Healthcare overhaul bills working their way through Congress could jeopardize laws in California and other states that require insurers to pay for treatments such as AIDS testing, second surgical opinions and reconstructive surgery for breast cancer patients.
What's more, the federal legislation could make it virtually impossible for states to enforce other consumer protection laws, such as the right to appeal if an insurer denies coverage for a particular treatment.
Healthcare overhaul bills in both the Senate and the House would open the door to insurers selling policies across state lines -- which some lawmakers fear could allow health plans to take advantage of the lenient rules in some jurisdictions while avoiding tougher enforcement regimes in places like California.
"It would be a huge problem for California consumers," said Rep. Jackie Speier (D-Hillsborough), who helped craft insurance laws when she served in the state Senate. "California is leading the way in terms of consumer protection, and I don't want to see that lost."
The proposals are part of the broader federal healthcare legislation that has been passed in the House and is still under consideration by the Senate. Before any of it can become law, both houses would have to agree on final language and President Obama would have to sign it.
Allowing insurers to sell across state lines is a key tenet of the Republican healthcare platform, and Sen. John McCain (R-Ariz.) made it a centerpiece of his presidential campaign. Proponents argue that interstate sales would enable insurers to customize policies to individual customers' needs, ignoring state benefit mandates they view as overly burdensome.
Democrats, on the other hand, generally oppose interstate sales and have defeated earlier efforts in Congress to allow them. Opponents fear that allowing insurers to sell across state lines would trigger a "race to the bottom," in which insurers compete to sell bare-bones policies at the lowest price, lacking benefits such as maternity care.
Interstate sales "is insurance code for picking their rules," said Jerry Flanagan, patient advocate for Santa Monica-based Consumer Watchdog. "The insurance companies will all run to Wyoming to issue policies, and Wyoming laws would rule in California."
Whereas some insurers want to be able to sell policies across state lines, the Blue Cross Blue Shield Assn. opposes the idea. It argues that such permission would result in inexpensive, watered-down policies.
Establishing a minimum level of benefits at the federal level could mitigate that somewhat, said Kris Haltmeyer, Blue Cross Blue Shield policy director.
Still, he said, "I do worry that there will be a race to the bottom, but the bottom won't be as low as it used to be."
The provisions allowing interstate insurance sales were included in the House and Senate legislation to win votes from conservative Democrats and moderate Republicans, according to legislative insiders.
But some close to those negotiations said the bills have safeguards that would ensure that the interstate policies provide the medical coverage consumers need.
For instance, the bill passed by the House on Nov. 7 and one approved earlier by the Senate Finance Committee call for the establishment of a federal benefits "floor," an essential set of medical services that all policies would have to cover.
The Congressional Budget Office has found that mandates contribute a small fraction to overall premium costs.
Still, some in the health insurance industry contend that mandates are one reason health insurance premiums are rising. These groups ask, for instance, why someone with no children must buy a health insurance policy that covers childhood immunizations.
The Council for Affordable Health Insurance says states have imposed more than 2,000 benefit mandates on insurers. J.P. Wieske, the group's state affairs director, said fears that insurers, if allowed, will rush to sell the most minimal benefits packages are unfounded.
"Companies design these policies knowing that people want certain benefits and certain benefits are popular," he said. "And if you don't include them, you may not be able to sell the policy. So mandates are an issue, but they are not the issue for the insurance companies."
Currently, most health insurance is subject to the laws of the state where the purchaser lives. Some states, including California, have greater consumer protections than others.
Patients' rights are among many areas where California has sought to provide protections beyond those of the federal government and other states. In a similar way, the state's standards for air and water pollution and fair employment and housing exceed federal laws.