United Healthcare Stops Offering Insurance to Children

[dgoldenz]

United Healthcare has stopped offering child-only insurance policies as of last week. Other companies may follow suit as the new mandates for guaranteed coverage for children and minimum 80% loss ratio are going to kill companies that continue offering the policies:

As of the end of April 2010, United Health One (the individual market subsidiary of Golden Rule/United Healthcare) has decided to discontinue offering health insurance to children in response to the new mandates under the recently signed Patient Protection and Affordable Care Act. Children will still be able to get insurance as a dependent under an adult who is insured on the same plan, but parents will no longer be allowed to purchase child-only policies.

The new law states that by September 2010, children can no longer be denied for coverage based on pre-existing conditions. However, that assumes that the insurance company is offering to insure them in the first place. If the company will not offer any coverage, the law does not make any difference. Meanwhile, insurable children are penalized by the new law as it may severely limit their choices between companies and plans if other insurance companies follow the same path.

The healthcare bill was supposed to expand coverage to millions of uninsured Americans, increase choice and competition, and lower costs. Now, many of the provisions are coming into effect and causing the complete opposite – less coverage availability, less choice and competition as smaller companies leave the market (mainly due to minimum loss ratio requirements), and increased costs for provisions guaranteeing no cost-sharing for preventative care and guaranteed coverage for children. As we all know, nothing in life is free, and this may only be the beginning of what’s to come.

 

[eridanus]

A public option may be closer than we think.

 

[dgoldenz]

A public option may be closer than we think.

All part of the plan...

 

[ziggy29]

A public option may be closer than we think.

One indeed has to wonder if they buried stuff in this bill which they knew would lead to consequences leading to a demand for said public option. Clauses that encourage insurers to pull out of markets and stop issuing policies would have that effect, so perhaps they were "trojan horses" for the eventual introduction of the public option.

 

[IndependentlyPoor]

I suppose that pulling out of the market. Could just mean that they just don't know how to to price the risk. It will be interesting to see if all companies do the same.

I am a little surprised. Since it is a national law, the playing field should be level, so one would think that it would be just a profitable to compete for no-pre-existing condition policies as any other policy.

As for the politicts, i wouldn't put anything past either side. I find it easy to believe that the administration is including things to lead to a public option. I find it just as easy to believe that insurance companies are doing things like this to influence the November elections and to build opposition to any sort of health reform.

 

[ziggy29]

As for the politicts, i wouldn't put anything past either side. I find it easy to believe that the administration is including things to lead to a public option. I find it just as easy to believe that insurance companies are doing things like this to influence the November elections and to build opposition to any sort of health reform.

Yep. I don't trust either of them farther than I can throw my car.

 

[dgoldenz]

I suppose that pulling out of the market. Could just mean that they just don't know how to to price the risk. It will be interesting to see if all companies do the same.

I am a little surprised. Since it is a national law, the playing field should be level, so one would think that it would be just a profitable to compete for no-pre-existing condition policies as any other policy.

As for the politicts, i wouldn't put anything past either side. I find it easy to believe that the administration is including things to lead to a public option. I find it just as easy to believe that insurance companies are doing things like this to influence the November elections and to build opposition to any sort of health reform.

They would probably rather not offer it at all than price it correctly and have more media outrage over the sky-high rates they will need to charge. Someone from another company told me today that a child with bipolar disorder last week had a 350% rate-up because of the prescription costs (they would have been declined previously). What would a child with cancer have, a 5,000% rate-up? There is no cap on rate-ups from what I have been told...

 

[dex]

One indeed has to wonder if they buried stuff in this bill which they knew would lead to consequences leading to a demand for said public option. Clauses that encourage insurers to pull out of markets and stop issuing policies would have that effect, so perhaps they were "trojan horses" for the eventual introduction of the public option.

I think so. Wait for the headline: "United Health One Will Not Insure Sick Children"
the formula is: Insert costly clauses in the law, make it impossible to exist as a business; demonized the business, eliminate the business.

I don't have children - so I don't care.
I don't earn over $200K - so I don't care if they tax them.


"THEY CAME FIRST for the Communists,
and I didn't speak up because I wasn't a Communist.

THEN THEY CAME for the Jews,
and I didn't speak up because I wasn't a Jew.

THEN THEY CAME for the trade unionists,
and I didn't speak up because I wasn't a trade unionist.

THEN THEY CAME for me
and by that time no one was left to speak up."

 

[lets-retire]

One indeed has to wonder if they buried stuff in this bill which they knew would lead to consequences leading to a demand for said public option. Clauses that encourage insurers to pull out of markets and stop issuing policies would have that effect, so perhaps they were "trojan horses" for the eventual introduction of the public option.

