Insurance Department Research Articles

Australian Angiogram Review Panel – monitoring the use of photodynamic therapy with verteporfin

Photodynamic therapy with verteporfin for choroidal neovascularization (CNV) secondary to macular disease received an Australian government grant in 2002 to fund treatment for 3 years. Funding was restricted to subfoveal predominantly classic CNV where visual acuity was at least 6/60. Access to this funding was via review of angiograms by an expert panel, the Angiogram Review Panel (ARP), managed by the Royal Australian and New Zealand College of Ophthalmologists. De-identified data from the ARP were obtained for the period June 2002 to April 2005 inclusive and the panel's outcomes were analysed. Health Insurance Commission and Department of Veteran Affairs data for photodynamic therapy for the same interval were also retrieved. A total of 7198 submissions to the ARP were received for 5867 individuals in this period. Overall 86.6% eyes submitted were accepted for initial funding (treatments 2-4). There was no change over time in the percentage rejected during this period. The first reviewer accepted 77.2%. And the second reviewer accepted a further 7.7%. An additional 1.6% were accepted on appeal. It was estimated that 29.2% of this initial cohort received five or more treatments. The ARP data indicate an incidence of subfoveal predominantly classic CNV secondary to macular disease in Australia of about 2000 eyes per annum. Only one quarter of patients received five or more treatments. The panel provided a unique opportunity to estimate the 'whole of nation' incidence of predominantly classic subfoveal CNV secondary to macular disease and thus provides a firm foundation upon which to plan public health spending as new treatments become available.

Longitudinal analyses of four years of experience of a prepaid comprehensive medical care plan. 1958.

The spectacular contributions of science to medicine and the popularization of the results have greatly stimulated the demand on the part of the public for making modern medical benefits more readily accessible to a larger portion of the population. But the very advances which have stimulated this demand and which have focused attention on the preventive aspects of disease have also contributed greatly to the cost of medical care. On the one hand, this increased cost has led to an enormous growth in the application of the insurance principle to prepayment for medical and hospital care; on the other, it has led to new approaches in the organization of medical practice to provide this care. These changes in the methods of paying for and of providing medical care are comparative newcomers among American social institutions. Provision for prepayment of hospitalization began in 1933 with the establishment of Blue Cross plans. Prepayment of medical care is an even more recent phenomenon. Fewer than six persons per 1,000 held surgical and medical insurance in 1939. Today, according to the Health Information Foundation,2 almost 70 per cent of the population is protected or “covered” by some combination of hospital, surgical, or medical insurance. On the organizational side change has been less rapid, but there has been a steady growth in the number of group practice organizations. It has been estimated3 that while in 1932 there were 239 medical groups with 1,466 physicians in the United States, by 1951 there were 600 such groups with over 5,000 physicians. Growth in voluntary health insurance both in terms of people covered and in benefits offered will undoubtedly continue. New organizational patterns will continue to emerge. Unlike their predecessors, however, these new developments will be able to call upon a body of experience to guide them which was not available to most of the present voluntary prepayment plans for medical care at the time they were founded. The experience of one such plan—the Health Insurance Plan of Greater New York (HIP)—has been analyzed in the belief that it will be of value not only to HIP but also to administrators of other medical care plans, to welfare fund administrators, to public health officials, to community planners, to sociologists, and to the public in general, all of whom are interested in facts that bear on the problem of making the benefits of modern medical care available to the population. The HIP experience will be presented in three parts: Part I, the present paper, deals with enrollment experience and sets forth data on the extent to which enrollees of different classes remain in the Plan and factors influencing continuance of their enrollment; Part II will present information on the number and kinds of physicians’ services utilized by enrollees and how this utilization varies with length of coverage in the Plan; Part III will contain data on morbidity among enrollees of the Plan and will seek to develop measures of prevalence and incidence of various diagnoses as reflected in the operating records of HIP. These data represent the results of a “longitudinal” analysis of the first four years of operation in HIP—that is, they show the experience of the same group of individuals followed through four years of calendar time. They supplement material contained in a published report on the findings of a field survey inquiring into the health and medical care of HIP and New York City households4 which was essentially a cross-sectional study depicting the situation at a particular point in time.

