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Old 05-05-2010, 09:56 PM   #21
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Originally Posted by MichaelB View Post
Silly me. I thought you saidThis has nothing to do with third tier, or any other. This is an out that every insurance company of every tier has.
I said the contracts are guaranteed renewable in response to the following:

Quote:
What is the point of health insurance if only healthy people (or kids) can get it and previously healthy people with health insurance can lose it as soon as they get sick?
It certainly has to do with third-rate companies...they are much more likely to stop selling insurance than one of the 3 or 4 largest companies in the entire country! Of course, if we didn't have such strict state-based regulatory oversight of health insurance companies in the first place, people who get "stuck" in that position wouldn't be so stuck after all....but I digress.
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Old 05-06-2010, 08:23 AM   #22
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Originally Posted by dgoldenz View Post
False....health insurance contracts are guaranteed renewable.
We've had this discussion and you've already admitted health insurance rescissions take place and are bad. And barring that, the price can be raised increasingly to the point where the premiums exceed the cost of care. Or the insurance company can game the system by dropping certain types of insurance, or discontinuing certain pools, only to force affected people through the underwriting process again for a slightly different product. Your systematical arguments in defense of all of this borders on the famous "it depends on what the meaning of 'is' is" gambit.

So back to the original question, under all of those scenarios what good is an individual health insurance policy?
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Old 05-06-2010, 08:35 AM   #23
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We've had this discussion and you've already admitted health insurance rescissions take place and are bad. And barring that, the price can be raised increasingly to the point where the premiums exceed the cost of care. Or the insurance company can game the system by dropping certain types of insurance, or discontinuing certain pools, only to force affected people through the underwriting process again for a slightly different product. Your systematical arguments in defense of all of this borders on the famous "it depends on what the meaning of 'is' is" gambit.

So back to the original question, under all of those scenarios what good is an individual health insurance policy?
Rescissions are bad when they are unjustified. I constantly see people lie on their applications (understating weight by 20+ pounds, lying about smoker status, conveniently "forgetting" they are using a CPAP machine, etc), and I am sure well over 90% of all rescissions are fully correct. Whether people like it or not, the insurance companies are usually right in their actions or else they would be subject to massive lawsuits (just ask Assurant!) Watching TV, you would think anyone who has ever sneezed has had their policy rescinded. Wellpoint just reported last week in response to the story about breast cancer targeting that less than 1/10th of 1% of all policies were rescinded in 2009.

If you don't think you should have a health insurance policy, don't buy one. Ask anyone who has ever had a million-dollar claim paid if it was worth having. One of my clients had two complicated births....total claims paid by Anthem, $1.8 million. Didn't see that one on the news.
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Old 05-06-2010, 08:42 AM   #24
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Originally Posted by dgoldenz View Post
That's part of the game...but they aren't cancelling it "because you get sick" - rate renewals must be the same for all insureds in that risk class/demographic. You aren't being singled out for your claims. I have plenty of healthy clients with 0 claims wanting to know why their rates are going up 25%...

As far as whether rate renewals must be the same for all insured in that class/demographic, some states do not regulate this so insurers can chose to raise the price on individuals based on their claims experience. It is unclear how pervasive this is and probably is not a common practice.

More commonly the rates go up if the group is problematic and the healthy people apply for a different less expensive plan, leaving the very expensive plan for those who no longer can get underwitten into a new plan.
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Old 05-06-2010, 08:44 AM   #25
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Pardon me, but do you have a a source for that? My understanding is except for a small handful of states only group policies have any kind of regulatory protection.
This is federal law, under HIPAA.

Here is the language from the statute on guaranteed renewability:

``(a) In General.--Except as provided in this section, a health
insurance issuer that provides individual health insurance coverage to
an individual shall renew or continue in force such coverage at the
option of the individual.

``(b) General Exceptions.--A health insurance issuer may nonrenew or
discontinue health insurance coverage of an individual in the individual
market based only on one or more of the following:

``(1) Nonpayment of premiums.--The individual has failed to
pay premiums or contributions in accordance with the terms of
the health insurance coverage or the issuer has not received
timely premium payments.

``(2) Fraud.--The individual has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage.

* ``(3) Termination of plan.--The issuer is ceasing to offer
coverage in the individual market in accordance with subsection
(c) and applicable State law.

``(4) Movement outside service area.--In the case of a
health insurance issuer that offers health insurance coverage in
the market through a network plan, the individual no longer
resides, lives, or works in the service area (or in an area for
which the issuer is authorized to do business) but only if such
coverage is terminated under this paragraph uniformly without
regard to any health status-related factor of covered
individuals.

``(5) Association membership ceases.--In the case of health
insurance coverage that is made available in the individual market only through one or more bona fide associations, the membership of the individual in the association (on the basis of which the coverage is provided) ceases but only if such coverage is terminated under this paragraph uniformly without regard to* any health status-related factor of covered individuals.



There are many ways that insurance companies can try to get around these limitations. One is to increase rates dramatically for everyone for a particular product, but offer a new policy to those who are healthy. HIPAA does not regulate rates. Another strategy mentioned above is when faced with a large claim, go through the application for insurance with a fine tooth comb, looking for any omission which the insurer could claim amounts to an "intentional misrepresentation of a material fact."
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Old 05-06-2010, 08:56 AM   #26
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Wellpoint just reported last week in response to the story about breast cancer targeting that less than 1/10th of 1% of all policies were rescinded in 2009.
That is an irrelevant and highly misleading statistic. The relevant statistic is "what percentage of women diagnosed with breast cancer in 2009 had their policies dropped." I doubt we'll see Wellpoint advertise that number.

Here's what they were doing, by the way . . .

