What pre-existing conditions do you and your children have? Just as financial companies rely on "credit reports" to establish credit for customers, insurance companies utilize "medical reports" to assess the health, determine the insurability, and set the price for insurance applicants and policyholders.
Most consumers and even many insurance agents are unaware that Humana, UnitedHealth Group , Aetna (AET), Blue Cross plans, and other insurance giants have ready access to applicants’ personal histories. These online reports, available to insurers in seconds from little-known intermediary companies, typically include voluminous medical and personal information. The reports may also provide a numerical score predicting what a person may cost an insurer in the future.
Using information from these medical report files, insurance companies can charge you higher premiums or terminate your coverage altogether. (For example, "Denied Insurance Because of a Medical Coding Error in Her MIB Report")
Few consumers realize that the Medical Information Bureau Inc. (MIB), Ingenix Inc. and Milliman Inc. have personal medical report files on them. Like the credit-reporting agencies Experian, TransUnion, and Equifax, these "nationwide specialty consumer reporting agencies" monitor virtually every aspect of a person’s life.
The health insurance lobbying group America's Health Insurance Plans (AHIP) says the MIB, founded more than a century ago, operates the most extensive database of medical information on individuals who have previously applied for health, life, disability income, critical illness and long-term care insurance in North America."
The Federal Trade Commission warns that your medical report files may include both medical and non-medical information about you. For instance, personal data collected by the MIB includes medical conditions, your credit report history, driving records, criminal activity, drug use, sexual orientation, lifestyle activities, international travel, participation in hazardous sports, and personal or family genetic history. Using information from these medical report files, insurance companies can charge you higher premiums, deny you coverage, or terminate your policy altogether.
In fact, failing to check your medical report can be costly; errors or omissions within individual medical report files can cause applicants to be rejected outright, pay higher policy premiums, or suffer outright rescission of coverage! Even if you are in good health, an error in your medical report file may impair your ability to obtain affordable insurance. Take the story of Sheila from Gulfport, Mississippi, who spent her 401(k) savings on out of pocket healthcare costs after being repeatedly denied for individual health insurance,
Consumer Reports Health’s Cover America Tour realized the impact of MIB when we visited Sheila in Gulfport, Miss., the day after her 50th birthday.
Sheila was surprised when she was rejected for an individual health-insurance policy by three different companies. She was even more shocked when she learned why: Her record with MIB listed her as having a history of Chronic Obstructive Pulmonary Disease (COPD). Sheila does suffer from asthma, but COPD is supposed to be used to indicate more severe diseases of the lungs, such as emphysema or severe bronchitis. No company would insure her with this damaging mark on her record.
Sheila eventually traced the problem to a coding disparity at her doctor’s office. She says letters and phone calls to both her doctor and MIB have been to no avail, and the problem remains uncorrected on her record, effectively blocking her from obtaining individual health coverage.
Or, there's the Consumer Reports story of Michael from Abingdon, Virginia, who first sought to buy individual insurance in 2003 after leaving a federal regulatory position and exhausting his COBRA benefits, but was distressed to learn that he was completely uninsurable.
"I’ve been diagnosed with diabetes but I’m perfectly healthy," Michael says. "I follow a strict diet. I’m not overweight and I walk 20 miles a week. I check my glucose levels regularly. I take oral medication, and my diabetes is completely under control."
His problems result from the practice called medical underwriting. It’s illegal nationwide for insurers to discriminate against people in group plans on the basis of their health. But in all but a handful of states, medical underwriting for individual plans is allowed."
If the insurance company doesn’t like what it sees, in many states, it can flatly turn you down, quote you a much higher premium, or offer you insurance that covers everything except the health conditions it doesn’t like. Applicants for individual health insurance quickly learn that although they consider themselves healthy, insurers may not. Health Net, for instance, lists "diabetes, once diagnosed, all treatments" on its list of "declinable conditions." Diabetes is one of a lengthy list of conditions that will automatically get you into state high-risk pools, special insurance products maintained by 34 states for people who can’t find themselves disqualified for individual health insurance on the open market.
"It sounds harsh, but insurance is an actuarial science that looks at the likelihood of something happening and what the cost will be," says Janet Trautwein, chief executive officer of the National Association of Health Underwriters. "When a diabetic does have complications, they are unbelievably expensive, and that’s why a diabetic is always turned down, even if they’re running marathons." But conditions that most lay people would consider less serious than diabetes will also get you disqualified for individual health insurance. PacifiCare may decline anyone who takes prescription medications for high blood pressure, acid reflux, asthma, migraines, arthritis, or depression. Aetna won’t insure anyone who’s had a hip or knee replacement.
An investigation in 2008 by the Federal Trade Commission found that two of these nationwide specialty consumer reporting agencies supplying these medical profiles, Ingenix Inc. and Milliman Inc., violated federal law for years by keeping the system hidden from consumers. But the FTC has merely required disclosure if prescription information causes denial of coverage or some other adverse action; the agency imposed no penalties.
Remember, the new health care reform laws in the Patient Protection and Affordable Care Act don’t go in effect until 2014. All insurance applicants and policyholders should request an annual copy of their medical report files from the nationwide specialty nationwide consumer reporting agencies to ensure they aren’t overpaying for insurance or in danger of policy rejection or rescission for pre-existing conditions or errors.