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By Cindy Zeldin

This piece originally appeared in the Macon Telegraph.

In these difficult economic times, the loss of a job is frequently compounded by the loss of the health insurance that had been tied to it. With unemployment rates hovering near 10 percent, more and more Georgians are facing this dual predicament.

For many recently unemployed Georgians, a popular program that subsidizes the continuation of employer-sponsored coverage has served as a lifeline since it was enacted into law in early 2009.  Under the program, known as the COBRA subsidy, most workers laid off between September 1, 2008 and December 31, 2009 were made eligible for a 9-month subsidy to ease the financial load of paying full freight to stay on their old plan.

In normal times, people losing their jobs can remain on their previous employment-based plan for 18 months by paying the entire premium, including the portion their former employer had previously contributed. For someone who has just lost his or her primary source of income, however, paying the entire premium can be cost prohibitive. To address this challenge, the subsidy puts COBRA coverage in reach for many Georgians:  according to a study recently released by Families USA, monthly premiums for subsidized COBRA coverage average $369 in Georgia, while the average monthly premium without the subsidy is $1,053.

On December 1st, however, this program began expiring for the first cohort of Georgians who utilized it to obtain health insurance. While the program was just extended for an additional six months, its initial expiration earlier this month drew attention to the paucity of affordable and meaningful health insurance options available to Georgians who don’t have access to an employment-based plan.

Since the 1950s, job-based health insurance has formed the bedrock of our health insurance system. In the post World War II era, to get around wage and price controls, employers began offering health insurance as a workplace benefit to compete for high quality workers. A subsequent Internal Revenue Service ruling that health insurance benefits were excluded from taxation encouraged the growth of this practice. Further, in the 1950s and 1960s, staying with one large company throughout a career was more common than it is today, making the locus of employment a logical place to access health insurance. At the same time, medical advances made health insurance more and more of a necessity, which in turn made the insurance benefit increasingly valuable to workers.

Over the past couple of decades, however, due to changes in the labor market and to rapidly rising health care costs, employment-based health insurance has been eroding from its high-water mark. In Georgia today, about sixty percent of the non-elderly have insurance through an employer plan. For many, this still works pretty well, as evidenced by the desire for many recently unemployed workers to utilize the COBRA subsidy rather than take their chances in the individual health insurance market or become uninsured.

For the roughly 3.5 million—and growing—Georgians under age 65 without a job-based health insurance option at all, the choices are grim. Unless you meet the strict eligibility requirements for a public program such as Medicaid, the individual market is currently your only option. Unfortunately, in Georgia, this marketplace functions poorly and unfairly.

First, Georgia is not a “guaranteed issue” state. This means that insurers are not required to sell you a policy, and you can be turned down if you are considered to be too risky. In this case, you may not want to be uninsured, but you might not have a choice. Second, insurers can exclude pre-existing conditions, meaning that they can sell you a policy that carves out and does not cover a health condition you already have. Third, insurers can vary premiums based on your health status, gender, and other characteristics. In other words, the price of health insurance depends on the person who is buying it, making transparency nearly impossible.

Once you have an individual policy, it doesn’t always cover what you think it does. In addition to premiums, deductibles and out-of-pocket expenses can also be quite high. Further, insurers routinely engage in post claims underwriting, or the practice of investigating a consumer’s medical history and cancelling a policy after the covered consumer incurs a claim. As a result, insurance policies purchased on the individual market in Georgia are often not only expensive, but also full of Swiss cheese-like gaps that translate to an illusion of protection rather than true, meaningful coverage. To fix these problems, we need to change the rules of the road.

While the health reform legislation moving through Congress right now contains an array of provisions, among the less frequently discussed features of the legislation are strong consumer protections for people who have private health insurance policies and a reorganization of the individual and small group health insurance marketplace. Enforced properly, these elements could transform a broken market into a fair marketplace.

While there are substantial differences between the House and Senate bills, they both include the key consumer protections: insurers would be required to sell health insurance to all comers, and the price of the policy will not vary based on the health status of the person purchasing it. Pre-existing conditions cannot be excluded from coverage, insurers cannot engage in post-claims underwriting, and hard caps will be placed on out-of-pocket expenses.

Insurance plans will be standardized such that insurers can compete for business within defined tiers, and low-to-middle income individuals and families purchasing insurance will be eligible for a credit to make the premium affordable. Combined with the new rules described above, the primary incentive facing insurers would move away from finding the healthiest people to enroll in their plans and towards a combination of price and quality—in other words, value—within a defined package of benefits.

These changes not only reflect basic fairness, but would also be a tangible benefit to Georgia’s consumers. In these difficult economic times, Georgia’s consumers deserve real choices and a health system that works for us, not against us.

This piece appeared in the Macon Telegraph on Sunday, January 10, 2010.