By Jonni Good
I worked for five years for the customer service department at one of the largest health insurance companies in the northwest. I spoke to many people who discovered they were not eligible for affordable health insurance because of pre-existing conditions. I spoke to many other people who thought, incorrectly, that their insurance policies would protect them from financial ruin. Who are these people and how do our presidential candidates promise to help them? Let’s take a look:
Coverage for high-risk patients:
I talked to a young veteran who returned to our state after serving in Iraq with the National Guard. He and his wife had no health insurance, but they couldn’t buy an individual policy from our company because the wife was pregnant. Our company denied individual policies to pregnant women and their husbands because of the possible cost of a high-risk delivery, and because the baby would be automatically eligible for coverage without going through underwriting after it was born. (Some states have mandated that potential members cannot be denied coverage due to pregnancy).
Our CEO liked to tell us that our company and all our policy-holders were like a community, with all of us looking out for each other. However, our ‘community’ excluded membership to individuals who were most in need of help.
The rationale for denying coverage to people with pre-existing conditions is that the company cannot maintain their profitability if they sell policies to people who are already sick. However, group policies sold through employers include both sick and healthy people, and the insurance companies have been providing these policies quite profitably for many years.
John McCain’s website says he will work with states to create a Guaranteed Access Plan (GAP) to assure that people with pre-existing conditions can get insurance.
Here in Oregon we already have a GAP – it’s called the Oregon Medical Insurance Pool, (OMIP). It was created by the Oregon Legislature in 1987, so this is hardly a new idea. Anyone who is turned down for an individual plan by a commercial health insurance company in Oregon qualifies for an OMIP policy. At least 31 other states have already implemented a high-risk insurance pool for their citizens.
Because OMIP only covers high-risk people, the rates are much higher than other individual or group policies – which make them unaffordable to many people. Our returning Iraq veteran and his wife would have paid $552 a month for coverage under OMIP, and when the baby was born the premium would go up to $755/month. The premium rates are based on age, so older Oregonians pay much more. For the first six months of coverage any claims for a pre-existing condition (her pregnancy, for instance), would not be paid under this high-risk plan. This means that our returning Iraq veteran and his wife needed to apply for OMIP coverage within three months of conception to make sure the delivery was covered, assuming the baby didn’t come early. Her prenatal care would not be covered.
Pre-existing conditions:
Most individual policies and many employer-provided group policies contain a pre-existing condition clause. Under this clause, claims are not paid for a specific period of time for any illness if the insurance company can prove that the policyholder had that condition before the policy began. This means that your claims may not be paid even if you do manage to find a policy to cover you and your family.
Many people take jobs specifically because the employer offers health insurance benefits. They fail to read the fine print of their policies and find out about the pre-existing exclusion clause only when they receive a large bill from their health care provider.
As mentioned earlier, our state’s high-risk medical pool also includes a pre-existing condition clause. The high-risk insurance is very expensive, and you only qualify if you already have a pre-existing condition - but claims for that condition will not be paid until you’ve been on the policy for six months. During that first six months, you pay your insurance premiums and your hospital and doctor bills.
One particularly wrenching illustration of this problem came during my last year working for the health insurance company. A young woman took a low-paying job with a child-care provider that had contracted with our company to provide group health insurance to their employees. The employer did not pay the employee’s insurance premium - the full amount of the premium was deducted from the employees’ wages. The policy had a six-month pre-existing condition clause, which this poorly educated woman did not understand.
Since the job paid close to minimum wage, a large portion of her wages went towards her health insurance premium.
I received an email from this young woman’s mother after she had already called our company many times for help. In her email she explained that her daughter had been diagnosed with bone cancer several months after she started her job, and had amassed over $100,000 in bills for surgery and cancer treatment. Every claim had been denied.
Our company’s lawyers found out that she had gone to an emergency room for back pain before she was covered under our policy. The emergency room doctor gave the woman pain medication and sent her home. She was not diagnosed with any illness at the time, and received no real treatment.
Our lawyers claimed that the emergency room visit proved that the bone cancer began before the policy started, and, therefore, our company was not responsible for any claims related to that illness. In spite of paying a large portion of her small wages to our company for her health insurance policy, she was, for all intents and purposes, uninsured. I did my best to argue her case with our company’s lawyers, but in the end I had to tell her mother that the claims would not be paid.
This brings up a related issue that needs to be addressed - the disparity between the charges that are paid by insurance companies and the much higher charges paid by the uninsured. In the case of our young lady with bone cancer, after her death her mother was presented a bill that may have been up to four times higher than the same providers would have happily accepted if her daughter’s illness had been covered by her policy.
Charging different people different amounts for the same services is perfectly legal. In this case, the people who are least able to afford the higher charges are the ones who get the biggest bills.
Health problems and bankruptcy:
You often see articles that give statistics showing the number of people who declare bankruptcy because they got sick and couldn’t pay the hospitals and doctor bills. This doesn’t put a real face on the problem.
