Arizona’s Health Insurance Crisis: Insurance Alt

Sept. 21, 2005

Transcript:

>> Michael Grant:
Tonight on "Horizon," we continue our series on Arizona's health insurance issues. Tonight, alternatives and congressman John Shadegg's plan. PBS senior correspondent Ray Suarez talks about Katrina and the media. And it's not a winery in California, it's southeast Arizona. We'll visit the state's growing wine industry.

>> Announcer:
"Horizon" is made possible by the friends of channel 8, members who provide financial support to this Arizona PBS station. Thank you.

>> Michael Grant:
Good evening. Thanks for joining us on "Horizon." I'm Michael Grant. In tonight's segment of our series "Arizona's health care crisis" we look at various alternatives that are available to consumers, such as discount plans, also, United States congressman John Shadegg is promoting a plan he calls the healthcare choice act. That would allow a nationwide health insurance market from which consumers may choose insurance carriers from state lines. He came to our studios recently to explain his plan.

>> John Shadegg:
Lots of Americans works for employers who can't afford to offer them health insurance, and they can't afford health insurance themselves. They have to go right now into what's called the individual market, which is where you buy a one-on policy, a policy for you yourself if you are not married or a policy for you and your family. Those policies are extremely expensive. In part, that's because there is very little competition in the individual market. For example, in any given State, there are probably no more than two, three, at most, four or five companies offering health insurance policies in the individual market. That's not much competition. This bill will enable many more companies to bring a health insurance product to the market in each of the 50 states. So the level of competition for individual policies will go up dramatically, making those policies less expensive and more available and hopefully resulting in fewer uninsured Americans, because the cost comes down and comes down rather dramatically, in part as a result of competition, but also in part as a result of the fact that the policy will not have to include every single mandated service that that particular state requires. Let me try to explain that. Years ago, let's say, 15, 20 years ago, the number of mandates that is, the number of things that States required the policy to cover as a result of their state laws, was a handful. 10 or 15 in the entire country and they would be things you would expect, emergency room coverage, perhaps drugs, perhaps pregnancy. Standard kind of things that everybody needed. Today, there are more than 1800 of these mandates, and they include things like in some states, acupuncture. They include things like aromatherapy. They include hairpiece coverage. They include all kinds of services that the average American will never use. Now, all of those were mandated by state law because people thought, well, it's a good idea, we ought to offer this to people. The problem is, every time you add another mandated benefit to the policy; it drives the cost of the policy up. And so those states that have a very, very high list of mandates, Maryland, would be an example, lots and lots of state-required mandates, policies in those states are extremely expensive. States that have relatively few mandates are much less expensive. This legislation allows you to -- allow an insurance company to qualify a policy for sale in a State that has relatively few mandates, maybe just pregnancy and emergency room, we'll say or maybe one or two others. Let's say diabetes, for example. But, then, offer that policy in any one of the other 50 states, and the State regulators in any state where it is sold and where the consumer lives, that State regularity nonetheless has jurisdiction or authority to enforce the policy. So, if for some reason the insurance company doesn't provide the benefits they have promised your own state regulator, for us here in Arizona, the Arizona commissioner of insurance, and the Arizona Insurance Department, can pursue the insurance company. So you get the best of both worlds. You get a policy that qualifies under a law with minimal benefit mandates, but you get it enforced by your own state regularity.

>> Michael Grant:
One of the criticisms of the plan is that the bill would allow insurers to sell insurance from states with the least amount of oversight and consumer protections. The congressman responded with this answer.

