August 12, 2009

You *Think* You Have Insurance, But...Do You?

Does everyone know that their own insurance, seemingly so good, is in fact just exactly like walking on a frozen pond that has plenty of thin ice? You usually won't fall into the icy water on most steps (years), and might be lucky for a very long time, but...

“When a person is diagnosed with an expensive condition such as cancer, some insurance companies review his/her initial health status questionnaire,” the HHS said in a posting at HealthReform.Gov. In most states, insurance companies can retroactively cancel individuals' policies if any condition was not disclosed when the policy was obtained, "even if the medical condition is unrelated, and even if the person was not aware of the condition at the time.” -- Daily Dose Blog (8/11)

Such as having a policy canceled during breast cancer because you didn't report acne.

If you think you're safe because you have group-coverage from your employer, think again.

Because...what if you aren't with that employer in a year or two? For any reason.

You can have your individual-market insurance canceled for unrelated, innocent mistakes in your application, which are almost or entirely impossible to avoid -- provide every detail of every kind of every health care visit and test result and medication for the last 10 years. Wait...there's more...

You won't be told you must report even things you don't know about, such as when your doctor didn't mention them to you.

These hidden practices give insurers huge advantages -- they can then find excuses to cancel policies if someone is desperately ill and the medical costs are large, and thus increase profits.

Most medical claims costs go to care for high-cost patients. So canceling just some of those patients greatly increases profits.

Therefore the insurer doesn't even verify the application information at the beginning, since that would lose the advantage of being able to cancel on this pretext later!

This is the "free" market situation right now.

Further, anyone, you, me, all of us -- except high profile people like legislators and reporters in the media which insurers are afraid to cancel -- can end up desperately ill and then have a canceled policy in the individual market quite quickly. Here's how: all that's needed is a major illness or accident that removes you from work long enough to lose your job, or even just a simple layoff for economic reasons. Next, if you can't pay the huge expense of cobra ($500-$1800/month, but still hard to pay even with the new 65% subsidy Obama signed into law)...or 18 months pass and cobra expires.... are in the individual market, but...whoops, you have a preexisting condition.

Time to sell everything you have, pay what you can, and then go bankrupt. But if you can't pay any more then....what happens when you need more treatment?

Finally, most people will not have an opportunity to learn first-hand about this danger ahead of time, since only a small minority become seriously ill or badly injured. So few of us actually personally know someone who has gone bankrupt this way. Years ago, this did not happen.

Most people pay their premiums, without serious illness, and everything seems fine. Routine visits are satisfying and paid for and there is no way to realize the safety net has broken ropes in it.

Most people aren't even aware their employers have recently changed their policies to shift part of the costs onto workers, of necessity, as costs skyrocket at 5%-10%/year.

Has your deductible just gone up a lot? Doubled? Tripled? Do you know?

What can be done about this?

Here is a solution already agreed on across the political spectrum. Here is an even better solution we will need in the long run. Here are reforms to control the health care cost-inflation that is slamming everyone now.

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