MORGAN CITY — Louisiana’s commissioner of insurance is focused on implementing federal health care reforms.
That was the message Jim Donelon delivered to the St. Mary Industrial Group Monday.
Health care reform is badly needed in the U.S., Donelon said. It currently comes in the form of “Obamacare,” as the Patient Protection and Affordable Care Act is commonly called.
The state, he said, still lacks an effective rate review system, but he hasn’t championed the change since he’s been office because states with such regulations have more expensive health insurance.
As an example, Donelon cited other insurance products in Louisiana that are similarly regulated — auto and home owner’s insurances. Louisiana ranks second in the nation for the most expensive auto insurance and third for home. With no regulation for health insurance, the state is 25th out of 50 states in terms of cost.
In comparison, the state generally has a per capita income that ranks around 42nd in the nation. That changed after “in part because of the mother of all stimulus — Hurricanes Katrina and Rita,” Donelon said, and in 2010 the state’s per capita income average was ranked 26th in the nation. So, the average income in Louisiana is roughly at the national average.
Having insurance costs out of kilter with income averages makes insurance harder for the average family to afford.
The only real way to control insurance rates is competition, Donelon said.
That’s something that is lacking more and more in Louisiana’s market. Six years ago, Blue Cross/Blue Shield had 40 percent of the health insurance market in the state. Today, the company has 70 percent.
With larger and larger portions of the market going to one company, Donelon has plans to ask the legislature to give him prior approval for any rate increases to assist in controlling the market. Also, he is looking at a law similar to one on the books in Arkansas called “any willing health plan,” which essentially allows any health insurance company and health care provider to operate under the same reimbursement agreement that Blue Cross works out.
However, Donelon said he doesn’t have much confidence that either option will be passed by the legislature for a variety of reasons.
The Obama administration recently rejected a waiver request from Louisiana that would have given the state two extra years to meet the 2010 health overhaul law’s requirement for health insurance carriers to spend at least 80 percent of premiums for medical care and quality control efforts. The remaining 20 percent is allowed to be spent on administrative costs.
Donelon said the state applied for the waiver because Blue Cross holds 70 percent of the market. Louisiana was the fourth state to be turned down for the waiver. Seventeen applied, and six were accepted. The remaining states are still awaiting determinations on their applications, he said.
Should Obamacare be declared unconstitutional under the current court challenges, Donelon said, it likely will not be the entire bill, but just the section that sets forth a mandate to purchase health insurance. If that key piece is changed, it will be up to the legislature to fix the bill to make the rest of it still work. Most likely, a limited enrollment period would be enacted, he said.
“We have the best (health care) system in the world. Yes, it needs to be reformed … but I don’t want to see us throw the baby out with the bath water,” Donelon said.