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Medical insurance for the rich?

Medical Insurance For The Rich?

A bill to establish a health insurance risk pool has passed the state House of Representatives but is coming under increasing fire as "nothing more than a tax subsidy for the rich."

The House passed HB 1114 with a vote of 77 for, 2 against with three abstentions Jan. 24. At press time, the measure was awaiting action by the Senate Insurance and Commerce Committee.

Gov. Bill Clinton has embraced the bill as part of his health care legislative package. Its sponsors are Reps. Dave Roberts of North Little Rock and John Dawson of Camden, both in the insurance business, and Ode Maddox of Oden (Montgomery County), the farmer/retired educator who chairs the House Insurance and Commerce Committee.

The floor discussion that preceded House action illustrates the reception the bill is getting as its implications become known.

Dawson began by stating clearly - and repeating - that the risk pool is not intended for those who can't afford health insurance. Rather, it is for those who can afford but can't get medical coverage because of a physical condition. To be eligible, an Arkansan must furnish proof of rejection by an insurance company and pay an annual premium that would be 150 to 200 percent above the standard - about $2,500 a year.

No Free Rides

The bill does not say how the difference between premiums and claims would be paid, though it contains an oblique reference to the collection of the "earmarked tax revenues."

Roberts estimates the pool will cost from $2.5 million to $4 million a year and says that Clinton is searching for a way to finance it. He adds he is "optimistic" the governor will succeed before the legislative session ends. "There aren't any free rides," he says.

Rep. Bobby L. Hogue of Jonesboro, who sells what is known as "cafeteria" group policies to small businesses, was delighted when Dawson introduced the bill for passage, calling it "an excellent piece of legislation that has long been needed."

Then Hogue outlined a situation in which a small business is incurring ever-higher group policy premiums because one of its workers has cancer. He asked if the ailing individual could switch to the risk pool, thereby lowering the costs to his employer and fellow workers.

Dawson stumbled and began explaining portions of the bill irrelevant to Hogue's question, but finally arrived at a statement that a person could qualify if the private insurance premium he pays now is higher than the one he would be charged for the risk pool. The impression was that Hogue's cancer patient could switch.

Moments later, Rep. James Allen of Hot Springs rose to call Dawson's attention to an "anti-dumping" provision in the bill that would bar Hogue's hypothetical cancer victim from leaving a group policy to join the risk pool. "I'll have to backtrack and say you're right," Dawson said.

Complaining that Medicare was "about to break the country's back," Republican Rep. Jerry Hinshaw of Springdale demanded to know what was in the bill to protect the state.

A $250,000 maximum on lifetime benefits and deductibles ranging from $500 to $1,000, Dawson replied. Further, he noted that 28 states have risk pools now. Minnesota pioneered the concept in 1976 and has the most participants - 18,797. There are 3,834 in Illinois' pool, 3,132 in Indiana's, and 5,934 in Florida's, Dawson continued, and added, "At least it will give people who can afford it a chance of coverage."

When Hinshaw persisted, Dawson said he wouldn't guarantee that the plan won't "come back to haunt us someday, but if at any time the state feels it can't afford it, it can discontinue the pool."

His ardor cooled by now, Hogue came to the House well to say he no longer was prepared to speak for or against the bill, even though it "probably is needed." However, he warned, "There is going to come a day when the state will have to bail out the pool," so he advised those who intended to vote for the bill to "make up your mind now to vote for an appropriation" in the future.

Hot Debate

An earlier debate in the 20-member House Insurance and Commerce Committee was even testier, and the measure received just enough votes - 10 - to make it to the House floor with a "do pass" recommendation. Former House Speaker Ernest Cunningham of Helena and Reps. Carolyn Pollan of Fort Smith and Jim Holland of Knobel (Clay County) voted no.

Cunningham asserted "It's not fair for someone making $15,000 to pay the same amount as someone making $50,000 ... That's just not fair."

"If you want to make it a social program, that's fine," Roberts told him, "but if you want to make it an insurance program ..."

"Any time you subsidize to the tune of $4 million, it's a social program" Cunningham shot back.

Research analyst David L. Rickard testified before the committee and is stepping up his attacks on the bill in behalf of a group he says calls itself Arkansans for Health Care.

He declares that only a "few wealthy people with medical problems will be able to join the pool and this makes it "a subsidy for the rich." To this criticism, Roberts invariably responds "We've got to start somewhere,"

Rickard says this doesn't have to be. The bill requires all health insurers in the state to be pool members but specifically excludes self-insurers. If the pool "were to be run like a high-risk automobile insurance pool, then all insurance writers.

Rickard also objects strenuously to the makeup of the board that would run the pool, contending it is rife with conflicts of interest.

The state Insurance Commission would chair the nine-member board. Five of the other eight would represent the health insurance industry. One each would come from the ranks of the Arkansas Medical Society, the Arkansas Hospital Association, and the Arkansas State Chamber of Commerce. Rickard insists that consumers' interests should occupy at least three of the nine seats.

In addition to chairing the board, the Insurance Commissioner must approve the Board's rules, and he also has the job of auditing the Board's financial operations every year.

"How can the Insurance Commissioner effectively and fairly discharge these duties when he chairs the board that draws up and submits the plan of operation to him?" Rickard asks.

PHOTO : INSURANCE FOR SOME: Rep. John Dawson of Camden is one of three legislators sponsoring a proposed risk pool offering medical insurance for those who can pay, but can't get coverage. Detractors say the pool will cost up to $4 million and will subsidize the well-to-do.
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Title Annotation:bill proposal on health insurance risk pool
Author:Griffee, Carol
Publication:Arkansas Business
Date:Feb 4, 1991
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