Stability, Not Crisis: Medical Malpractice Claim Outcomes in Texas, 1988–2002

Using a comprehensive database of closed claims maintained by the Texas Department of Insurance since 1988, this study provides evidence on a range of issues involving medical malpractice litigation, including claim frequency, payout frequency, payment amounts, defense costs, and jury verdicts. The data present a picture of stability in most respects and moderate change in others. We do not find evidence in claim outcomes of the medical malpractice insurance crisis that produced headlines over the last several years and led to legal reform in Texas and other states. Controlling for population growth, the number of large paid claims (over $25,000 in real 1988 dollars) was roughly constant from 1990–2002. The number of smaller paid claims declined. Controlling for inflation, payout per large paid claim increased over 1988–2002 by an estimated 0.1 percent (insignificant) to 0.5 percent (marginally significant) per year, depending on the data set we use. Jury awards increased by an estimated 2.5 percent (insignificant) to 3.6 percent (marginally significant) per year, depending on the data set, but actual payouts in tried cases showed little or no time trend. Real defense costs per large paid claim rose by 4.2–4.5 percent per year. Real total cost per large paid claim, including defense costs, rose by 0.8–1.2 percent per year.

State laws on insurance coverage for bariatric surgery: help or a hindrance?

Background The purpose of this study was to determine which states have proposed or passed laws regarding insurance coverage for bariatric surgery and to obtain feedback from bariatric surgeons/programs regarding the effectiveness of these laws. Methods The Departments of Insurance in all 50 states and the District of Columbia in the United States and all members of the American Society for Bariatric Surgery were surveyed. Results Responses were obtained from all states and the District of Columbia, and 16 responses were received from the bariatric surgeons/programs. Michigan law requires all Health Maintenance Organizations to pay for all medically necessary treatments or procedures in general, such that if bariatric surgery can be shown to be medically necessary, it should be covered. Four states (Louisiana, Ohio, South Carolina, and Tennessee) have proposed state laws regarding bariatric surgery coverage, and four states (Georgia, Indiana, Maryland, and Virginia) have such laws in effect. However, none of the state laws that were passed “mandate” coverage, but rather “recommend” coverage or mandate that the insurer offer the coverage, for which the insurer can charge additional premiums. Although the numbers of responses from bariatric surgeons/programs were few, all of their responses were in agreement that the state laws have not increased insurance approvals for bariatric surgery and, in some cases, has made it more difficult to obtain approval. Conclusion So far, the laws that have been passed have not adequately addressed the problems with decreasing coverage of bariatric surgery. Recommendations for future legislation are discussed.

Health insurance, neighborhood income, and emergency department usage by Utah children 1996–1998

BackgroundIt is estimated that approximately half of emergency department (ED) usage in the U.S. and other developed countries is for non-urgent conditions and that this usage is related to availability, social, and economic factors. We examined pediatric ED usage in a U.S. state with respect to income, health insurance status, types of medical conditions, and whether introduction of managed care affected utilization by Medicaid children.MethodsEmergency department usage rates were calculated from 1996 through 1998 using Utah ED data for children with commercial health insurance, Medicaid, for uninsured children, and by income group estimating neighborhood household income from Zip code of residence. We analyzed usage following the July 1996 transition of Utah Medicaid to managed care.ResultsChildren with Medicaid had approximately 50% greater ED utilization rates than children with commercial health insurance or uninsured children. The majority of usage for Medicaid and uninsured children was for non-traumatic conditions. Only 35% of total ED usage was for non-emergent or non-urgent conditions and this was related to both Medicaid and low household income. Children lacking health insurance were more likely to be discharged against medical advice (OR = 2.36, 95% C.I. 1.88–2.96). There was no reduction in Medicaid ED usage following the transition to managed care.ConclusionUsage of ED services is related to both health insurance status and income. Children lacking health insurance and Medicaid children have excessive usage for conditions which could be treated in a primary care setting. That managed care does not reduce Medicaid ED usage is consistent with findings of other studies.

