Falling Through The Cracks

Wednesday, November 11, 2009
The three key stakeholders in the delivery of health care to our citizens are the government, the medical community, and the insurance companies. It has been the goal of this blog to show that none of these players can ever be allowed to operate unchecked.

Yes, I come to this discussion as a thirty plus year veteran of the insurance business. My experience colors my point of view as much, if not more, than my income needs. But, it is fair to ask if I have covered insurance problems and access sufficiently.

Today we tackle an insurance problem.

Joan Rogers (as usual, not her real name) was referred to me by one of my loyal readers. Joan is a self-employed professional in her late fifties. Her divorce was finalized in December 2006. She has been covered under her ex-spouse’s group health insurance policy ever since. Her COBRA ends next month. Joan Rogers is in trouble.

Ms. Rogers has several medical conditions. None are life threatening, but none are cheap to control. Her three medications have a combined cost of $7,700 per year. She does not qualify for a comprehensive individually underwritten medical insurance plan. Since she doesn’t have an employee or business partner, we can’t write a group policy. A group policy would have to take her. She doesn’t want to stop doing what she does just to get a job that provides insurance benefits. Well educated and talented, Joan wants to continue her career.

What are Joan’s options?

First, is it unfair that she doesn’t qualify for a regular policy? Joan’s prescriptions add $650 per month to the cost of her care. Her scheduled office visits and tests are hundreds more. How does Anthem or Medical Mutual build that into her rates? Do we spread her risk to your rates and mine?

United Health Care might take Joan. The policy would exclude treatment for her most expensive conditions and insure her for anything else. The premium is $320 per month. Since the policy would qualify for a Health Savings Account (HSA), Joan could put close to $4,000 in an account, take the tax deduction, and use the money to help pay for her medications. This is not a good option. She has way too much exposure.


I know what some of you are thinking. Since Joan is coming off a group policy, she is guaranteed the right to purchase an individual policy. HIPAA to the rescue.

Federal regulation guarantees that Joan can purchase a policy designed by her state of residence. Ohio has two awful options – The Ohio Basic and Standard Plans. The Standard Plan, the better of the two, has the following benefits:
• $750 deductible
• 70% / 30% coinsurance
• $5,000 maximum out of pocket each year
• $1,000,000 lifetime maximum
• $2,500 maximum benefit each year for outpatient prescription drugs

You get the idea. This is nothing special.

The Anthem premium for this policy is $2,994.95 per month. The Golden Rule premium for this policy is only $1,323.21 per month. These are not typos.

What is the answer? Damned if I know. I agonize over the uninsured and I have spent a ton of time on Joan’s case in the last week or so. And Joan is not the only person in this predicament.

Would the “Public Option” solve Joan’s problem? Hard to say. The Ohio Standard Plan is, in essence, the state’s version of the Public Option. Would the State of Ohio create a better plan the next time around or will the policy be created by the federal government? And who pays for this?

If preexisting conditions were no longer relevant and insurers had to accept all applicants, Joan’s problems are solved at the exact same moment that your problems begin. If everyone is required to have insurance, the burden is less severe.

But today is November 11, 2009 and Joan has run our of good options. There is a real need for health care reform. The question is how to correct what doesn’t work without destroying what does.

DAVE

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