Douglas says health risk should affect insurance rates

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(Host) Governor Jim Douglas says he’s looking at a plan to make some changes to Vermont’s community rating health care law. The law, which was passed by the Legislature in the 1990s, prevents health insurance companies from taking an individual’s health risk into consideration when determining policy rates.

The legislation was passed after some insurance companies decided to cover only young and healthy people and rejected applications from older and less healthy individuals. Speaking last night on VPR’s Switchboard program, Douglas says there’s a good chance he’ll seek changes to the community rating law through an administrative process:

(Douglas) “A number of insurance companies were not happy when that was enacted a few years ago. Many companies – most companies – seem to have left the state because they don’t like the regulatory climate here. And so by providing some relief from the strict community rating standard, I think we can entice more companies to come back in Vermont and offer some competition in the marketplace.”

(Host) Douglas says he wants to some make changes because he disagrees with the basic premise of the community rating law:

(Douglas) “In every other line of insurance a company does assess its risk. In other words, if you’re a good driver, you get a break on your auto insurance. If you have sprinklers in your home, you get a break in your homeowner’s insurance. If you don’t sky dive, you’ll get a break on your life insurance. But in health insurance, there’s no distinction based on risk and it seems to me we want to incent people to live healthy lives.”

(Host) Douglas says he doesn’t want to repeal the community rating law, but he wants to implement changes that will help restore more competition to the state’s health insurance industry.

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