Give Us Some Credit: The Use of Credit Information in Insurance Underwriting and Rating

Moderator: Diana Lee Speakers: Sam Sorich, Michael J. Miller, and Rob Schneider Since the mid-1990s, many insurance companies writing automobile and homeowners insurance in the United States have been using consumer credit history as one of the factors they consider when making underwriting or rate-making decisions. This practice has generated vigorous debate among insurance companies, agents, legislators, regulators, and consumer activists. The views of all of these disparate groups are discussed below. A distinguished panel of insurance professionals takes up the issue of credit scoring. Sam Sorich is the President of the Association of California Insurance Companies. Sam is the chief insurance lobbyist in the state of California. Since 1980, Sam has also been with the National Association of Independent Insurers (NAII) staff, where he coordinates the state government affairs activities for Arizona, Nevada, Hawaii, as well as California. Prior to coming to NAII, Sam was the assistant attorney general in Illinois. He is a graduate of the University of Illinois Law School. Next is Michael Miller, who is a principal with the actuarial consulting firm of Epic Actuaries, with offices located in Wisconsin and Illinois. He is a Fellow of the Casualty Actuarial Society (CAS) and a chartered life underwriter. He is a member of the American Academy of Actuaries as well. Mike has had more than 30 years of experience in the industry and has held different offices within the CAS. His name is very well known in the insurance industry, as he has testified on numerous topics including investment income, excess profits, rate regulation, risk classification, and of course, credit scoring. Mike holds a BS degree in mathematics from Illinois State University, and by the way, Epic is one of ARIA's most recent sponsors. Rob Schneider is the senior staff attorney with the southwest regional office of Consumers Union. Located in Austin, the office is one of three public interest advocacy offices maintained by Consumers Union, the publisher of Consumer Reports Magazine and Consumer Reports Online. Rob coordinates the offices of legislative and regulatory efforts on financial services and insurance and funeral services as well as access to government information. Before his current position, Mr. Schneider was the associate commissioner for consumer protection at the Texas Department of Insurance. He holds BA and JD degrees from the University of Texas at Austin. Society increasingly equates the ability to manage credit responsibly with responsible behavior, even if individuals have a bad credit record through no fault of their own. The use of credit information is widespread these days. For example, banks and other lenders look at credit records of loan applicants to find out whether they are likely to have loans repaid. Landlords look at applicants' credit records to see whether people can manage their finances properly and can pay their rent on time. Employers even look at credit records sometimes as a measurement of maturity and stability. Diana Lee: Mr. Sorich, please give us a brief overview of why and how insurers use credit scoring. Sam Sorich: In a sense, this isn't anything new. The Federal Fair Credit Reporting Act (FCRA), enacted in 1970, specifies a number of permissible uses for credit reports. Businesses are able to use credit reports for determining whether or not to make a loan, and landlords are able to use credit reports to determine whether or not they want to enter into a lease agreement. Employers have access to credit reports. And in 1970, when Congress enacted the law, it became permissible to use credit reports in insurance underwriting. But really, from 1970 to the early 1990s, this wasn't much of an issue. The reason for this was that insurance underwriters did not have the expertise to relate credit reports to the likelihood of an insurance loss. So even though credit information could be used in underwriting, it was not practical for most companies. …

Stability, Not Crisis: Medical Malpractice Claim Outcomes in Texas, 1988-2002

Using a comprehensive database of closed claims maintained by the Texas Department of Insurance since 1988, this study provides evidence on a range of issues involving medical malpractice litigation, including claim frequency, payout amounts, defense costs, and jury verdicts. The data present a picture of stability in most aspects and moderate change in others. We do not find evidence in claim outcomes of the medical malpractice insurance crisis that produced headlines over the last several years and led to legal reform in Texas and other states. Controlling for population growth, the number of large paid claims (over $25,000 in real 1988 dollars) was roughly constant from 1990-2002. The number of smaller paid claims declined. Controlling for inflation, payout per large paid claim increased over 1988-2002 by an estimated 0.1 percent insignificant) -0.5 percent (marginally significant) per year, depending on the data set, but actual payouts in tried cases showed little or no time trend. Real defense costs per large paid claim rose by 4.2-4.5 percent per year. Real total cost per large paid claim, including defense costs, rose by 0.8-1.2 percent per year. The prior working paper version of this paper is available at http://ssrn.com/abstract=678601. The working paper version contains color figures, which were converted to black and white in the published version.

