a statement.
Cady Thomas, a lobbyist for the Realtors, said spiraling insurance costs are the No. 1 complaint of Realtors, who are independent, self-employed contractors and are responsible for their own health insurance. The realtors association has 43,000 members.
"When you have a $2,000 monthly premium coming up and you don't have a sale, it causes cash flow issues," Thomas said. "We have seen a number of members who are going without health insurance."
The provision passed as part of House Bill 933, which deals with licensing school psychologists. The health benefits provision was added by the Senate only last week and will have to go back to the House for approval. It would allow nonprofit member organizations with members in all 100 counties of the state to offer health benefit plans starting in 2020.
Only two states allow nonprofits to sell membership health benefit organizations. Tennessee has allowed the practice for a quarter-century; Iowa approved the change in April but it hasn't been implemented. Tennessee's unregulated health benefits, called "traditional health plans," cover 39,478 people on 23,183 policies as of May 31.
Tennessee applicants must fill out a 13-page questionnaire listing all their medications and medical conditions. Applicants must sign a statement acknowledging that if the information they submitted is not true and complete, they could face penalties that include "imprisonment, fines, and denial of coverage."
The Tennessee program includes options with waiting periods of 6 months and 12 months for people with pre-existing medical conditions. Some plans offer no maternity coverage and some offer maternity benefits after the policy has been in effect for 9 months.
The Trump Administration in January proposed a similar exception to the ACA, dubbing this type of health care coverage "association health plans." The Trump proposal, which is still under review, would not allow association health plans to charge individuals higher premiums based on health conditions or to reject applicants because of poor health.
Most people covered under the ACA, including nearly 520,000 in North Carolina, receive federal subsidies to partially offset their health insurance costs. But those who have experienced the largest cost increases have household incomes are ineligible for the subsidies. These individual health insurance plans are sold to individuals or to families directly or through insurance agents.
The bill doesn't directly affect the majority of people who buy their health insurance through an employer or from Medicare or Medicaid.
Larry Wooten, president of the N.C. Farm Bureau, said health benefit plans wouldn't attract legions of people, as critics warn.
"We can provide some relief to some of our members who are basically trapped," Wooten said. "I've got horror story after horror story from our farm members."
Wooten said the Farm Bureau, which has 551,000 member families, would offer tiered health benefits, based on health condition and cost. Some will not be able to afford it and some may not quality, he said.
"This is not going to be cheap health insurance," Wooten said. "What we're doing has got to be actuarially sound, capitalized, and on and on.