Georgia insurers will soon be able to offer stripped-down health insurance policies to people who don't get coverage at work, under a new state law authorizing the sale of health plans approved by other states.
Supporters say the new law will offer Georgians in the costly individual market -- typically the self-employed -- more choices and cheaper coverage. But opponents say it will have little impact on price and could lead consumers to buy policies with inadequate coverages.
The new law has implications for 350,000 Georgians who purchase health insurance through the individual market, and for the 1.9 million Georgians with no insurance coverage at all. Unaffected are Georgians who buy health insurance through an employer or who receive government health care.
Brian Mayfield, the owner of a Cobb County small business that repairs cash registers and bar code scanners, welcomes the chance to buy coverage across state lines. Mayfield, 42, has selected and paid for his own insurance coverage for most of his adult life. And he said the choices have always been limited.
"Without competition, there's no motivation for innovation," Mayfield said. "It only makes sense that you give consumers more choice -- and that ought to drive prices down."
Mayfield pays $576 a month for a policy that covers him, his wife and their two children. Last year, the family spent another $6,600 for health care costs on top of the premiums.
"We have a very healthy family and we rarely go to the doctor," Mayfield said, "But when we do, we end up paying out the nose because our policy doesn't cover a lot."
Experts said it is difficult to predict how much the law might influence prices, since costs for the typically low-premium-high-deductible individual policies are determined by a range of factors.
A study of average premiums paid by consumers who bought coverage through eHealthInsurance, an online broker of health insurance plans, found that Georgians who buy their own coverage directly paid $392 monthly for a family plan and $163 for an individual plan last year -- close to the national average. In Alabama, which has fewer mandates, the average family plan costs significantly less: at $291 a month, while individual coverage averaged $126.
Leading conservatives have been pushing for the sale of health plans across state lines as a way to increase competition and consumer options. Wyoming in 2010 became the first state to pass such a law, said Christie Herrera, a health policy expert at the American Legislative Exchange Council. Georgia is now the second state. The law is still being implemented in Wyoming.
"We're going to be watched by a lot of states to see how this works," said Rep. Matt Ramsey, R-Peachtree City, the lead sponsor of the bill.
The new law will allow insurers selling individual plans to avoid the state's list of minimum coverage requirements, which includes benefits ranging from well-child care and prostate cancer screenings to contraceptive prescriptions and treatments by chiropractors for covered conditions
State Sen. Nan Orrock, D-Atlanta, said legislators have spent 20 years fighting for the list of minimum requirements that today make sure Georgians get adequate health coverage when they buy insurance. "Unfortunately, this one House bill threatens all of those consumer protections," Orrock said.
Under the law, consumers with disputes could still turn to the Georgia courts or the Georgia Department of Insurance for a resolution. The law requires consumers to get a side-by-side comparison of the benefits of their policy versus the coverage required by Georgia law.
"We trust our families and small business owners to make those decisions for themselves," Ramsey said.
Insurers must wait until the state Department of Insurance writes the detailed rules for the measure to offer the new plans.
It's unclear whether Georgia insurers will pounce on the opportunity. The law allows those insurers to sell policies approved by other states, even if those policies do not meet Georgia's coverage requirements."The rules of the game will have to be established first," said Graham Thompson, executive director of a trade organization that represents Georgia insurers. "Then we’ll decide how, when and how much we’ll play in this new market."
Some of the law's potential may be obscured by the implementation of the federal health care overhaul, which will establish a new set of minimum requirements for any plans sold on state-based insurance exchanges. The new marketplaces, which will open in 2014, will allow small businesses and consumers who don't get coverage at work to shop for plans and get access to government subsidies.
Georgia State University professor William Custer, who studies health policy, said the new Georgia law "probably is not going to have a large effect, in the short run, on the health insurance market."
But he said the longer-term implications are hard to predict, because the federal health law prescribes dramatic changes to the marketplace, and it's unclear how the new Georgia law will fit in. "It's a piece of a very big puzzle," Custer said.
Dr. Ed Gerson, an Atlanta radiologist who is also an advocate for health care consumers, said Georgia's insurance market needs more competition and more oversight. In the two years that he's had an individual policy, Gerson has been hit with two premium increases totalling about 30 percent. Gerson said he has a high-deductible policy and that none of his bills have exceeded his deductible.
"They have shelled out zero dollars on my behalf," Gerson said.
Gerson said he complained to the state Department of Insurance last year about the rate hikes and learned that Georgia does not require insurers to get approval for rate increases on individual polices. While he said the state should implement more aggressive reviews, he hopes that the new law might help consumers by increasing competition.
"Hopefully the insurers will see that as a reason to be more cost-competitive," Gerson said. "Right now, they can do whatever they want and that's unconscionable."
Mayfield is simply hoping for some price relief. If he could save even $2,000 a year on health care, Mayfield said he would be more comfortable hiring another employee for his small business or taking the family to the beach for an extra week. And he said he is hopeful he could save money if he could select the coverage that his family truly needs.
"I'm not interested in people being mandated what they have to do," he said.
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