Medical malpractice crisis: Florida's recent experience.

As summarized in several previous Circulation Mini-Reviews1–3 and elsewhere,4 the United States is experiencing a growing deficit in cardiovascular physicians that is made worse as cardiovascular diseases become more prevalent. Important contributors to this deficit in the cardiovascular workforce and other specialty workforces are the high and rising costs of malpractice premiums in the majority of our states.5 As cardiovascular specialists in Florida (cardiothoracic surgery and cardiology), we are at the center of this crisis. In the present review, we will examine the problem along with recent activities related to this crisis in Florida and discuss their implications. The American Medical Association stated in June 2002, that the majority (>40) of our states had major problems in that members of high-risk specialties were leaving or considering leaving their practices. Then–AMA President, Richard F. Corlin, MD, stated, “doctors are disappearing from American communities on a regular basis because of skyrocketing medical liability insurance premiums and an out-of-control legal system. As insurance becomes unaffordable or unavailable, and the legal system produces multi-million dollar jury awards on a regular basis, physicians are forced to limit services, leave practices, or relocate—all of which seriously impede patient access to high quality health care.” Florida (along with Georgia, Mississippi, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Texas, Washington, and West Virginia) was among the 12 states considered to be at crisis level. According to the Department of Insurance in Florida, in 1975, total indemnity payments for professional liability cases were $10 271 090. By 2001, this had increased 3074% to a total indemnity payout of $326 052 228. A survey of comparative 2002 malpractice insurance premiums revealed that an invasive cardiologist in Los Angeles paid $16 148 for $1 000 000 coverage, whereas the same specialist in Miami paid $106 497, highest …

SIMULTANEOUSLY MODELING CONDITIONAL HETEROSKEDASTICITY AND SCALE CHANGE

This paper proposes a semiparametric approach by introducing a smooth scale function into the standard generalized autoregressive conditional heteroskedastic (GARCH) model so that conditional heteroskedasticity (CH) and scale change in financial returns can be modeled simultaneously. An estimation procedure combining kernel estimation of the scale function and maximum likelihood estimation of the GARCH parameters is proposed. Asymptotic properties of the estimators are investigated in detail. It is shown that asymptotically normal, -consistent parameter estimation is available. A data-driven algorithm is developed for practical implementation. Finite sample performance of the proposal is studied through simulation. The proposal is applied to model CH and scale change in the daily S&P 500 and DAX 100 returns. It is shown that both series have simultaneously significant scale change and CH.We are very grateful to the co-editor and two referees for their helpful comments and suggestions, which led to a substantial improvement of this paper. The paper was finished under the advice of Professor Jan Beran, Department of Mathematics and Statistics, University of Konstanz, Germany, and was financially supported by the Center of Finance and Econometrics (CoFE), University of Konstanz. We thank colleagues in CoFE, especially Professor Winfried Pohlmeier, for their interesting questions at a talk of the author. It was these questions that motivated the author to write this paper. Our special thanks go to Dr. Erik Lüders, Department of Finance and Insurance, Laval University, and Stern School of Business, New York University, for his helpful suggestions.

Review of the professional medical liability insurance crisis: lessons from Missouri merit prize

Objective This study was undertaken to document and generalize the professional liability insurance (PLI) crisis. Study design Data analysis from physician surveys, Missouri Department of Insurance, and court records. Results In 2001-2002, many insurers stopped writing new and existing PLI. A survey found 1 in 7 physicians had their PLI terminated and/or application for new insurance denied. Average premiums increased 22% in 2001 and 60% in 2002. Accordingly, 50% of surveyed obstetricians took salary cuts, 18% secured loans, 9% liquidated assets, and 55% significantly limited their clinical services. An adverse court ruling caused insurers to double reserves. Incomplete data led the Missouri Department of Insurance to erroneously conclude a decrease in claim frequency and severity. In contrast, courthouse records and missing data sources revealed increased malpractice filings. PLI premiums continue to rise. Conclusion Many life-saving specialists are being forced out of business. Specialists are less willing to care for emergency and indigent patients for fear of liability exposure. Legislative enactments leading to meaningful tort reform, public support, and judicial restraint must occur to save health care.

