On 12/30/06, Steven L. Robinson <srobin21 at comcast.net> wrote:
>
> (Although the focus of this article is California, the problems it
> describes
> are likely not unique to it. There seems to be some awareness of the
> problem
> in the state government, but even with a state legislature that is better
> on
> healthcare issues than most in this country, single payer seems to be off
> the table for now. SR)
>
> Insurance is elusive even for healthy
>
> Applicants for private policies can be rejected for minor ailments.
>
> By Lisa Girion, Staff Writer
> Los Angeles Times
> 6:22 PM PST, December 30, 2006
>
>
> Scott Svonkin joined the Los Angeles County Commission on Insurance 10
> years
> ago because he was concerned about an emerging problem: people losing
> health
> coverage. Since then, the ranks of uninsured Americans have swelled to
> more
> than 46 million.
>
> Svonkin almost became one of them.
>
> It happened after he left a comfortable government job as a legislative
> chief of staff to start his own marketing and public affairs consulting
> business. Late last year he started shopping around for health insurance
> for
> himself, his expectant wife and his young daughter.
>
> He knew he'd pay more without an employer picking up most of the tab. And
> he
> knew he'd have to fill out a medical questionnaire because, unlike
> job-based
> coverage, individual insurance in California is contingent on an
> applicant's
> health. But that didn't concern him because, he said, "I'm healthy as a
> horse, never smoked and have had no major surgery."
>
> As it turned out, Svonkin was rejected by not just one but three of
> California's biggest health insurers, which cited his history of asthma,
> among other things.
>
> "I couldn't buy it at any price," said Svonkin, 40, who lives in Sherman
> Oaks. "I remember thinking, 'This can't be happening to me.' "
>
> Svonkin is part of what experts say is a largely hidden aspect of the
> nation's health insurance crisis: the uninsurables, people whom insurance
> companies won't touch, even though they can afford to pay high premiums.
> Some, such as Svonkin, pay steep rates for lean coverage from the state's
> high-risk insurance pool. Others simply go without.
>
> Insurers have wide latitude to choose among applicants for individual
> coverage and set premiums based on medical conditions. Insurers say
> medical
> underwriting, as the selection process is known, is key to keeping
> premiums
> under control.
>
> "Our goal is to extend affordable coverage to as many people as we can,"
> said Cheryl Randolph, a spokeswoman for PacifiCare Health Systems Inc., a
> subsidiary of Minneapolis-based UnitedHealth Group Inc. "But because of
> the
> medical underwriting, we do not accept everybody."
>
> Consumer advocates see the practice as cherry-picking - a legal form of
> discrimination that is no longer tolerated in schools, public
> accommodations
> or workplaces - and a way to guarantee profits.
>
> "The idea is to avoid all risk," said Bryan Liang, executive director of
> the
> Institute of Health Law Studies at California Western School of Law in San
> Diego.
>
> Jerry Flanagan, an advocate with the Foundation for Consumer and Taxpayer
> Rights, said it wouldn't take much to be left out of the private-insurance
> market. "A minor asthma condition or a surgery 10 years ago that requires
> no
> further medical care is enough to get you blacklisted forever," he said.
>
> As a result, some people forgo treatment so as not to tarnish their health
> records. Others withhold information from doctors or ask them to leave
> details out of their records. For those who are uninsurable, healthcare
> often is the chief reason they stay in or take a certain job.
>
> Claudine Swartz enjoyed running her own consulting business but had been
> rejected for individual insurance. After a scare over a benign cyst in her
> breast, the San Francisco resident closed her business and got a job with
> the University of California's health system, where she enjoys guaranteed
> coverage.
>
> The episode made her realize that without insurance, she would have been
> on
> the hook for catastrophic expenses if her diagnosis had been more serious.
>
> "I wasn't willing to take that risk," said Swartz, 35. "It's a real
> problem
> for people trying to be entrepreneurial and work on their own."
>
> Uninsurable individuals pose a significant challenge for the state, which
> expects to spend more than $10 billion this year on people who lack
> adequate
> coverage.
>
> Gov. Arnold Schwarzenegger, preparing to announce a proposal for expanding
> coverage in his State of the State address, has said he favors a mandate
> on
> individuals to buy health insurance - just as drivers must carry auto
> insurance.
>
> Democrats, who control the Legislature, have favored expansion of
> employment-based insurance and have signaled their opposition to a mandate
> on individuals.
>
> Consumer advocates say such a mandate is unworkable unless insurers are
> required to sell coverage to all comers, as they are in several states,
> including New York and Massachusetts.
>
> No one knows how many Californians are uninsurable. Blue Cross of
> California, which dominates the market, declined to disclose its rejection
> rate, as did its chief competitors. A 2004 industry survey found that
> health
> plans said they turned away about 12% of all applicants. But the rejection
> rate rose with age to 30% for people 59 and older.
>
> A consumer survey this year found that 1 in 5 people who applied for
> individual coverage was turned away or charged a higher premium because of
> preexisting conditions. Experts say it is hard to know how many of
> California's more than 6 million uninsured residents are uninsurable
> because
> many people with medical problems don't even bother applying in the belief
> that they would be rejected.
>
> ADVERTISEMENT The industry contends that individual coverage is widely
> available. But experts say a wave of consolidation has reduced the number
> of
> insurers offering individual coverage, leaving a marketplace that shuns
> all
> but the ostensibly healthiest consumers.
>
> Insurers say they are picky because they have to be.
>
> Kaiser Permanente's "fairly generous" benefits require that the health
> maintenance organization be restrictive to remain solvent, spokesman Jim
> Anderson said. "We have to be very careful to not enroll a bunch of people
> who are going to spend all the money on their care."