>> John Shadegg:
The way the statute is written, one thing would be true and that would be no matter where the policy was issued, even if that State didn't require independent review that would be required as a matter of federal law. So let's say you buy a policy that's issued from Idaho, all right? First qualified in Idaho and then brought to Arizona and sold in Arizona. And just for example, I don't think this is true, but let's say Idaho didn't require independent review, Idaho allowed the insurance company to turn you down and that was final. As a matter of federal law, under this bill, you would have a right to independent review anyway, and to have the denial by your insurance company reviewed by a doctor, not employed by that insurance company. So there is a minimum standard set in the legislation. There still might be, as you point out, some enforcement rights, which is why there is a large disclosure that says this policy is sold pursuant to the law of, or governed by the law of Illinois and it may not have all of the rights of an Arizona policy. By the way, one way to bring that to people's attention, I suppose, I think most people are like me, you don't necessarily read every word of the policy when you get it, we put that advisory that it's not -- that it wasn't sold under the law of the state where you live, but it is sold under the law of a different state, not only in the policy itself, but in each renewal notice. The one thing we do tend to look at because they come, as a bill is the renewal notice, I get them every six months. We put it there again, so you are on notice to double check and find out what's covered and not covered.

>> Michael Grant:
Currently congressman Shadegg's bill has passed its primary committee in the house an it's ready to go to the floor. The bill has about 60 Coe sponsors. Congressman Shadegg says he's hopeful the bill will go to the floor sometime this fall. Joining us now to talk about alternatives available to consumers is June Shaffer. She is an independent insurance broker. Thank you for joining us.

>> June Shaffer:
Thank you.

>> Michael Grant:
We want to talk about some alternatives, but first I want to talk about the universe of people that we're talking about or who may be likely candidates for these alternatives. Most of us look to our group health plans to get coverage. Give me some idea of who ought to look at and who does look at the various alternatives that we'll be talking about in a couple of minutes.

>> June Shaffer:
The calls that we get most frequently are from people who have been declined for insurance, has nothing to do with their income level, it has to do with preexisting health conditions, or people who have been on AHCCCS who are now earning too much money to qualify for AHCCCS, but they still can't afford regular insurance, or people who have moved from other states, they are on cobra, their cobra is going away, and they can't afford high-risk insurance through the guaranteed HIPAA or portability policies.

>> Michael Grant:
Cobra being that transition times you leaves employment?

>> June Shaffer:
Right, when you leave a group plan that has more than 20 employees, you are guaranteed coverage under cobra for 18 months, but sometimes when you move from one state to another that cobra may not follow you. So now when you move from New York to Arizona, it may disappear when you move to Arizona and you may find out you are not insurable.

>> Michael Grant:
Let's say that I'm employed and my employer is offering a group plan and the employer says, okay, I'll pay for you, Mike, but you know, your dependents you are going to have to cover yourself, and I say, whoa, boy, that is a large premium. Is that a class or a subset that might go looking for some alternatives to cover dependents that way?

>> June Shaffer:
Normally that group of people is looking for independent coverage, a family plan or individual coverage, not a group policy, and they'll usually just call around to the various carriers or agents and say, I'm a 28-year-old female, I have two children, what would it cost me to get insurance, and there is no set answer, because the carriers no matter what kind of insurance you are getting, other than group, are going to ask height, weight, what your medical history is going back 10 years. And those are the things that are taken into consideration. But all other things being equal, we have found that when a family opts for an individual or family policy, they are probably going to come in at anywhere from 25 to 50% lower than coverage on a group plan through their spouses job.

>> Michael Grant:
That can be a good move, at least take a look at?

>> June Shaffer:
It's always worth looking at because the savings can be quite considerable.

>> Michael Grant:
Let's talk about some of the alternatives. I see it seems like more and more discount plans. What are discount plans, and are they a good idea?

>> June Shaffer:
We work with medical discount plans only when we can't go anywhere else. They are not insurance. People within the insurance community do not by and large sell them. Companies who do it through multi-level sell most of these programs and these people are not trained to understand the nuances of how these work. We'll get these faxes every single day at our office too. It'll say cover your entire family for $89.95, discounts up to 80% off of this, this, this and so on. You say wow; this is too good to be true. That's the problem. You might get some discounts in the 40 or 50 or 60% range, normally, they are not that high, and in a lot of cases, you, as the consumer, have to show proof that you could financially pay that bill to that provider, that hospital or that doctor, if for some reason you didn't get a discount, and many hospitals who do work with those programs will not give you a discount up front. You have to either pay the bill or show proof with a credit card or a letter of credit from your bank that you can pay that bill, before they will let you in to have that service performed.