APA Leaders Update Members On Liability Insurance Program

APA Leaders Update Members On Liability Insurance Program

Health Insurance: Review Agents May Not Make Delayed Coverage Decisions Under Vermont Insurance Law—Merit Behavioral Care Corporation and Magellan HRSC, Inc. v. State of Vermont Independent Panel of Mental Health Providers, Austen Riggs Center and Jane Doe

Health Insurance: Review Agents May Not Make Delayed Coverage Decisions Under Vermont Insurance Law-Merit Behavioral Care Corporation and Magellan HRSC, Inc. v. State of Vermont Independent Panel of Mental Health Providers, Austen Riggs Center and Jane Doe1-The Supreme Court of Vermont held that [section] 4089a(c)(5) [of the state insurance code] obligates 'review agents' to conduct their mental health coverage reviews in accordance with the prospective/concurrent requirement, regardless of whether the legislature anticipated regulations elaborating on such requirements.2 Merit Behavioral Care Corporation (Merit) has a contract with the State of Vermont to manage the mental healthcare of state employees who are under the State's medical benefit plan. Merit contracted Austen Riggs, a private healthcare facility, to serve as one of its mental healthcare providers. Jane Doe, a state employee, was referred to Austen Riggs for treatment of a long-term mental disorder. Austen Riggs' policy required appropriate candidates to be admitted to the hospital for a minimum of thirty days. Merit, however, had a policy requiring daily in order to ensure that continued inpatient mental healthcare were medically necessary. In the early phases of Jane Doe's treatment, Merit elected to delay a determination of coverage and appropriateness of her care, and articulated to Austen Riggs that such a decision was pending. After several months had passed, and Jane Doe was discharged, Merit decided that the treatment she received at Austen Riggs was not medically necessary or reimbursable under the terms of its contract with the State. This decision was overturned by an independent panel, which prompted Merit to file suit. Merit sought of the independent panel's decision in superior court, and added breach of contract and indemnity claims against Austen Riggs. That court concluded that as a Merit was obligated to engage in 'service review,' which must be prospective or concurrent with the [patient's] treatment.3 The superior court analogized this case to insurance law because the statute does not provide a specific remedy for a agent's failure to conduct a concurrent or prospective review.4 Under this analogy, the superior court found that Merit had a statutory duty to speak and make a coverage decision prospectively or concurrently with Doe's treatments. In failing to make a coverage decision at the proper time, Merit waived any objections to Doe's request for coverage. Accordingly, the court granted summary judgment to Austen Riggs.5 On appeal to the Supreme Court of Vermont, Merit argued that the superior court erroneously concluded that it had a statutory obligation to conduct reviews prospectively or concurrently. Merit denied such an obligation and asserted that the statutory provision that mandated prospective or concurrent was not self-implementing. Rather, Merit argued, it required the Commissioner of the Vermont Department of Banking, Insurance, Securities and Health Care Administration to promulgate a rule establishing this requirement. Because the regulation that was adopted does not reiterate the prospective-or-concurrent requirement, Merit argued, such was not required. Under the statute, as a agent, Merit must perform service review activities, which include reviewing the appropriate and efficient allocation of mental health care services for the purpose of recommending or determining whether such should be provided, reimbursed, or covered. …

Brokers and the Insurance of Non-Verifiable Losses

How do insurance markets spread the risk when events are unknown or even unknowable? We argue that the insurance market is organized to write incomplete contracts such that these risks can be spread, even though complete contracts cannot be written. Both policyholders and insurers hostage their reputations when they engage in trade. The force of these reputation investments leads the parties to negotiate for a settlement when an event that is not covered by the insurance contract occurs. By choice of brokers, the parties can leverage the reputation stakes and thus influence the payoffs for un-contracted events. Thus, we see the role of ex post negotiation as helping to complete markets where otherwise insurance would not have been available. This view contrasts with other recent analyses in which ex post negotiation is seen as a degradation of the insurance market. ∗Doherty and Muermann: Department of Insurance and Risk Management, The Wharton School, University of Pennsylvania, 3620 Locust Walk, Philadelphia, PA 19104-6218, USA, email: doherty@wharton.upenn.edu muermann@wharton.upenn.edu. We wish to thank Christian Laux and Soenje Reiche for valuable comments.