>
> Insurers declined to disclose the underwriting guidelines that lead to
> rejection or higher premiums. But a review of public records, as well as
> rejection letters sent to individuals, shows that California carriers turn
> people away or charge them higher premiums for conditions that range from
> the catastrophic to the common. Cancer, epilepsy and AIDS make the list,
> along with breast implants, ear infections, varicose veins and sleep
> apnea.
>
> Jeffrey Miles, a vice president of the California Assn. of Health
> Underwriters, a trade group for independent insurance agents, said one of
> his clients - a 27-year-old woman "in perfect health with absolutely
> nothing
> wrong" - was rejected because she had seen a psychologist for three months
> after breaking up with a boyfriend.
>
> "I call it hangnail underwriting," Miles said. "If a person has taken
> virtually any medication, they are going to be turned down. If people have
> had any psychological counseling at any time in recent history, they are
> going to get turned down."
>
> Swartz, the consultant, said the reason she couldn't get individual
> coverage
> was a condition in her records that she may never have actually had. Her
> physician had diagnosed ulcerative colitis. But after years without
> additional symptoms, Swartz said, her doctor decided the initial diagnosis
> was probably wrong.
>
> Consumer advocates say out-of-date, ambiguous and even erroneous medical
> information can render people uninsurable. Sometimes the reasons can seem
> absurd. In a letter to an otherwise healthy recent college graduate, for
> instance, Blue Cross listed among the reasons it denied coverage a past
> bout
> of jock itch, "successfully treated with cream."
>
> A last resort for people turned away by the private market is the state's
> high-risk pool, in which the state assumes the financial risk but pays
> private insurers to administer coverage. Enrollees spend as much as
> one-third of their income on monthly premiums that cost as much as $796.
> Yet
> annual benefits are capped at $75,000.
>
> Still, demand perennially outstrips the high-risk pool's capacity, which
> has
> been reduced over the years as medical costs have risen and funding has
> remained largely limited to state tobacco tax revenue and enrollee
> premiums.
> Of 32 states with medical high-risk insurance pools, California's is one
> of
> the largest, covering 7,800 people.
>
> "The best estimate is it's only serving about 10% of the people who are
> medically uninsurable," said Beth Capell, an advocate with the consumer
> group Health Access California.
>
> Most people in the high-risk pool have been rejected by at least one
> private
> insurer. Yet many turn out to be a bargain, paying more in premiums than
> they cost in medical expenses. In fact, 19% of the enrollees submitted no
> medical claims at all in 2004, the last year figures were available, and
> about 80% submitted claims for less than the average annual premium.
>
> High-risk enrollees include people like Scott Svonkin, who makes time for
> at
> least one tennis match each week. On a Burbank court after more than an
> hour
> of play one recent evening, he scrambled for a ball so far out of reach
> that
> most people wouldn't have bothered. After the game, Svonkin's fair skin
> was
> ruddy and sweat dripped from his forehead, but he was not out of breath.
>
> After suffering from debilitating bouts of asthma as a child, he clearly
> relishes the ability he now has to exercise. He credits medications that
> weren't around when he was growing up. But the very drugs that have
> allowed
> him to breathe freely for years may also have cost him his health
> coverage.
>
> When Svonkin left his job, he picked up the premiums on the Blue Shield
> HMO
> his former employer had offered and extended his coverage for three years.
> That's the maximum allowed under a federal law known as COBRA and a
> matching
> state law, both designed to make health insurance portable. A couple of
> months before that coverage was to expire, he asked Blue Shield to sell
> him
> an individual plan just like the one he was on.
>
> But Blue Shield declined to sell him anything like that HMO plan, which
> included prescription benefits, he said. Instead, the carrier offered him
> a
> plan that did not cover medication.
>
> Blue Shield declined to discuss Svonkin's case, citing patient privacy
> laws,
> as did the other insurers that subsequently rejected him, Blue Cross and
> PacifiCare. Although the rejection notices pointed to various problems -
> "expectant fatherhood" and swelling from a spider bite - all three blamed
> his history of asthma, a condition that affects more than 4.5 million
> Californians.
>
> Svonkin was able to enroll his wife, daughter and baby son in a private
> plan. But with nowhere else to turn, he reluctantly enrolled himself in
> the
> state's high-risk pool. In an ironic twist, the pool assigned him to a
> plan
> administered by Blue Shield. His premiums are $479 a month - far more than
> he figures he has cost the plan. The only medical expenses he has
> submitted
> in his first year on the plan have been his prescriptions, which retail
> for
> about $100 a month.
>
> Blue Shield "wouldn't take me at their risk, but they took me at the
> state's
> risk," he said. "The reasons they won't sell me insurance are ludicrous
> because they can still make a profit providing me with healthcare."
>
> The ordeal has been an object lesson for Svonkin, who is now chairman of
> the
> county commission on insurance, an advisory panel to the Board of
> Supervisors. He uses his post to focus on the problems of the uninsured as
> well as the uninsurables. The county does not regulate insurers, but its
> clinics, hospitals and emergency rooms are overflowing with uninsured
> residents who have nowhere else to turn.
>
> "Insurance companies are offloading sick people onto the county system,"
> Svonkin said. "They want a guarantee that they are going to make money.
> That's why they won't take sick people. They are missing the whole point
> about assuming some risk."
>
> lisa.girion at latimes.com
>
>
> http://www.latimes.com/business/la-fi-reject31dec31,0,4111486.story?coll=la-
> home-headlines
>
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