>> Michael Grant:
June, mechanically, when I pay my $80 for this kind of thing, and I go to the doctor and I have $150 in, let's say he honors it, whatever, and I get a 50% discount, at that point in time, do I pay the doctor $75? He doesn't look to the plan --

>> June Shaffer:
The plan is not going to pay him. The plan is going to give you, the consumer, a discount, if that provider works with that program, and then you pay him directly.

>> Michael Grant:
Okay. Specified benefit plans. What are those?

>> June Shaffer:
Specified insurance companies underwrite benefit plans, but they are not a full insurance product. You do have to qualify. You do have to answer certain health question and you buy a product that will give you a schedule of what they will pay, for instance, some will pay $1,000 a day for hospitalization, and they'll pay triple that if you are in intensive care, or they'll pay up to $10,000 or $20,000 for a surgeon. These are guaranteed payments. They are not discount programs. Everyone takes them. There is no specific group you need to work with. You can go anywhere for your care, and there is a premium every month that can range anywhere from $75 to $300, depending on your age.

>> Michael Grant:
What kind of consumer would be looking for something like that or would that kind of plan work for?

>> June Shaffer:
Generally, the person who is going to look for that plan is someone who understands that they will have to go out-of-pocket for smaller items on their own, like lab, x-rays and doctors, and they will go out and look for these plans saying I'm not concerned about the little stuff, I can't get insurance because I've had a heart attack or I've recently been treated for cancer. I need something that if I were to go in the hospital down the road, I would get some assistance, and that's what specified benefit plans do. They are very good in that area.

>> Michael Grant:
What about stand-alone optical and dental plans?

>> June Shaffer:
There are a lot of companies that offer stand-alone benefits for opt call, also for dental, and it can be a dental insurance program. There is no health qualifying for true dental insurance, which let's you go to any dentist anywhere. The problem is with true dental insurance, nothing other than cleanings, x-rays and fluoride treatments are generally covered for 12 months. So by the time the 12-month waiting period for a preexisting condition rolls around, you've paid for your route canal through your premiums. Some people want the ability to go to any doctor and these programs are great. There is no health issue that you have to qualify through. There are also dental referral plans. We work with one that we've worked with since 1993; you have a large number of dentists. You can go to any one of them. You get 50% off almost all services at all times. It's not a sliding scale, and it is about one/fourth the cost of dental insurance, but you can buy it today and go tomorrow. And then we have stand-alone accident plans. They are exactly what they sound like. If you have a child, he's playing ball, he gets hit in the head with a ball, he's got a $500 emergency room bill and another $2,000 in expenses, whether you have insurance or not, that plan is going to kick into play if you have insurance, it will pay whatever your deductible would have been, and whatever your co-insurance might have been, up to the limits of that policy, which can be anywhere from $2,000 to $5,000, per accident. If you don't have insurance, then that's what it's going to pay, and it's going to do it on a per occurrence basis, not once a year or twice a year.

>> Michael Grant:
Okay. Another -- certainly another thing that you hear about frequently is a high deductible plan. That's okay, I can, you know, I can handle medical bills up to $5,000 a year, maybe even $10,000, whatever my circumstances are. What I'm worried about, though, is I'm worried about the catastrophic --

>> June Shaffer:
Those are my favorite kinds of plans. I tell people buy the highest deductible you can afford because no one ever went broke paying a deductible. You can always work out the details of the deductible with the hospital or provider. But that premium you are going to pay to have a low deductible plan, you are going to pay that every single month whether you use the plan or not. Why not save anywhere from 30 to 40% on your premiums, have a higher deductible plan, and then down the road, if you do need to use it, you've saved all of that money in premiums, but you still have comprehensive insurance. But the one thing people need to understand, and we get calls from people looking for health savings accounts which are high deductible plans, they believe that if they can't get other insurance, they can always get a high deductible plan. Whether you are looking at a $500 deductible or a $5,000 deductible, 99% of the time, the underwriting is going to be exactly the same.

