One of the most important factors in buying health insurance (either an individual or group policy) is whether the insured person has a “pre-existing condition.” Generally speaking, if you have a medical condition that has required medical attention—and you still have it at the time that you apply for new insurance—you’re going to have some difficulty buying a standard policy.
Why are pre-existing conditions such a big deal?
Most policies limit or deny coverage for people with pre-existing health problems. Politically, this is a major issue; actuarially, it’s just common sense. In the last year or two, the politics has been getting the better of the common sense. In this column, we’ll consider the matter from both perspectives, so that you can understand how to make the best insurance-buying choice. Even if you have a pre-existing condition.
It’s a central tenet of free-market insurance that any person can buy coverage—as long as that person is willing to pay high enough premiums and accept low enough coverage limits. If the premiums are too high and the coverage limits too low, a rational individual will choose to avoid health insurance and pay cash out-of-pocket for whatever (hopefully minor) medical expenses he or she incurs. This option not to buy overpriced health insurance coverage is an important signal to insurance companies about how effective their pricing models are. Take it away and prices tend to rise for everyone. Why? Because, when a healthy person chooses to opt out of the available health insurance marketplace, he or she leaves people who tend to be in worse health—on average—than in the pool of insureds. And, if many healthy people leave, a kind of negative critical mass occurs: So many sick people remain that they drive up claims costs sharply.
Economists call this “adverse selection.”
Some insurance experts argue that adverse selection causes insurance costs to rise so fast that no rational healthy consumer will ever buy available coverage. The only people left in the risk pool are those who expect to make claims greater than the premiums they pay. This leads to a counter-intuitive conclusion: If an insurance company can sign up a customer with a preexisting condition at an exorbitant premium, the insurance company probably doesn’t want that customer. Why? Because that customer has decided that the coverage he or she will receive in exchange for the seemingly-high premium will outweigh the seemingly-high cost. And will be inclined to make claims.
Some insurance experts have written that people with preexisting conditions “are better at predicting” their future medical needs than healthy people who don’t have as much experience in using health care services. But the federal government doesn’t seem to believe this theory.
Currently, the Affordable Care Act (ACA) has established a government-run Pre-Existing Condition Insurance Plan (PCIP) that offers health insurance coverage to those denied coverage because of their conditions. The program’s current financial status hints at the high costs that come from insuring people with histories of cancer, diabetes, heart attack, stroke, etc. The health care cost per participant in the PCIP is currently projected to be nearly $30,000 a year; this more than double what government actuaries projected when the ACA was passed into law.
Of course, the PCIP is merely a transitional program. By 2014, the ACA will prevent insurers from discriminating in any manner based on pre-existing conditions: by law, cancer victims and stroke survivors will be able to buy insurance at the same price as healthy applicants of the same age and gender.
In other words, under the ACA, all people are required to buy government-approved health coverage. The healthy can’t opt out; they have to subsidize the sick.
This is the scheme’s vaunted hedge against adverse selection—the so-called “individual mandate.” But this mandate blinds the health insurance marketplace to its critical pricing signals.
Suppose the Company X offers all insureds the a medical insurance policy for $10,000 per year, based on data showing that the annual medical costs of all insureds is about $8,000, on average. A consumer who expects his expenses to total just a few hundred dollars—and there are some people who have such few and minor health problems—won’t sign up. The coverage isn’t worth it.
But consumers who decide that they will use more than $10,000 in medical services each year will enroll.
Now, suppose that Company X researches loss histories for people who’ve had cancer and concludes that its average annual medical expense for each of them is $15,000. On first glance, Company X should be able to charge an annual premium of $20,000 to people who’ve had cancer and stay well ahead of the projected medical expenses. But things don’t always work so logically. In fact, rising premiums often create a so-called “death spiral.” Each time Company X raises its premiums, it chases away more relatively-healthy people and attracts an increasingly expensive set of sick insureds.