Magellan Announces Bankruptcy As APA Monitors Implications

Back to table of contents Previous article Next article Professional NewsFull AccessMagellan Announces Bankruptcy As APA Monitors ImplicationsKate MulliganKate MulliganSearch for more papers by this authorPublished Online:4 Apr 2003https://doi.org/10.1176/pn.38.7.0002On March 11, Magellan Health Services Inc. announced that it had filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.Magellan is the one of the leading managed behavioral health and wellness organizations in the country, with a total enrollment of 67.4 million people.Magellan CEO Steven Shulman said in a press release that same day that creditors had committed to make an investment of $50 million in a reorganized Magellan. The proposed restructuring plan submitted to the bankruptcy court outlines actions that are intended to reduce its indebtedness of $1 billion by more than $500 million by fall 2003.Aetna Inc. agreed to extend its contract with Magellan through 2005, according to a March 11 press release.Aetna provides medical services to 13.7 million people, and its contract with Magellan was scheduled to end at the close of 2003. According to the new contract, Magellan must establish three customer-service call centers for Aetna members.The release said, “Aetna’s new strategic focus and agreement with Magellan will feature clinical enhancements designed to promote a stronger integration of care between mind and body, and provide a better way to detect and facilitate the treatment of behavioral health issues associated with chronic medical illnesses.”According to the March 12 Washington Post, Shulman said that the bankruptcy filing “will not affect [Magellan's] services” to 67.4 million people through its contracts with 2,300 health insurers, government agencies, unions, and businesses.Stock analyst Eliezer J. Radinsky of Jefferies & Co. was quoted in the Post as saying, “Magellan is still doing a good job with its providers.”Irvin (Sam) Muszynski, J.D., director of APA’s Office of Healthcare Systems and Financing, has had numerous meetings and phone conversations with Magellan’s staff since the prospect of bankruptcy became apparent.On March 14 Shulman sent a letter to professionals who offer mental health services through Magellan. He wrote, “We do not expect any disruptions to customer or member services or any changes to member programs as a result of the filing.”Shulman referred practitioners to www.MagellanProvider.com for further information.On January 9 Muszynski sent a letter, signed by APA President Paul Appelbaum, M.D., to the commissioner of each state’s department of insurance to attempt to alert them to the problem and to determine the role that agency could play in assuring payment to providers if Magellan declared bankruptcy.Staff are reviewing the responses, which have come from 18 states at press time.Muszynski said that any pertinent news about Magellan would be posted quickly on APA’s Web site at www.psych.org. He urged APA members to report any problems or ask questions to staff at APA’s Help Line at (800) 343-4671. ▪ ISSUES NewArchived

Coalition Succeeds in Killing Controversial Vermont Hospital Plan

Coalition Succeeds in Killing Controversial Vermont Hospital Plan

Epidemiological surveillance at Electricité de France-Gaz de France: health assessment of nuclear power plant employees between 1993 and 1998.