>> Michael Grant:
So in other words, if you've got a heart problem, or fill in the blank -- if you have a major medical problem, it's not going to matter a whole lot to the carrier that the deductible is $5,000, because a medical event of that magnitude could easily run to $30 or $50 or $75,000 or more?

>> June Shaffer:
Right. The carriers don't care about the little things either. They are looking at the big picture. As high risk specialists, we get people who say I'm in great health this happened years ago, but I can't get insurance, so we try to find what will work, and sometimes we have a little bit of negotiability with certain carriers, someone will come in and say, I want $1,000 deductible, and their health is kind of on the not sure side, and we'll go back to them and say, if I can get you coverage, would you be willing to take a higher deductible. Sometimes the carriers will come back and say yes, because we know the issues we're looking at are not likely to hit $5,000, we would consider that. So sometimes we have a little bit of leeway depending on what the medical history is. But, again, whether it's a low deductible or a high deductible, the carriers aren't worried about the little things either; they are worried about the big picture, too.

>> Michael Grant:
June Shaffer, thank you very much for painting the big picture for us. We appreciate the information.

>> June Shaffer:
Thank you.

>> Michael Grant:
Students at a valley college had a special visitor today, Ray Suarez; spoke to the students about timely issues. Producer Merry Lucero was there to listen in.

>> Merry Lucero: Over lunch at Scottsdale Community College's Artichoke Grill, news hour senior correspondent Ray Suarez talked to the students about how the media covers certain events. Hurricane Katrina is one of them.

>> Ray Suarez:
Journalism is an arm's length transaction with the rest of the world. You are asking people to explain one thing or another to you, but you are not experiencing it yourself. You are a human being, you may sympathize. You may even empathize, but you are not living it as well. And the first person, emotionally present kind of reporting that we saw over the past few weeks, is quite different, frankly, from what we're used to in the pages of papers and on our television screens and from the radios, but I guess in this particular case, in the particular case of an event of this magnitude and a tragedy of the kind that's happened, that's been appropriate. But I think what you're going to see over the next week to two weeks is a very apparent shift in gear, away from that kind of experiential, emotional, first-person reporting to a more analytical reporting as we try to figure out as a country, and as the business tries to wrap its arms around both the past, who did what, when, why, how, how well, how badly, and the future, what the government has in mind for picking up, cleaning up, fixing up, who's going to pay for it, who's going to be in charge of the money, how it's going to be spent. It's going to become, instead of an in-the-moment story, here I am, standing here in this water, and here I am, seeing these things happen to people. It's going to an almost conversion to looking back and looking forward as part of our daily diet of news involving hurricane Katrina.

>> Merry Lucero:
News coverage of the gulf war and corporate scandals were also discussed. Suarez also had advice on how viewers can be better news consumers.

>> Ray Suarez:
I'm going to advise you to do something hard, unfortunately. I know you would prefer that I ask you to do something easy, but too many Americans have a too narrow news diet. And you really should be, if you can, getting your information from multiple sources. And by that, I don't mean watching MSNBC and then going to MSNBC.com, I mean trying to widen the sources a little bit more than that, because it's not that one side is lying to you and the other side is telling you the truth and you are going to figure that out by going to multiple places, but there is a difference in perspective on a day-to-day basis on an individual story. If you sent 10 reporters out into the world to describe the same event, you would get 10 different stories. So that being the case, you owe it to yourself, and the bigger the issue, the more you owe it to yourself to have an idea of the different ways that those stories are being told. To understand that there are multiple ways of telling just those stories. Right now, we're in an era in the country when it feels like a lot of things that were settled 20 years ago, or 30 years ago, are now reopened for negotiation. And that being the case, the way these things get renegotiated is going to shape your lives as adults, as working adults. And you owe it to yourself to be in there in the game when the world is being renegotiated or else it's going to be renegotiated without your input. If you are cool with that, you know, good luck. If you don't like that, then you have to really pay attention.

