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It was a wallbanger moment. Yep, there's the story; Pregnancy not covered by most individual health policies ...as if that was news.

For those of us who live and work in health care every day, it's mind boggling to see how clueless the MSM is about how the U.S. health system works. I get it, health care is not something you think about until you desperately seek it. Unfortunately, that leads to a nasty surprise or two. If the sticker shock doesn't get you, the blatant unfairness might.

Pregnancy coverage isn't something you think about, until you find out you don't have it. MSNBC's article about individual health policies lacking pregnancy coverage is a bit anemic. Their story covered older, married women who didn't understand the insurance policies they purchased. The story didn't cover the other situations where people find out they get to pay for their baby on their own. The side effects of the U.S. rationing care to pregnant women according to their ability to pay is not something the MSM cares to evaluate.

To the uninitiated the lack of pregnancy coverage seems to be an extension of murder by spreadsheet methodology and they would be right. Except, the real motivation is to save money on claims, so the insurer can spend it on executive compensation or other overhead (MLR rules be damned). The insurance company wants people to pay premiums, but they hate to pay out on claims. Pregnancy is a slam dunk minimum of $8,600 in claims and high risk pregnancies can cost $25,000 or more. The incentive to minimize losses is irresistible to insurers, so eliminating pregnancy benefits is the best way to go to ensure the bottom line.

Insurer's have undercovered pregnancy since the 1970's due to the explosion of C-sections in this country. Why is MSNBC only waking up to these facts now? Again, why does the msm act surprised when a corporation acts in their best interest at the expense of their customers? As glad as I am that MSNBC published this story, I have to ask; where was the press last year? Why didn't MSNBC and the rest of the msm point out just how malevolent health insurers are in our society when Congress was going to do something about it last spring? Why now?

The for profit insurer's attitude runs counter to why we want insurance. We buy insurance because we want to use it and insurer's don't want to cover the services we are likely to need and want. To their credit, Henry Waxman and Bart Stupak decided to investigate insurers for, among other things, pregnancy coverage.

Memo to Committee on Energy and Commerce

Henry Waxman and Bart Stupak completed that investigation and wrote a memo on this subject last October and sent it to the Energy and Commerce Committee. Their findings are based upon 68,000 documents submitted to them from Aetna, Humana, UnitedHealth Group, and WellPoint who covered about 2.8 million people with individual policies in 2009. Their findings clearly show a need for a Public Option at the very least.

Findings

  1. Women who are pregnant, expectant fathers, and families attempting to adopt children are generally unable to obtain health insurance in the individual market. (A new baby is too much of a crap shoot and the risks can't be accurately predicted, so the safest course of action is to deny coverage all together.)
  1. Health insurance companies often exclude maternity care from coverage in the individual market. (Pregnancy pre-natal care is too difficult to predict accurately, so the safest course of action is to deny coverage all together.)
  1. Insurance companies severely limit the benefits they provide under maternity riders. (The more pregnancy care that can be "cost shared" with the policy holder, the healthier the insurer's bottom line. The best strategy is to contract for most pregnancy care to be excluded services  under the pregnancy rider.)
  1. Health insurance company executives have developed business plans designed to reduce coverage of maternity expenses. (Pregnancy is one of the ten issues that resulted "in higher prices, lower margins and loss of market share" for insurers, so the safest course of action is to manipulate their products to eliminate covering pregnancy all together.)


Follow the Money

The entire 8 page memo is worth the read, but this section clearly shows the actuarial interest of the insurers and points out why paying private, for profit companies to administer our health care system leads to unnecessary stress, suffering and in some cases, death.

Health insurance company executives discussed their reluctance to cover maternity expenses in internal corporate documents. In a presentation to senior staff, executives identified maternity coverage as one of ten issues that resulted "in higher prices, lower margins and loss of market share." According to the presentation, the financial risks associated with maternity coverage total $20 million each year in one state. Senior executives then explained that "[m]aternity risk increases first year loss ratios by 7%." The increase of the medical loss ratio by 7% means that the company will pay more in medical claims and have less revenue available for other expenses such as marketing costs, administrative expenses, executive compensation, and profits.

Executives of a different insurance company expressed concern about the cost of offering maternity riders. One company analyst recommended: "overall experience on policies with maternity rider is 90% loss ratios. So, I think any restriction would help since that is a money-losing ratio. If someone is going to lapse just because we don’t let them add a maternity rider . . . maybe we should just let them." He added: "Competitively, it seems like we need to offer some kind of rider. But, actuarially we don’t want to make it too attractive."

An executive for the third insurance company stated that she was "concerned that it appears that there is a downstream effect of members joining [the company] and shortly thereafter becoming pregnant or being treated for pregnancy." After explaining that the company had paid $1 million for delivery expenses, another executive asked: "The large dollar amount of Deliver[y] charges begs the question of what exactly are we paying for and is it covered?" He explained that "[m]ost of our policies do not cover maternity."

