Insurance Premiums

Workers laid off by California's smallest businesses have a shot at subsidized healthcare under a bill moving quickly through the Legislature. As part of February's stimulus package, some laid-off employees can get the government to temporarily cover 65% of the cost of continuing their health insurance under the federal COBRA law, which allows workers to keep their healthcare coverage but requires them to pay the premiums.

Soaring medical costs may drive up premiums paid by already beleaguered California employers for workers' compensation insurance -- after rates plunged 65% over the last six years. Gov. Arnold Schwarzenegger, who forged major changes in the state workers' comp law in 2004 that slashed rates, has launched a bid to stop a potential 24.4% rate hike now being discussed in Sacramento.

Healthcare reformers tell a wry joke about one of their number who, called to heaven, is given the opportunity to pose a single question to God. "Will we ever have universal health coverage in the United States?" the reformer asks. "Yes," comes the answer from on high, "but not in my lifetime." The simple truth implicit in this joke is underscored by the landmark healthcare bill passed this week by the Senate Finance Committee: America is walking up the driveway of universal coverage, but hasn't yet made it through the door.

Who could object to rewarding people who quit smoking, lose weight or start to exercise? The American Cancer Society and the American Heart Assn., for starters. Some companies are charging lower insurance premiums to workers who meet benchmarks for healthy living. The Senate's healthcare overhaul legislation would expand the trend. But instead of cheering the proposal, some patient advocacy and health groups are worried that it could mean higher rates for less-fit Americans, possibly pricing them out of their employers' insurance plans.

California has ousted Blue Shield, the state's second-largest not-for-profit health plan, from the state's high-risk medical insurance pool because its premiums were too high. The pool, known as the Major Risk Medical Insurance Program, or MRMIP, insures more than 6,700 Californians who have been shut out of the private health insurance market because of pre-existing conditions. Through MRMIP, such people are able to buy coverage from private insurers at premiums that are supposed to be 25% higher than the market rate for a comparable policy.

In the drive to bring health coverage to almost every American, lawmakers have largely rejected restrictions on how much insurers can charge, sparking fears that consumers will continue to face the skyrocketing premium increases of recent years. The legislators' reluctance to control premium costs comes despite the fact that they intend to require virtually all Americans to get health insurance, an unprecedented mandate -- long sought by insurance companies -- that would mark the first time the federal government has compelled consumers to buy a single industry's product, effectively creating a captive market.