First, many people look at bankruptcy as a somewhat unsavory legal maneuver that people use to get out of paying their debts. Second, most people assume that you can get treated in any hospital emergency room even if you can’t pay the bill, and the hospital will simply write it off. It is also assumed that people should take some personal responsibility and buy a health insurance policy before they actually get sick, even though the current system often makes this impossible.
Hospitals do write off many expenses when they treat indigent patients, but if the patient has any assets, such as a house or savings, they’ll go after those assets rather than provide ‘charity’ care. The statistics we need to see are the number of people who have lost their homes because they were uninsured. In the case of the young lady with bone cancer, her bills would have gone to her estate, and her mother may have lost her home, if she owned one. This issue needs to be seen as a very real personal tragedy instead of a dry statistic.
Putting a real face on the problem:
Since the McCain campaign has made this is the year of the veteran, I would like to see statistics showing the number of US war veterans and their families who are unable to buy health insurance due to pre-existing conditions, and who cannot afford the high cost of the high-risk medical pools that McCain supports as the answer to this problem. I would also like to see some real people (including vets), who have lost everything they own because they were uninsured or underinsured - not because they didn’t try to buy a policy, but because they were denied coverage, or they couldn’t afford the high-risk medical pool policy, or they got caught by their group policy’s pre-existing condition clause.
Obama’s Plan to Cover Uninsured Americans: (taken from the Obama website), that specifically address this issue:
Obama will make available a new national health plan to all Americans, including the self-employed and small businesses, to buy affordable health coverage that is similar to the plan available to members of Congress. The Obama plan will have the following features:
- Guaranteed eligibility. No American will be turned away from any insurance plan because of illness or pre-existing conditions.
- Comprehensive benefits. The benefit package will be similar to that offered through Federal Employees Health Benefits Program (FEHBP), the plan members of Congress have. The plan will cover all essential medical services, including preventive, maternity and mental health care. (See my note, below).
- Affordable premiums, co-pays and deductibles.
- Subsidies. Individuals and families who do not qualify for Medicaid or SCHIP but still need financial assistance will receive an income-related federal subsidy to buy into the new public plan or purchase a private health care plan.
- Simplified paperwork and reined in health costs.
- Easy enrollment. The new public plan will be simple to enroll in and provide ready access to coverage.
- Portability and choice. Participants in the new public plan and the National Health Insurance Exchange (see below) will be able to move from job to job without changing or jeopardizing their health care coverage.
- Quality and efficiency. Participating insurance companies in the new public program will be required to report data to ensure that standards for quality, health information technology and administration are being met.
Author’s note: In Oregon, there are two available plans under FEHBP. The HMO plan has no deductible, and covered services are provided with either a $15 or $20 copay. The other available plan has a $2000 deductible and the member pays 10% of the allowable provider fees, with a total out-of-pocket cost per year of $3,000. Both plans include the following statement in the policy:
We will not refuse to cover the treatment of a condition that you had before you enrolled in this Plan solely because you had the condition before you enrolled.
Contrasts with the McCain plan:
I am no expert on either the Obama or McCain plans, but the following conclusions can be gathered from their websites:
McCain:
- McCain will rely on the states’ high-risk pools to provide coverage for people with pre-existing conditions. His website does not mention the pre-existing condition clause that caused such grief to the young woman with bone cancer. Under Oregon’s OMIP plan, her claims would have been denied if coverage began after that visit to the emergency room.
- The McCain plan will attempt to disconnect health insurance from employment by taxing health insurance benefits provided by employers, and providing a tax credit to individuals who buy their own coverage. This means that fewer people will be covered under group policies, forcing more people into the expensive state high risk pools because of pre-existing conditions.
- McCain proposes a government subsidy for individual policies, regardless of income. After receiving the proposed government subsidy of $5000 a year, our returning Iraq veteran and his young family would still pay $339 a month for their high-risk insurance policy, which would be administered by the state. It is unlikely that they would be able to find an employer who would provide a group insurance policy, under the McCain administration. If they did find employer-supported health benefits, those health benefits would be taxed.
Obama:
- The Obama plan would make it illegal for insurance carriers to deny coverage to people based on their current health, putting individual policies on the same footing as group policies. Individuals would no longer need to provide health records proving they were healthy to be eligible for a new policy. Under this plan, our Iraq veteran and his wife would be able to buy a policy of their choice from the company I worked for.
- The national health care plan Obama proposes would have similar benefits to the policies offered to public employees – in Oregon, the public employee plans do not exclude coverage for pre-existing conditions. With no pre-existing condition clause, the claims for our young woman with bone cancer would have been paid. Our returning Iraq war veteran’s wife’s prenatal care would have been covered, and their baby would be automatically added to their policy when it was born.
- Those who cannot afford an individual policy would receive a government subsidy, based on their ability to pay. Giving a subsidy only to those who need it would save taxpayers money. And by pooling everyone into one large group instead of segregating sick people, the premiums would be lower than the premiums of our current state high-risk pools.
To become more informed about this important issue, see the policy statements on the candidates’ websites:
http://www.barackobama.com/issues/healthcare/
http://www.johnmccain.com/Informing/Issues/19ba2f1c-c03f-4ac2-8cd5-5cf2edb527cf.htm