The Atlanta Journal–Constitution / ajc.com @issue Friday, December 21, 2007/ A19
Private health insurance offers us sickly benefits
I wrote this opinion piece to share my experience with others who might advocate private health insurance as a solution for America's health care crisis.
Huge hikes are meant to drive you away, even if you file no claims, which benefits stockholders
By JIM McMEANS
President George Bush on Wednesday, December 13 vetoed the SCHIP renewal bill which would have expanded government health insurance to thousands more needy and sick children. The President said, "...our nation’s goal should be to move children who have no insurance to private coverage, not to move children who have private health coverage to government coverage."
Bush also said, "the bill...moves our health care system in the wrong direction."
But more than any other factor, private health insurance coverage is the reason why the United States has a dysfunctional health care system in which over 45 million Americans lack coverage and approximately another 40 million have unreliable coverage. Americans who have unreliable coverage are sometimes called the underinsured. A better description is Americans who have private health insurance.
In contrast to what he wishes to impose on his fellow Americans, President Bush spent much of his adult life with taxpayer funded health insurance, or as he calls it "socialized" health care.
As Governor of Texas, Bush and his families health insurance was taxpayer subsidized. Bush has received [tax payer subsidized] health care as President, and he and Laura Bush will continue to enjoy the benefits of "socialized medicine" for the rest of their lives.
Rudy Guilliani is another strong advocate of private health insurance for the common folk. But he has enjoyed taxpayer subsidized health insurance for almost his entire working life. Guilliani clerked for a federal judge for a year after graduating from law school in 1968, then went to work for the Department of Justice, with a four year exile at a private law firm during the Carter presidency. He then returned to the Department of Justice from 1981 to the early 1990’s before serving as Mayor of New York for 8 years beginning in 1993.
Is Rudy Guilliani running for President because he knows that if he were a typical American prostate cancer survivor working in the private sector, he would not be able to obtain a health insurance policy that would pay for the medical treatment he needs if his cancer reappears?
Tony Snow, who as spokesperson for the Bush administration frequently touted the "benefits" of private health insurance, is another cancer survivor who was fortunate to have government sponsored, federal tax payer subsidized health insurance when his cancer returned. If Tony Snow had left Fox News to begin a career as an independent small businessman instead of going to work for the government, he would not have been able to obtain a health insurance policy from the private health insurance industry that would have covered the treatment of his cancer. Both his life and his family’s financial security would have been put at risk.
Private equals predatory
While it’s not realistic for the average American to expect to have health insurance as good as the President of the United States, why can’t all Americans have health insurance as reliable and affordable as Tony Snow?
When so many individuals who avoid private health insurance are prescribing it for the rest of us, it’s important that they understand the consequences of the policies they are advocating for the American people.
Millions of Americans are reasonably happy with their health plans, but for the most part, they don’t have private health insurance. Americans who work for the government or for large corporations generally enjoy reliable and reasonably affordable employer sponsored health plans, in which the employer assumes the monetary risk for most or all of the employees medical costs. In some of these plans, a private health insurance company shuffles the paperwork and negotiates prices with medical professionals, but the health insurance company does not risk it’s own money. Whether an employee enjoys reliable and affordable health care benefits seems to be determined by whose money is at risk, the employer or the private health insurance company.
Private, for-profit health insurance sold to individuals is almost always predatory health insurance. Millions of Americans like myself already have private health insurance, and unlike President Bush, I wouldn’t wish private health insurance on my worst enemy.
Some of the warning signs of predatory health insurance are: underwriting, that is, denying health insurance coverage to those who need it; pre-existing condition limitation clauses; $2000 and up deductibles that increase by the thousands each year; and finally, premium increases larger than general inflation or medical inflation.
The purpose of the inexplicably large premium increases is to induce the policy holder to drop the policy after 3 to 5 years, which according to industry statistics, is when previously healthy policy holders begin to get sick and file claims. The industry term for this practice is "churning." If you have ever been hit with a premium increase larger than the rate of medical inflation, you have been "churned."
Stockholders come first.
It may seem incredible to some entrepreneurs that a business would chase away paying customers, but it’s true in the health insurance industry. Policy holders are not assets, but liabilities on a private health insurance company’s moral balance sheet. A policy holder with a chronic illness can run up hundreds of thousands of dollars worth of medical bills a year while paying less than $10,000 a year in premiums. Like any for-profit business, a commercial health insurance company’s first obligation is to the stockholders, not the policy holders, and as a result, private health insurance companies have a conflict of interest with their policy holders. The economic reality is that it is basically impossible to run a for-profit health insurance company honestly and still obtain the 15% and higher return on investment demanded by stockholders and board members.
I can testify first hand as to the existence of churning. As a self employed independent bookseller, over the last 15 years I have purchased private health insurance policies from 5 different for-profit health insurance companies. Before you accuse me of being flighty, please note that I have had the same car insurance policy for over 30 years and the same house insurance policy for 20 years.
[Changing health insurance companies so often is risky because if at any time I had developed a medical condition, I would not have been able to purchase a new policy that covered that specific disease and related medical conditions. Also, for the first twelve months, the policy holder is in health insurance limbo, the pre-existing condition black-out period when the insurance company might deny the claim for essentially any reason or no reason at all.]
So why did I take the risk of changing health insurance companies so many times? The truth is I was forced out of each of those policies within three years by yearly premium increases of 20 to 90 percent. It is standard practice for predatory health insurance companies to "churn" their policy holders with abusive premium increases within three to five years. At no time during that period did I ever file a claim or even go to the doctor.