Quote:
They had no idea that WellPoint was using a computer algorithm that automatically targeted them and every other policyholder recently diagnosed with breast cancer. The software triggered an immediate fraud investigation, as the company searched for some pretext to drop their policies, according to government regulators and investigators.
And this isn't exclusive to Wellpoint, and certainly not exclusive to breast cancer. Here's a similar story about Assurant (previously Fortis) using a similar computer algorithm to identify HIV patients.
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Old 05-06-2010, 09:03 AM   #27
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Here's an old blog describing the math behind the low percentage "recission numbers". The punch line is that if you have very high health care costs your chance of facing recission is about 50% even if only one-half of one percent of all policies are recinded.

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Half of the insured population uses virtually no health care at all. The 80th percentile uses only $3,000 (2002 dollars, adjust a bit up for today). You have to hit the 95th percentile to get anywhere interesting, and even there you have only $11,487 in costs. It’s the 99th percentile, the people with over $35,000 of medical costs, who represent fully 22% of the entire nation’s medical costs. These people have chronic, expensive conditions. They are, to use a technical term, sick.

An individual adult insurance plan is roughly $7,000 (varies dramatically by age and somewhat by sex and location).

It should be fairly clear that the people who do not file insurance claims do not face rescission. The insurance companies will happily deposit their checks. Indeed, even for someone in the 95th percentile, it doesn’t make a lot of sense for the insurance company to take the nuclear option of blowing up the policy. $11,487 in claims is less than two years’ premium; less than one if the individual has family coverage in the $12,000 price range. But that top one percent, the folks responsible for more than $35,000 of costs – sometimes far, far more – well there, ladies and gentlemen, is where the money comes in. Once an insurance company knows that Sally has breast cancer, it has already seen the goat; it knows it wants nothing to do with Sally.


If the top 5% is the absolute largest population for whom rescission would make sense, the probability of having your policy cancelled given that you have filed a claim is fully 10% (0.5% rescission/5.0% of the population). If you take the LA Times estimate that $300mm was saved by abrogating 20,000 policies in California ($15,000/policy), you are somewhere in the 15% zone, depending on the convexity of the top section of population. If, as I suspect, rescission is targeted toward the truly bankrupting cases – the top 1%, the folks with over $35,000 of annual claims who could never be profitable for the carrier – then the probability of having your policy torn up given a massively expensive condition is pushing 50%. One in two. You have three times better odds playing Russian Roulette.
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Old 05-06-2010, 09:15 AM   #28
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That is an irrelevant and highly misleading statistic. The relevant statistic is "what percentage of women diagnosed with breast cancer in 2009 had their policies dropped." I doubt we'll see Wellpoint advertise that number.

Here's what they were doing, by the way . . .

And this isn't exclusive to Wellpoint, and certainly not exclusive to breast cancer. Here's a similar story about Assurant (previously Fortis) using a similar computer algorithm to identify HIV patients.
I know all about the Assurant case, which is why I mentioned them. That was clearly a big-time screw-up by the company and they paid dearly for it. Insurance companies are VERY careful of who they rescind for this exact reason - if they are wrong, they will get the pants sued off of them and every lawyer will be lined up to take the case.

Wellpoint posted a response to the Reuters article, which I'm sure you either didn't see or didn't read:

http://www.wellpoint.com/pdf/HHS_Letter.pdf

WellPoint > News Article General

Key sections:

Quote:
-The story also misstates the role of what it terms computer algorithms. Contrary to how its use was portrayed in the story, such software is used to look at a series of diagnostic codes meant to capture conditions that applicants would likely have known about at the time they applied for coverage. We do not single out breast cancer or pregnancy.

-In fact, last year less than one-tenth of 1 percent of our individual members' policies were rescinded.

-Another significant error in the Reuters story is that WellPoint rescinded coverage to Robin Beaton. As noted during her public testimony during the US House Energy and Commerce Committee hearing, Ms. Beaton is NOT a WellPoint member, but rather was insured by another company.

-Yet another inaccuracy is the false implication at the beginning of the article that Ms. Reilling's coverage was dropped due to breast cancer. If Ms. Reilling would be willing to sign a HIPAA waiver, we would be happy to disclose the facts in her case. Also a small point, but indicative of the inaccurate reporting in this story, Reuters misspells Ms. Reilling's name repeatedly throughout.
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Old 05-06-2010, 09:43 AM   #29
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Wellpoint posted a response to the Reuters article, which I'm sure you either didn't see or didn't read:
I saw it and it is basically bunk. I don't accept their assertion that they are not targeting sick people when they have every financial incentive in the world to do it, their CEO's refused to say they would stop doing it on national T.V. and in front of Congress, and other companies in the industry have been caught doing it. I mean seriously. If they weren't doing it why wouldn't the CEO's have said they would stop in cases where fraud wasn't obvious when asked by Congress last year? If it wasn't a big number, or important, why would all three CEO's sit there and tell Congress they were going to keep on rescinding policies even in cases were fraud wasn't obvious? A press release isn't as telling as CEO testimony before Congress.

They also repeat the same meaningless statistic about how many recissions they have in their entire insurance pool when the real question is "how many recessions do you have among the sickest population in your insurance pool."
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Old 05-06-2010, 09:44 AM   #30
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Besides, the mere fact that we're even having a discussion about how many sick people get dropped from insurance is proof enough that the system is broken and needs to be radically altered.
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Old 05-06-2010, 09:50 AM   #31
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Besides, the mere fact that we're even having a discussion about how many sick people get dropped from insurance is proof enough that the system is broken and needs to be radically altered.
See my response in the other thread for sensible solutions that would work. No doubt the system is screwed up the way it is, but you have to work with what's there. Either that or we can all pay through the nose in 2014, which is what we're on track for.
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