SACRAMENTO — Seeking to salvage two years of efforts to completely remake California's health insurance system, Gov. Arnold Schwarzenegger and Democratic legislators are nearing deals intended to rein in costly, meager medical insurance policies sold directly to individuals.
In the final weeks of the legislative session, they are negotiating measures that would limit insurer profits on individual plans, require plans to provide a minimum set of benefits and restrict insurers' ability to cancel policies retroactively.
The new focus reflects how far Schwarzenegger remains from his original healthcare goal: to orchestrate medical insurance for the 5 million Californians who lack it. Despite a year of strenuous campaigning for his vision, which garnered attention nationwide, the state Senate rejected that $14.9-billion plan in January.
Many of the concepts now under discussion were included in that proposal. Although most California insurers supported the governor's broader effort because it would have created millions of new customers, the industry is uniformly resisting the current push to circumscribe some of its most lucrative products.
Three million Californians buy health insurance on their own rather than through employers. Insurers keep premiums low -- and profits high, their critics say -- on some individual policies by limiting the services they cover. Such plans may exclude prescription drugs and maternity services, for example; others may cover only hospital visits.
Many of the policies have big deductibles and require patients to pay large portions of their expenses, costing them much more than coverage obtained at workplaces.
Studies have found that people with individual plans are more likely to end up with financially debilitating medical bills when serious illness strikes. California regulates these policies less firmly than it oversees coverage sold to businesses, though individuals have much less leverage to negotiate.
"The individual market really is the worst place to buy insurance," said Michael Russo, a healthcare advocate for the California Public Interest Research Group. "People can't band together to take advantage of greater bargaining power in groups, and as a result of that, they pay more to get less."
Insurers say the proposals being negotiated would drive up the cost of premiums and prompt some people to forgo coverage. Anthem Blue Cross, the largest seller of individual policies in California, says 70% of the people who bought coverage directly in the last year previously had been uninsured.
