You’re On Your Own
When I graduated college, I considered getting individual insurance while I was looking for steady work. Of course, after seeing the monthly premiums that would land me a prime $5,000 deductible and little to no coverage for routine healthcare (along with the always-awesome set of discount cards that’ll land you a cool 15% off at Lenscrafters…as will your $1.50 Sunday paper), I skipped it and ran the risk of having to pay for anything that came up. As risky as it felt with the ingrained message that without health insurance you die in a fetid swamp of debt, the only time that an affordable policy made sense was if I anticipated having invasive surgery at some point before getting a job with more affordable insurance. Being young and healthy, spending hundreds of dollars a month in order to have the privilege of spending thousands before being denied for my medical needs seemed about as appealing as a nice harsh buzz off a liter of Boone’s Farm. And a much less appealing story to tell when I’m wheeled into the emergency room.
The LA Times discusses the growing individual policy market today, and it’s not pretty.
Unlike group plans, which must accept all qualified applicants and can’t base a member’s premium on his or her medical history, individual plans in most states (including California) are free to cherry-pick the healthiest customers.
Insurers can reject applicants for even mild preexisting conditions. People have been turned down for individual policies because they have hay fever, have suffered from jock itch or use common medicines such as cholesterol-lowering drugs, records and interviews show. Even those lucky enough to have insurance are uncertain they can keep it or count on it in a crisis.
The basis of the individual insurance market is drawing in a pool of healthy people having no history of medical problems who still want to insure against grave, low-probability risk, and are willing to pay to ensure the quality of coverage they’d expect in such a situation. Unfortunately, you generally don’t get to the point where you feel the need to purchase insurance on your own without something having happened to instill the value of it into you.
The second problem, of course, comes in the fact that no insurer wants to cover more than any other insurer, because they’ll be swamped with all the people who can’t get covered anywhere else:
Insurers insist that they can’t stay in business without excluding chronic disease sufferers, known in the industry as “clinical train wrecks.” But companies in the individual market also want to avoid even marginal risk — adopting a practice some insiders call “hangnail underwriting.”
Even nonprofits such as Blue Shield of California are obliged to follow prevailing market practices, lest they be swamped with the highest-cost customers.
“That’s the game,” said Cindy Ehnes, director of the California Department of Managed Health Care. Risk selection, she said, “must be part of every insurer’s strategy or else they potentially will get all the bad risk.”
Keep in mind this is the exact type of market that John McCain wants to push us towards – the kind where we all make informed consumer choices about which of a great variety of insurers will one day, at best, make us fight with them over the denial of coverage for the bleeding head wound that they’ve declared a preexisting condition. That, my friends, is cranial damage you can believe in.