The illusion of private insurance coverage
The Illusion of Coverage: How Health Insurance Fails People When They Get Sick
By Carol Pryor, Andrew Cohen and Jeffrey Prottas
The Access Project
March 2007
The purpose of this study is to investigate the gaps in coverage and the systemic problems that cause insured people to accrue medical debt, as well as the consequences of the debt for individuals and families.
Findings
Our interviews suggest that medical debt among the insured results from a variety of causes and the interaction of a number of factors, including the adequacy of people’s insurance plans, the nature of their medical needs, the cost of their treatments, and their financial resources. In all cases, however, interviewees found that their insurance failed to fulfill its primary function - to protect them from financial losses and guarantee access to needed care when they became ill.
Insurance Characteristics that Cause Medical Debt
- Premiums, deductibles and other cost sharing.
- Caps on coverage.
- Uncovered services.
Insurance Processes that Cause Medical Debt
- Confusing policy provisions.
- Out-of-network fees.
- Procedural problems.
- Insurance disputes and errors.
- Complex provider billing and collections systems that compounded problems
resulting from complex insurance processes.
Lack of Meaningful Choice of Plans
- No real choice of plans.
- Increasing costs and worsening coverage.
- Higher premiums and levels of cost sharing.
- Pre-existing condition exclusions.
- Deceptive marketing practices.
Consequences of Medical Debt
- Access to care.
- Financial consequences.
- Employment consequences.
- Access to credit.
- Psychological consequences.
Conclusion
With health care costs and the number of people without insurance rising out of control, health care analysts and state and federal policy-makers are again focusing on ways to repair our health care system. Some of the proposals that have been offered are based on theoretical notions of what ails our system and what will fix it - people don’t pay enough of their medical costs to become informed consumers, state mandates require insurers to provide too much coverage, people should be allowed to purchase only the health insurance they need. However, serious proposals should be based not only on theory, but on real experiences of real people.
Numerous surveys have clearly documented that, in fact, many uninsured and insured people face unaffordable medical bills and crushing medical debt that undermines both their health and their long-term financial security. This report has attempted to put a face on those numbers. It has tried to show the often devastating effects of medical debt on individuals and families who thought they were secure because they were insured, but found out that their insurance did not protect them when they needed care. As we look for ways to decrease the number of uninsured, we should not replace one problem with another. People need coverage, not the illusion of coverage. We must guarantee that they have access to quality, affordable insurance that provides real protection when they are most in need.
http://www.accessproject.org/adobe/the_illusion_of_coverage.pdf
Comment:
By Don McCanne, MD
This report is important. It shows through the personal experiences of real people the severe deficiencies of our private insurance plans. Those who have significant health care needs are sounding the alarm for many of the rest of us who are complacent in believing that our private plans will provide us with adequate financial protection should we ever need to rely on them. Sadly, this report confirms that today’s health insurance plans frequently provide only the illusion of coverage.
There is one problem with this report, and that is with its recommendations. After identifying the major deficiencies of private health coverage, the authors make numerous specific recommendations to correct these deficiencies. They call for comprehensiveness, limited out-of-pocket expenses, guaranteed issue, guaranteed renewability, community rating, insurer efficiency, ombudsmen for dispute resolution, and regulatory oversight of unfair insurance practices. But just imagine what that would do to private insurance premiums under our current multipayer system. Talk about unaffordable!
So what do the authors suggest? They recommend public hearings on insurers’ requests for premium increases, as if talking about skyrocketing costs would control them. When that doesn’t work, to protect people with unaffordable medical expenses they would “require hospitals and other providers to offer appropriate discounts and financial assistance.” Really? The private insurance model is irreparably flawed. It’s time to give up on it.
A single payer system of national health insurance would eliminate all of the problems listed in the findings of this report - except one. We would lose our choice of health plans. Instead of choosing between thousands of plans with unaffordable premiums and inadequate protection, we would be limited to only one plan that really does work.