>> Michael Grant:
Nation's production of wine is exploding and the wine boom is happening in some unexpected places, such as southern Arizona. Tony Paniagua visits Arizona wine country.

>> Tony Paniagua:
When you see these vineyards with bunches of ripe and juicy grapes, you might think you are in California, France or perhaps Italy, but these plants are a growing industry in Arizona. The high desert southeast of Tucson is home to a blossoming wine business, which is maturing, in the abundant sunshine.

>> Gordon Dutt:
I couldn't believe there were no wineries because I just came from the University of California where I had been on the faculty and moved to the faculty at the U of A.

>> Gordon Dutt:
The ones that are 100% from my vineyard are over here.

>> Tony Paniagua:
Dr. Gordon Dutt is a retired professor from the University of Arizona. He is a soil and water specialist and he studied this region for growing grapes, a wine pioneer in a state associated with cactus.

>> Gordon Dutt:
We have a perfect climate here for growing grapes. It's identical to that in Burgundy.

>> Tony Paniagua:
His experiments proved successful. Sonoran vineyards was born in 1979 and expanded. Now you can find 8 varieties on 30 acres.

>> It smells delicious.

>> Tony Paniagua:
Curious visitors can tasted the finished products, like Pinot Noir and Cabernet Sauvignon. Rachel Griffin and her mother made a special trip while touring Arizona.

>> Rachel Griffin:
We like the wine so much that we're both going back with our share for just personal enjoyment and to share with friends too.

>> Tony Paniagua:
What are you going to tell them? Will they be surprised when you tell them you bought wine in Arizona?

>> Rachel Griffin:
They'll be very surprised. I think they'll be more surprised when they open a bottle and taste it.

>> Jeff O'Brien:
It's pretty interesting, really. It's still developing and there are a lot of people interested in wine in general in the United States right now everywhere, and there are quite a few people interested in Arizona as well.

>> Tony Paniagua:
Since taking root in 1979, this industry has been increasing steadily in our state. The Arizona wine growers association was formed in the 1980s. It reports that there are now more than a dozen wineries and vineyards statewide with more on the way.

>> Gordon Dutt:
It is just taking off, right now. We're having the same thing happen here that has happened in other states.

>> Tony Paniagua:
The Arizona wine growers association says the industry generates $20 million a year in economic development. Wine country attracts over 15,000 visitors annually. Arizona wines have been served at the White House since 1989. Kent Callaghan and his parents started their business in 1990 just a few miles away from the Sonoran vineyards. He has planted 20 acres. The soil is especially good for reds.

>> Kent Callaghan:
The original planning was Bordeaux varieties. Cabernet and Merlot, some Zinfandel. We've added a good Spanish grape. I'm going to put some other wines in pretty soon.

>> Kent Callaghan:
Things are doing better than they were. It took 10 years for us to figure out what we needed to do in terms of water application, fertilization that type of thing.

>> Tony Paniagua:
The industry here is small compared to California or Washington State's, but owners are optimistic about the future.

>> Gordon Dutt:
All I can see is potential growth and it's just really beginning to occur. There must be six new places going in now and they are all talking about wineries. I don't know if they are going in the right place, I have a little worry about that, but they are definitely going in. With

>> Tony Paniagua:
With hard work, dedication and support, growers say the business should thrive in Arizona. Ageing gracefully like the grapes they depend on for their livelihoods.

>> Michael Grant:
To see transcripts of "Horizon," find out about upcoming topics, please visit the web site. It's at www.azpbs.org.

>> Mike Sauceda:
Health insurance benefits after retirement are getting to be more problematic. We'll talk about insurance after retirement. Wrapping up our four-part series on insurance, plus hear from Arizona's chief justice Ruth McGregor. She'll talk about issues facing the courts, such as judicial independence. That's Thursday at 7:00 on "Horizon."

>> Michael Grant:
Thank you very much for joining us this evening. I'm Michael Grant. Have a great one. Good night.