Because the 17,500 employees working in nuclear power plants at Electricité de France, the national power company, may be exposed to a wide variety of industrial hazards, the health insurance department of the company has set up an epidemiological surveillance programme for them. This report describes its first stage, an analysis of their health problems. This descriptive, cross-sectional and exhaustive study examined sick-leave, mortality and cancer incidence to assess the health of the employees working from 1993 through 1998. The analysis compared the employees in nuclear power plants, considered 'exposed', with the rest of the personnel of Electricité de France-Gaz de France, the 'non-exposed' (125,000 persons). Relative risks for these variables were estimated, after stratification for age, sex and work grade. Globally, the employees in the nuclear sector appeared to have fewer health problems than the other company employees. This was true regardless of age and especially for men, operating employees and supervisory employees. Nonetheless, three points must be noted: non-work accidents generated a non-significant excess of absenteeism and mortality among these employees, especially among management and supervisory personnel; suicides affected supervisors in particular; and an excess of primary malignant brain tumours affected both mortality [relative risk (RR) = 1.96, n.s.] and incidence, especially among operating employees (RR = 2.87, 95% confidence interval = 1.00-8.43). No excess of malignant blood disease was observed. This study, performed for surveillance purposes, points to brain tumours as a problem that raises important aetiological questions. Research is now necessary to provide answers. Surveillance of nuclear plant employees at Electricité de France should be continued and expanded to include the study of specific occupational exposures.

Guaranteed renewability and the problem of risk variation in individual health insurance markets.

Consumers should be protected against fluctuations in premiums for private individual health insurance associated with the onset of high-cost chronic conditions. The most commonly discussed way to do so is through community rating, which provides protection but can require a heavy regulatory burden and can create incentives for adverse selection and cream skimming. This paper describes an alternative method of providing the same type of protection: insurance contract provisions that guarantee renewability for the next coverage period at class-average rates. Drawing on recent work in insurance theory, the paper shows that such protection is feasible in competitive insurance markets. Guaranteed renewability, which is required of all individual health insurance by the Health Insurance Portability and Accountability Act (HIPAA) of 1996, is incomplete because the law fails to require that premiums be the same for all insured persons in a rating class. However, the paper reports the results of a recent survey of state insurance regulation, which indicates that all but three state insurance departments report having such a requirement. The paper concludes with a discussion of possible threats to the protection guaranteed renewability provides against risk segmentation.

Urban Homeowners Insurance Markets in Texas: A Search for Redlining

There has been a continuing debate in Texas and other states about the availability and cost of home insurance to residents of inner city and minority neighborhoods. Consumer and community advocates contend that insurers engage in redlining, or unfair discrimination against minority areas, by charging excessive prices and limiting the supply of insurance. Unfortunately, insurance allegations have been largely based on simple comparisons of minority and nonminority areas that do not consider the influence of other factors. In this article, the authors build on a more rigorous vein of research by using econometric analysis to identify measurable factors that affect urban homeowners insurance markets. While this study cannot conclusively prove or disprove the presence and negative effect of unfair discrimination, it assesses whether significant statistical evidence exists for such behavior. The authors conclude that no statistical evidence of exists and that the risk of loss and the demand fo r insurance appear to primarily drive the terms of insurance transactions. This conclusion implies that measures directed toward enhancing safety and bettering economic conditions offer the best prospects for improving urban insurance markets. INTRODUCTION Problems with the availability and cost of home insurance in urban communities and allegations of industry redlining practices have received considerable political attention and generated an intense policy debate. This 40-year debate has progressed as urban communities and industry practices have evolved. Charges of explicit racial discrimination have changed to allegations of implicit unfair discrimination against minority areas caused by certain industry marketing, pricing, and underwriting methods. A resurgence of these allegations after the 1992 Los Angeles civil disturbance prompted investigations by state governments, the federal government, and other organizations. (1) In Texas, consumer organizations and the insurance department conducted studies on urban auto and home insurance and offered recommendations on remedial measures (see, for example, CEJ, 1997a and 199Th). Community and consumer advocates contend that insurers' underwriting practices and pricing systems unfairly discriminate against neighborhoods with older and lowvalue homes, resulting in excessive rates and diminished availability of coverage. That alleged underserved areas tend to have high-minority populations leads to charges of racial as well as geographic discrimination. (2) Industry critics call for strong legal and regulatory measures as well as voluntary efforts by insurers to correct this situation (Squires, 1997). (3) Insurers respond that risk and other economic factors account for higher rates and coverage limitations in urban areas and that remedial effort should focus on improving economic and safety conditions (Duncan, 1995). This is a difficult issue to resolve because of the complexity of urban insurance markets. Higher rates and more limited coverage in the inner city could be caused by a number of factors, including greater risk, substandard housing, low income, costly information and other barriers to market entry, and regulatory constraints, among others. Unfair discrimination is alleged to be a significant factor by some and refuted by others. In addition, certain industry underwriting and marketing practices, justified from a business perspective, may still have a negative effect on urban communities because of these areas' particular economic characteristics: The true nature and causes of urban insurance problems have important implications for the types of remedies that are warranted and likely to be most successful. Most prior research fails to provide an adequate understanding of urban homeowners insurance markets or a satisfactory basis on which to recommend appropriate remedies. Previous analyses of urban insurance markets in Texas and other states tend to rely on simple statistical comparisons of prices and availability measures across areas differentiated by their racial composition. …

