The most controversial provision in the Senate health insurance reform plan would require insurers to offer individual coverage to anyone who leaves an employer-sponsored plan, regardless of pre-existing conditions.
Opposition to the provision is being led by the Health Insurance Association of America and the Blue Cross and Blue Shield Association. Both groups say they support most of the Senate health insurance reform plan but oppose the so-called group-to-individual portability provision because it would dramatically increase the cost of individual insurance.
The Kassebaum-Kennedy Health Insurance Reform Act, introduced by Sens. Nancy Kassebaum (R-Kan.) and Edward Kennedy (D-Mass.), is expected to go to the Senate floor next month.
The HIAA estimates the rise in premium costs would be as much as 30%. Increases would occur for two reasons. First, because the people most likely to seek individual coverage would be among the sickest and most costly. And second, because of what insurers call a "death spiral," which occurs when sudden increases in premiums cause the healthiest individuals to drop their coverage. That leaves the risk pool with a higher proportion of sicker patients, causing premiums to rise again, and so on.
But others, including the American Academy of Actuaries, say costs would rise at most 5% if the Senate plan were passed.
Jeffrey Ricchetti, senior Washington representative for Blue Cross and Blue Shield, warned that even a 5% increase, on top of the normal 5% to 7% annual increases because of healthcare inflation, could have a devastating effect on the market.
"There is no way of knowing how this will affect the market. This is just not an area the federal government needs to be in," Ricchetti said.
The plan's opponents say it isn't necessary because about 30 states already have a high-risk individual pool that is subsidized by other insurance customers.
According to estimates by the General Accounting Office, about 1 million people could be affected by the group-to-individual portability provisions of the Senate plan.