By Julie Appleby
USA Today
January 29, 2007
Insurers say they rarely revoke policies, and generally do so only because of misleading or omitted information on applications. One large insurer, Blue Cross of California, says it revokes less than one-half of 1% of all individual policies each year. Requiring complete medical details and honesty on the part of applicants, insurers say, is necessary to control costs and weed out fraud.
(Karen Pollitz of the Institute for Health Care Research and Policy at Georgetown University) says the individual market has some very complicated rules that applicants and insurers can get caught up in. At the root of the problem, she says, is that the market works best for people who are healthy.
“You’re eligible for insurance when you don’t need health care and not eligible when you do,” she says. “Are people gaming? Maybe they are. Why were they gaming to begin with? They lost other coverage and need new coverage.”
“Our objective as an industry is to provide as affordable a product as possible,” says Mohit Ghose of America’s Health Insurance Plans, the industry association. “We have to rely on the medical record information supplied by the applicant.”
http://www.usatoday.com/printedition/news/20070129/1a_cover29.art.htm
Comment:
By Don McCanne, MD
Who is the bad actor here? Is it the insurer that rejects a claim and rescinds an insurance policy based on a look-back at the application process to see if an error, omission of false statement can be discovered that would allow the insurer to back out of this agreement? Or is it the insured individual who either made an honest error or omission, or, out of desperation for coverage, avoided full disclosure on the medical history form?
Well, the worst actor in this process is the least visible. A health policy that inevitably results in some insured individuals being denied benefits, no matter the reason, is a flawed policy. So the real villains are the policymakers.
Mohit Ghose of America’s Health Insurance Plans (AHIP) states that their objective is to provide affordable insurance products, and that means that they must exclude individuals with an unfavorable medical history. But our policies must be designed to meet the needs of everyone, including those requiring more health care. If our policymakers required insurers to cover everyone through guaranteed issue, which a few states do, then insurance premiums for adequate coverage become unaffordable for many average-income individuals.
Our policymakers do recognize that the current system is not working. Unfortunately, their current efforts are totally off target. Although it is health care that has become unaffordable, they have narrowed their goals to making health insurance affordable, as if universal coverage would solve the problem of high health care costs. It can’t, because once you include those with health care needs, you can make premiums affordable only by creating plans that establish ever greater financial barriers to actual health care.
Keep in mind the quote from Wellpoint’s Blue Cross of California: “We believe that the cost of covering someone whose health can be predicted to require costly care should not be subsidized by someone with minimal health care needs.” This is an explicit statement that the nation’s largest health insurer does not believe in the crucial insurance function of pooling risk, and that concept is reinforced by AHIP.
Our policymakers do understand that establishing a single, universal risk pool and funding it through equitable tax policies would make health care affordable for everyone. If they would eliminate the private insurers and establish that risk pool for all of us, then we would no longer have to be concerned about identifying the bad actors of health insurance rescission.