Four More States See Value of Parity Laws

Four More States See Value of Parity Laws

DB Efforts Help Pass Mississippi Parity Bill

Back to table of contents Previous article Next article Government NewsFull AccessDB Efforts Help Pass Mississippi Parity BillChristine LehmannChristine LehmannSearch for more papers by this authorPublished Online:18 May 2001https://doi.org/10.1176/pn.36.10.0004Mississippi is the 32nd state to enact mental health parity legislation. To ensure the law’s passage, the Mississippi Psychiatric Association (MPA) and its coalition partners worked with key legislators, and Gov. Ronnie Musgrove (D) signed the bill last month.APA President Daniel Borenstein, M.D., said in a press release, “We applaud the Mississippi legislature and Gov. Musgrove for breaking down the barriers for the people of Mississippi from receiving treatment and recovery from mental illness.”APA’s Commission on Public Policy, Litigation, and Advocacy approved funding for MPA’s advocacy efforts last month, subject to approval by the Board of Trustees.APA’s Division of Government Relations held a one-day advocacy training session last year for MPA members and provided resource materials on parity.Sudha Madakasira, M.D.: “We were told by politicians that a parity bill would not pass given the opposition by key legislators.”MPA President Sudha Madakasira, M.D., said in an interview with Psychiatric News, “We were told by politicians that a parity bill would not pass given the opposition by key legislators. We decided not to ask for full parity and met with insurance committee chairs in the House and Senate and the insurance industry. Once we agreed on the provisions, the chairs sponsored the bills and shepherded them through their chambers.”Madakasira estimated that the law, which becomes effective next January, will affect 500,000 individuals in group health insurance plans. The legislation requires employers with more than 100 employees to provide mental health coverage for “clinically significant mental illnesses.” The law doesn’t list or define those illnesses.The mental health coalition also succeeded in not having lifetime caps on mental health benefits included in the bill.Specifically, HB 667 mandates that group health plans provide the following mental health benefits:• A minimum of 30 days of inpatient services annually• A minimum of 60 days of partial hospitalization annually• A minimum of 52 outpatient visits annuallyThe group health plans must cover a minimum of 50 percent of the cost of outpatient visits but are not required to pay more than $50 a visit. Group health plans can opt out of the new requirements if they result in increasing the plans’ costs by more than 1 percent.MPA lobbyist and executive director Angela Ladner told Psychiatric News, “In addition to having a 15-member mental health coalition that included the state psychological, medical, and hospital associations, we had representatives from the state department of health insurance giving us advice.”Ladner said the coalition took the department’s advice to craft a bill based on the mental health benefits in the health insurance plan for state employees. “We decided the state’s benefits were pretty good and that we could argue persuasively that everyone else should have the same benefits as state workers.”Ladner praised Mary Ann Stevens (D), chair of the House Insurance Committee and a previous opponent of parity, with meeting with the mental health coalition and agreeing to sponsor the bill.“Once we had the insurance industry on board, she did everything in her power to ensure the passage of this legislation.”Ladner credited Senators Billy Thems (D) and Robert Huggins (R), as well as Lt. Gov. Amy Tuck (D), who presides over the Senate, with pushing the bill through the Senate.Madakasira added that the law is a good first step toward full parity and that the mental health coalition plans to work toward having its provisions expanded. ▪ ISSUES NewArchived