Health care reform in Illinois: what to expect - State Insurance Director Michael McRaith discusses the impact of health care reform on Illinois
By Judith Graham
Copyright © 2010, Chicago Tribune
5:42 p.m. CDT, March 23, 2010
http://www.chicagotribune.com/health/ct-met-health-reform-illinois-20100323,0,4596796.story



New health care reform legislation is national in scope, but the task of implementing it will fall heavily on the states.

In Illinois, Michael McRaith, director of the state's Department of Insurance, will be at the center of activity, overseeing broad changes in the health insurance market.

The Tribune asked McRaith about the new law, signed Tuesday by President Barack Obama. He promised to challenge insurers that charge sky-high rates and vigorously enforce new consumer protections. An edited version of the conversation follows.

Q: What are the first changes Illinoisans will see?

A: Effective immediately, the secretary of (the U.S. Department of) Health and Human Services, in conjunction with the states, has authority to review and challenge unreasonable health insurance rate increases.

Right now, insurance companies report premium increases in the individual market, but we (in Illinois) do not have the authority to approve or deny rate changes. In the small-employer market, we don't even get informed of rate increases or premiums charged.

We will establish a protocol (for reporting data) as soon as possible. … It is absolutely certain that if there is an unreasonable rate increase, we will examine that and we will challenge that.

Q: What about people with pre-existing conditions who haven't been able to get insurance?

A: Another big challenge for our state is the expansion of high-risk pools, or what we in Illinois know as ICHIP (Illinois Comprehensive Health Insurance Program).

(These pools provide coverage to people with chronic illnesses or disabilities who can't get insurance elsewhere.)

Right now, ICHIP is prohibitively expensive, with premiums of $12,000 to $16,000 annually. It's funded two-thirds by premiums and one-third by general revenue funds. The federal law shifts that burden so enrollees pay no more than 35 percent of the cost of the program. That's about a 30 percent reduction in costs.

Our expectation is that we'll get clear guidance from Washington (about who can get insurance through the pools) within 90 days. We expect an implementation time of 15 to 45 days following that.

Since individuals in Illinois can be denied health insurance for any reason other than race, religion, color or national origin, we expect a large number of people will sign up.

Q: What about people who don't have pre-existing medical conditions but who don't have insurance?

A: On Jan. 1, 2014, health insurance exchanges will be established in all states, including Illinois. (These exchanges will offer a menu of standardized insurance plans to the uninsured and small businesses. No one will be turned away because of a medical condition.)

(Until then) we are concerned that some of the less responsible companies may try to increase premiums and eliminate people who need health care from their lists. … They might say, "Because we have to accept everyone starting in 2014, let's try to start 2014 only with healthy people who are profitable."

We're going to be there to help consumers every step of the way. If people have concerns, they should contact us.

Q: What about rescissions of insurance coverage?

A: Six months from the law's enactment, rescissions will only be allowed in cases of fraud.

Regrettably, Illinois has more rescissions than any other state, including California and Texas. Rescissions can occur up to two years after a policy is first issued. The company looks into the medical history of the patient and if it sees any reason that would have justified the denial of the application or a pre-existing condition exclusion or that would have justified charging the patient more, the policy can be rescinded.

The change in the rescission law is a significant improvement for Illinois families.

Q: Will the federal government take over regulation of insurance?

A: There are people throwing around statements about this being a government takeover of health insurance. The truth is, it's far from it.

Now we'll have national standards, but the health insurance market will continue to be regulated at the state level.

Q: What kinds of standards?

A: For instance, a requirement that insurers (pay 100 percent) for certain preventive treatments, such as childhood inoculations, … a requirement that insurers spend a certain amount of revenues on medical care (80 percent for individual and small group policyholders, 85 percent for members of large groups), and a standard benefit package to be developed by state regulators in collaboration with Health and Human Services.

jegraham@tribune.com