Imagine that, some women get insurance, wait until pregnancy coverage is in effect, then get pregnant. ...and the insurance executive finds that trend to be "concerning".

During a quarterly meeting in January 2008, executives for the fourth insurer decided that the "optional maternity coverage has a very unfavorable impact on our bottom line" and that "[t]his coverage option will be eliminated in stages." The director of the company’s individual health insurance market questioned whether this step would sufficiently control the company’s costs from claims related to maternity. He stated:

I am still concerned that our maternity costs do not stem from "normal maternity" charges, but rather the cases that fall under the complication of maternity provision in the policy. Since this will remain in the policy after we stop offering the rider, we may not get the results we anticipate.

The internal company documents indicate that insurance companies often do not provide coverage for pregnancy-related claims unless mandated by state laws. After conducting a review of insurance plans that provided maternity benefits and that had higher medical loss ratios, one senior executive stated: "This is why I’m not keen on offering maternity plans under [state] law when maternity is not mandated by law."

So, even if they do eliminate pregnancy benefits, they still may be on the hook for the complications of pregnancy....say the causes of C-sections and the C-section itself. The insurer is annoyed that they can't figure out how to avoid paying for death defying care. True, avoiding death in health care is expensive, but isn't that the point of medical care in the first place? You know, staying alive?

It's always been this way. Insurers only want to collect premiums and they want to avoid claim liability. I get that. That's the purpose of running a for profit enterprise. What I don't get is why people think this for profit system that slices up to a third off the top leads to better medical care then a system that focuses primarily on delivering quality care with minimal overhead. What's really puzzling to me is why the MSNBC writer is so surprised that insurance companies act like, well, insurance companies.

Here's a list of "gotcha's" in the pregnancy insurance racket market:

Waiting Periods - Individual policies generally require a 6-9 month waiting period before pregnancy benefits are payable (up from 3 months a couple decades ago). Get pregnant on an individual policy before the waiting period is up and you're on the hook for the baby tab - $10,000 or more. This usually isn't too much trouble for the planned pregnancy, but around 50% of U.S. pregnancies are unintended.

Pre-existing Conditions - This ends in 2014. Until then, if you're pregnant before getting the individual policy, then it's not covered as a pre-existing condition. That is if you can get an insurer to issue a policy, which is doubtful. If your child is pregnant before getting the individual policy, it won't be covered either for a couple reasons (pregnancy isn't part of the pediatric coverage package).

Child Pregnancy - The most common case of sticker shock comes to the parents of a pregnant teenage daughter. Their policy cover's Mom's pregnancy, but not their daughter's pregnancy. Those of us who have worked in OB/Gyn's offices can tell you of numerous parents stunned to find out they are on the hook for about $10,000 in costs (usually more because teenage girls with immature, less developed bodies are higher risk pregnancies).

Lapsed Coverage - If you're going from group coverage to group coverage and you didn't select the "overlapping" coverage option when leaving your last job, then you could have your pre-existing condition clock reset and be subject to a waiting period. If you go uninsured for a single day, you are subject to preexisting condition exclusions.

Group to Individual Policies - All the rules and regulations on group policies evaporate when you migrate to an individual policy. If you opened your own business and went from group to COBRA to inivdual policies, you also lost protections required under group policies that aren't there for individual policies.

COBRA - If you are lucky enough to be able to afford COBRA after you leave your job and get pregnant 12 months later, you need to know, that your baby will be born after your COBRA runs out and chances are pregnancy isn't a covered service if you convert your COBRA policy to an individual policy. What's more, is that a lot of the reimbursement for the pre-natal care is wrapped up in the compensation for the delivery, which will occur after your COBRA lapses. A lot of insurance companies don't pay for the prenatal visits and only pay for the delivery with about $1,200-$2,500 more for a C-section (that's another diary). That means your insurance company has an incentive to deny paying for anything. It's up to you to figure out they need to pay for the care you incurred while insured. Then, you need to bargain with your doctor and hospital for what they will accept from you. Don't expect the doctor to be up front about what they would get from your insurer if you were covered for your entire pregnancy, they will "double dip" if they can. Meaning they will take what they get from the insurance company and expect you to pay the difference without the write off your previous insurer contracturally required. You might be able to get a 10% courtesy discount, which is about 15-20% of the discount your previous insurer received.


Pregnancy coverage, or in this case, a lack of pregnancy coverage is another example of how the U.S. health care system fails us. It's another example of how corporate health care exploits the U.S. system to the detriment of women, children and the men who love them.

Originally posted to JDWolverton on Wed Nov 17, 2010 at 01:36 PM PST.

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