Consumer Protection in Private Health Insurance: The Role of Consumer Complaints. Principal Findings


Jurisdiction over private health insurance complaints varies across states, with responsibility for indemnity health insurance, managed care and quality complaints often split within or between state agencies. The lead role is usually taken by state insurance regulatory agencies, with the contribution of state health agencies declining in several states in recent years. While some states split regulatory responsibility according to type of insurance (e.g. indemnity, managed care), this is unlikely to be advantageous in the long term given the fluidity of the health insurance market and the potential for the market to evolve in response to different regulatory incentives.

There is also a wide spectrum in the type of consumer assistance or ombudsman programs available to people with health insurance complaints. Across the six states studied, Vermont, Maryland, Texas and California operated some ombudsman programs "independently" of the insurance regulatory agency, while California, Oregon and Texas also operated some ombudsman programs "internally" to the insurance regulatory agency. The Office of the Health Care Ombudsman in Vermont is the most independent public sector model across the studied states, having its own statutory basis including legislative protection for undertaking consumer advocacy and dedicated funding through a contract, with the authorizing legislation specifying that the contract be awarded to a non-profit organization.

According to an NAIC survey, only 26 states affirmatively publish complaints information. The five report cards produced in the studied states varied in features such as whether they included consumer and/or provider complaints, whether they included justified or all complaints, the complaint categories used, and the breakout of complaints by health insurance plan types. While there are some examples of best practice in complaints report cards, many reports are overly complex and provide insufficient guidance to consumers, suggesting that currently they are of most value to regulators in top-down accountability.

Grievances are internal complaints received directly by health insurance plans. In four states health insurance plans are required to regularly report grievance data to insurance regulatory agencies, with five states specifying the format for collection of grievance data. However there is no consistency in grievance data collection requirements across the states. Publication of grievance data is limited, with only New York publishing grievance data in its annual consumer guide, while Oregon makes grievance data available on its web site.

There is a hierarchy of complaints handling, with state regulators seeing only the tip of the iceberg in consumer complaints. A Californian survey found that 37% of people with a complaint called their health plan, but only 4% contacted a state or local agency for assistance. Across three states for which data were available, the volume of grievances received directly by plans was about seven to eight times greater than the volume of complaints received by state insurance regulatory agencies. While 17% of people contact their employer about health insurance problems, the three major employers studied did not maintain detailed complaints records for systemic analysis.

The level of complaints about managed care plans relative to indemnity insurance varies across the states, being lower in Oregon, higher or the same in New York depending upon the for-profit status of indemnity plans and essentially equivalent in Vermont. Hence, in these three states evidence for the managed care backlash, as measured by consumer complaints, is decidedly mixed.

Some data on complaint categories relevant to understanding patient protection issues are available in California, Maryland, Oregon and Texas. Of particular interest is the rate at which grievances are overturned in favor of consumers. In Oregon the best outcome for consumers was for grievances relating to emergency services (71% overturned) and the worst outcome was for grievances about access (only 1% overturned). In Maryland the best outcome for consumers was for grievances relating to pharmacy services (85% overturned) and the worst outcome was for grievances relating to mental health (only 28% overturned).