Risk averted or greed asserted?

Fifty-four employees from 18 local businesses (including City Pulse) were notified recently that U.S. Health and Life Insurance Co. will terminate the 6-year-old Ingham County Advantage health insurance plan, effective Dec. 31. It is known as the “third share plan” because the county subsidizes roughly one-third of the premium.

“We got notice about a month ago (from U.S. Health and Life) that they would no longer be able to underwrite the third share plan due to health care reform,” Robin Reynolds, executive director of Ingham Health Plan, said. “It is unfortunate this happened.”

The policy, which is aimed at helping lowerincome workers, includes a $250,000 lifetime maximum coverage with a $35,000 annual maximum. Once the carrier has paid that out, consumers pay the rest for all health care services. As of Thursday, federal law bars lifetime maximums.

Keith Maley, a spokesman for the U.S. Health and Human Services Department, which is overseeing the implementation of health insurance reform, said Tuesday, "Lifetime and annual limits often leave people without coverage when they need it most. The Affordable Care Act appropriately eliminates lifetime limits for all Americans within a year and phases out annual limits by 2014. The cost of these patient rights is very small but the benefits to people are very large."

Because there is no longer a limit on how much insurance carriers will have to cover in a year, it is likely that premiums, or upfront costs consumers pay, will go up. Reynolds said that U.S. Health and Life could not craft a coverage plan that has no lifetime maximum but keeps premiums reasonable. Nor has the county been able to find coverage elsewhere.

“We asked them to stay and reconsider, but they would not budge,” Reynolds said. “Insurance companies don’t want to be at risk any more than they have to.”

Jim Ford, a spokesman for U.S. Health and Life, said via e-mail that the company is exploring an option set forth by the U.S. Department of Health and Human Services that would waive the federal restriction on lifetime maximums, but that is not guaranteed.

Reynolds said Ingham is “exploring the feasibility” of continuing the third share plan if the waiver is granted.

The third share plan started about six years ago but never lived up to Reynolds’ hopes. She anticipated 500 people to be covered under the plan, which is aimed at small businesses, but only 54 signed up. She said oftentimes the plan was either too expensive or did not provide enough coverage. It costs $274.85 monthly per person. After the county pays $102.60, the employee and employer split the rest. The employer must pay at least 25 percent.

Ingham Health Plan, which administers the third share plan, provides benefits to about 13,000 people in the county.

Most of them (12,000) are under Ingham Health Plan B, which covers primary, specialty and urgent care visits and radiology and pharmacy for those making up to $26,000 per year. Reynolds said there are roughly 39,000 uninsured people in Ingham County.

Those who were dropped from the third share plan will be encouraged to apply for Plan B, but that plan does not cover emergency room visits or hospitalization — “Two biggies,” Reynolds said.

Michael Harp, an insurance agent at Papazian, Smalley and Harp, an East Lansing benefits firm, said that U.S. Health and Life’s cancellation of the third share plan is an “unintended consequence” of the new health care laws. The days of limited benefits are over, he said, leaving insurance carriers worried about their bottom line.

“Limited benefits mean lower premiums. You can’t do that anymore,” Harp said. “When you take away limited benefits, costs go way up.”

As an example, Harp cited individual plans through Blue Cross Blue Shield, which is required to take all applicants. A 25-year-old may pay between $72 and $225 per month, he said, while a 55-year old may pay between $334 and $736. Group rates vary on the amount and age of the people looking for coverage.

Harp compared the end of the third share plan to the recent wave of large insurance carriers who will no longer write child-only policies, due to the new law that prohibits denying coverage to children with pre-existing conditions.

“The law’s intention is protection and the insurance companies’ response has been, ‘We are not going to write that policy anymore,’” Harp said. “Insurance companies are protecting themselves.”

With the third share plan ending, Harp said those customers will likely end up either paying for more expensive group or individual policies or will opt to go uninsured. The third share plan might not have been the most inclusive policy, but it was better than nothing, he said.

The primary goal of the health care bill is to help everyone get health insurance, and there are a variety of ways the government intends that to happen, but those won’t kick in until 2014, Harp said. These include expanding Medicaid, offering tax breaks to business owners who provide health insurance and punishing those who don’t, and opening up “exchanges” with a variety of health plans to choose from.

William White, owner of Traveler’s Club International Restaurant in Okemos, was on the third share plan for about three years and will probably go uninsured for now, he said. He wasn’t surprised at the insurance industry’s reaction to the new health care laws.

“You can’t force companies to sell something they don’t want to sell. That’s what is happening,” he said.

White said he tries to stay healthy on his own terms with vitamins and exercise and is fortunate to have recently got some tests and an outpatient surgery out of the way before losing his coverage.

Lisa Hale, of the Southside Community Coalition, has helped Lansing residents acquire health benefits for about six years. She was covered under the third share plan with her husband until March when she switched them to a more expensive Blue Cross Blue Shield plan. Her husband suffers from what appear to be mysterious gastrointestinal problems and all of those expensive hospital visits have caused them to max out their benefits on the third share plan.

“It (third share plan) wasn’t very useful” for someone with serious health issues. Hale said. She said her new plan is “good, but not really affordable.”

Erin Knott, deputy director of Michigan Citizen Action and a health care reform advocate, called U.S. Health and Life’s actions “surprisingly brazen. They are clearly blaming their actions on the health care law, but not their own greed,” she said. “They don’t like the new rules so they are taking their ball and going home.”

U.S. Health and Life’s Ford said to remember that the third share plan could still be brought back if granted a federal maximum lifetime waiver.

“Greed — no way,” he wrote via e-mail. “The current policy does not meet the new federal requirements.”