Which is why many people did not support the bill. It did nothing to curtail costs and in fact implemented several things that have the effect of raising costs. Since nothing was put in to control costs, the end result would be that the prices of policies would go up until people started to complain and no other option would be available but to implement a public option. There were and still are many people who understand the need for reform of health care, but wanted real reform not what was passed, which did the opposite of the stated intentions.

 

[Gone4Good]

"THEY CAME FIRST for the Communists,
and I didn't speak up because I wasn't a Communist.

THEN THEY CAME for the Jews,
and I didn't speak up because I wasn't a Jew.

THEN THEY CAME for the trade unionists,
and I didn't speak up because I wasn't a trade unionist.

THEN THEY CAME for me
and by that time no one was left to speak up."

As a self described student of history you should know better than to use this as an analogy for health care legislation.

 

[Gone4Good]

Back on topic.

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?

This is a false debate.

 

[dgoldenz]

Back on topic.

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?

This is a false debate.

False....health insurance contracts are guaranteed renewable.

 

[Brat]

False....health insurance contracts are guaranteed renewable.

Ah yes, but at what price?? Raise it enough and it is as good as a cancellation.

 

[dgoldenz]

Ah yes, but at what price?? Raise it enough and it is as good as a cancellation.

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%...

 

[ziggy29]

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%...

Right, but it's part of the game. If these healthy clients were unfortunate enough to be in the same rate pool as a disproportionate number of folks who later developed cancer or diabetes, they're screwed. That whole group can be jacked up to try to force the cancer patients out of the pool (perhaps into a state high risk pool).

 

[MichaelB]

False....health insurance contracts are guaranteed renewable.

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.

 

[dgoldenz]

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.

Sure, read a health insurance policy. It is explicitly stated. I'll give you an excerpt from a United policy:

Term of Policy and Right to Terminate:

The policy is issued for an indefinite term. It continues in force until terminated.

The policyholder may terminate the policy by giving written notice to us.

You may terminate your coverage by giving written notice to us. Termination will be effective on the latter of: (A) the date we receive the notice; or (B) the requested termination date.

And the "Termination of Insurance and Renewability" section:

GUARANTEED RENEWABLE: You may keep this certificate in force by timely payment of the premiums. We may not refuse renewal of the policy/certificate unless:

(A): You fail to pay premiums when due, as described in the policy

(B): An act or practice that constitutes fraud or an intentional misrepresentation of material fact is made by or with the knowledge of the covered person in filing a claim for policy benefits

(C) We discontinue offering and refuse to renew all policies/certificates issued on this form with the same type and level of benefits, for all residents of the state where you reside; or

(D) We discontinue offering and refuse to renew all individual policies/certificates in the individual market in the state where you reside

Right, but it's part of the game. If these healthy clients were unfortunate enough to be in the same rate pool as a disproportionate number of folks who later developed cancer or diabetes, they're screwed. That whole group can be jacked up to try to force the cancer patients out of the pool (perhaps into a state high risk pool).

You could say the same thing about being in a group - if you unfortunately happen to work at an employer that has a disproportionate amount of older, sicker individuals, your rates will be jacked up because of it. That's the way it goes...however, the ones driving up the claims are also the least likely to ever drop their plans, regardless of cost. It will always be cheaper for them to continue paying what they are than to go somewhere else unless there is a risk pool to join. However, they'd likely have to have no current insurance to get into the risk pool anyway. Of course, risk pools are usually incredibly expensive too.

 

[MichaelB]

Sure, read a health insurance policy. It is explicitly stated. I'll give you an excerpt from a United policy:

Of course a policy can be canceled. Independent Health cancelled my policy in 2001. What a insurance company cannot do is cancel your policy because you get sick. They can, however, discontinue your policy. One reason there are so many different policy groups is to enable this.

 

[dgoldenz]

Of course a policy can be canceled. Independent Health cancelled my policy in 2001. What a insurance company cannot do is cancel your policy because you get sick. They can, however, discontinue your policy. One reason there are so many different policy groups is to enable this.

That's what I said....they can't cancel you because you get sick. If they stop selling insurance, sure they can. Another reason not to buy health insurance from a 3rd-tier regional company.

 

[MichaelB]

That's what I said....they can't cancel you because you get sick. If they stop selling insurance, sure they can. Another reason not to buy health insurance from a 3rd-tier regional company.

Silly me. I thought you said

False....health insurance contracts are guaranteed renewable.

This has nothing to do with third tier, or any other. This is an out that every insurance company of every tier has.

 

[dgoldenz]

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:

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.

 

[Gone4Good]

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?

 

[dgoldenz]

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.

 

[Martha]

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.

 

[Martha]

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."