In March 2005, I purchased an individual policy for myself from Blue Cross Blue Shield of Georgia. The cost was $165 a month with a $2000 deductible and a 70/30 co-pay with a maximum of $2000 out of pocket, not including some other minor miscellaneous co-pays. That was about the typical market price for a policy for a healthy 55 year old man. Politicians who push consumer choice health plans and catastrophic health insurance policies usually cite similar figures in their speeches.
It’s true as the politicians say that an individual can sign up for a health insurance policy with a $2000 deductible for around $200-250 a month depending on age. The problem is he or she can’t keep it.
111% premium hike
In October 2005, I was notified that as of January 1, my Blue Cross health insurance premium was being raised to $314 a month, a 90% increase in less than one year. Or, I was given the option to raise my deductible from $2000 to $3500 and only face a 45% premium increase to $240 a month. These increases came at a time when general inflation was approximately 5% and medical inflation approximately 10-12%.
Did I mention that I never filed a claim or even went to a doctor that year.
[I was not the only one who got socked with an outlandish premium increase. See the December 9, 2005 AJC article, "Insurance Commissioner Fines Blue Cross." Many other Georgians were hit with 90 % to
100 % premium increases that year.]
I chose to raise the deductible to $3500 and absorb the 45% increase. Fortunately, the co-pay remained $2000.
In October 2006, I was notified that my premium was being raised to $283 as of January 1st, an increase of 18%.The new premium of $283 was an increase of 72 % in my health insurance premium in one year and nine months.
Fortunately, I did not fall ill, did not file a claim, or even go to a doctor in 2006.
Now, as of October 2007, I have been notified that my premium is being raised to $349, a 40% increase. That figure represents an increase of 111% in my Blue Cross health insurance premium in two years and nine months.
[Of course, I have been given the option to raise the deductible to $5000, and enjoy a mere 20% premium increase to $315. That option represents an increase of 90% over my original premium in less than three years.]
I haven’t decided yet whether to keep this policy, raise the deductible or try to get another policy. But based on my past experiences with the other four health insurance companies, I believe I can safely predict that my Blue Cross premiums will be increasing next year, an election year, by about 20% and the year after by anywhere from 30 to 90 %.
Americans would be wise to emulate President Bush and Rudy Guilliani and go to work for the government and obtain taxpayer subsidized health insurance, or get a job with a large corporation that provides an employer sponsored health care benefit plan.
My advice is to avoid private health insurance like the plague.
Jim McMeans
5335 Highway 106 North
Danielsville, GA 30633
Jmcmeans@negia.net
Jim McMeans is a health insurance reform advocate and knowledgeable health care consumer
Information in brackets [ ] was not in the original op-ed but has been added for clarification.
# # #
Addenda:
The seemingly modest 18 % increase in October 2006 was probably due to the fact that it was an election year, and the insurance commissioner was up for re-election the very next month. It’s true I was given the option of choosing a $255 premium, a 6% increase, but only if I raised my deductible to $5000, with a $2000 co-pay, but I declined. Had I gotten sick, I would have been liable for $3060 for premiums, plus the $5000 deductible and $2000 co-pay, plus other miscellaneous co-pays that could have totaled over $10,000 out of pocket for the calendar year. If I had fallen seriously ill late in the year, it’s possible I would have been liable for over $20,000 if an illness had spilled over into a second calendar year. That alone would probably have bankrupted me, even though I had health insurance.
So, how do I know I am being "churned?" Isn’t my premium the same amount that Blue Cross charges all healthy men my age?
No. On the internet at ehealthinsurance.com, a new policy holder can purchase practically the same Blue Cross plan I have for considerably less. For example, the Blue Value $3000 deductible is only $298 a month for new customers, which is $51 less per month than the $349 which I would be charged and the deductible is $500 less besides. That amounts to $612 a year less than my new premium. The Blue Value $5000 deductible plan is only $257 a month as opposed to the $315 which I would be charged, a difference of $58 a month. Unless I am being churned, why else would I be charged $696 a year more than a new customer with the same $5000 deductible. And no, as a current policy holder, I’m not allowed to sign up for these less expensive plans.
I don’t know if Blue Cross has adopted the predatory health insurance business model, but if they have, I can speculate that their goal is to induce their policy holders to either to drop the policy or sign up for their $10, 000 deductible plan. The premium for the $10,000 plan which I have been offered is only $214 a month, but the plan comes with a $5000 co-pay. (On the internet, new policy holders would only pay $175 a month for this policy) If a policy holder were to fall seriously ill, he or she would be out of pocket $2568 in premiums, plus the $10,000 deductible and $5000 in co-pays, plus some miscellaneous co-pays, for a total of more than $17,500 a year. Again, if the policy holder were to fall ill late in the year and the treatment spills over into the next calendar year, the seriously ill policy holder could be looking at paying over $35,000 out of pocket. Most people would say thanks, but no thanks to that kind of health insurance policy. Blue Cross could be collecting $2500 a year from millions of policy holders for doing nothing.
For a married couple with "catastrophic" high deductible private health insurance, the monthly premiums would be slightly higher, but what hurts the most financially is that the standard deductibles and co-pays are not per family, but per person. Each spouse has to meet their own deductible before the insurance company pays anything. In my Blue Cross plan, any children would be lumped into another deductible and another co-pay for a total of three deductibles and co-pays per family under these "affordable," private health insurance company plans.
There is no logical explanation for a monthly premium to increase nearly 100 % in only three years. After five years, I predict my monthly premium will have increased over 200%.
Because I have individual private health insurance, there is no guarantee that my insurance company will pay anything if I do get sick. And if I ever do get sick when I am between policies, I won’t be able to obtain or keep private health insurance to help me pay my medical bills.
Jim McMeans