Again, this is why the individual mandate is so important to the ACA—if everyone is forced to buy health insurance, the healthy will end up paying in more money which funds the medical care provided to the sick.
The origins of the ACA’s tools against adverse selection reach back almost 50 years. In December 1963, Stanford economist Kenneth Arrow published a paper in the American Economic Review titled “Uncertainty and the Welfare Economics of Medical Care.” Arrow identified five principal “distortions” in the market for health care insurance:
Uncertainty of Demand. People’s needs for health care are unpredictable, unlike other basic expenses—like food and clothing.
Expected Behavior of the Physician. You can’t just set up shop on the side of a road and practice medicine; you need a license to be a physician—and getting that license requires years of training. And physicians want to be compensated for that.
Concepts of Trust and Delegation. Trust is a key component of the doctor-patient relationship; the patient must trust that the surgeon knows what he or she’s doing.
Supply Conditions. Doctors usually know far more about medicine than do their patients; therefore, the consumer of medical services is at a disadvantage relative to the seller.
Pricing Practices. Patients don’t see the bill until after the non-refundable service has been provided, so they’re rarely able to shop around for medical services on price and value.
Arrow argued that the only good solution to these pricing problems was to force everyone to buy the same, basic coverage.
Recently, the Forbes magazine columnist Avik Roy wrote a lengthy article in The Atlantic magazine which argued that there are several free-market solutions to the issues Arrow raised all those years ago. Specifically:
Arrow’s prescriptions for addressing health care’s distorted market involve…further distortion. [Y]ou can’t shop for health care when you’re unconscious, or when you’re in acute or emergent situations. Does this justify nationalizing the health care system? No. At most, it justifies nationalizing a subset of health-care decisions that take place in acute settings. …it seems to me, those who strongly believe in the shopping argument for socialized medicine should adopt a hybrid approach. Let’s have a free market for the 70-plus percent of health care where market forces can most directly apply, and let’s have universal catastrophic insurance for those situations where market forces work less well.
Until that day, U.S. already has a hybrid market: Medicare/Medicaid for the old and the poor and a relatively free market for health insurance for the younger and employed. While the status quo has flaws, it couldn’t be worse than the Feds at communicating important pricing signals.
The recent controversy involving “free” contraception advocate Sandra Fluke, talk radio host Rush Limbaugh and the role of “Obamacare” is instructive—but probably not for the reasons you think. If you look past the political posturing of the people and groups involved, the controversy offers some useful insights into how health care reform works and how the kind of coverage you choose affects the cost that you pay.
There are bound to be more controversies involving the implementation of the Patient Protection and Affordable Care Act. And, since this is an election year, these controversies are bound to be used to advance various political agendas. This column isn’t interested in partisan politics—but it is interested in how public policy and laws affect the choices available to consumer of health insurance and medical services. That is, the choices available to you.
You might be surprised to know that the word “contraception” doesn’t appear anywhere in the body of the Affordable Care Act. What does appear, many times, is the phrase “preventive services.” The Act states repeatedly that “preventive services” include:
1) diagnostic tests for chronic conditions such as diabetes (which is, essentially how Medicare defines the phrase),
2) regular check-ups, fairly standard screening tests like mammograms and well-baby visits for small children, and
3) any other services or items as defined by the Secretary of Health and Human Services.
The Act also makes repeated use of the term “no cost-sharing”—mostly in the negative (as in, “there shall be no cost-sharing for _____”). In this context, “cost-sharing” means co-payments, co-insurance fees, deductibles or other out-of-pocket payments borne by the patient.
Combining these concepts, the Act states more than once that there “shall be no cost-sharing” for “preventive items and services.” And it creates several task forces that are involved in defining terms like “preventive items and services” in greater detail. These task forces suggest administrative rules, ultimately issued by the HHS Secretary, which define how the Act is implemented.
This puts a lot of power in the hands of the task forces and the HHS Secretary. More to the point, for most consumers: The HHS Secretary determines what’s covered—not only for government-run insurance but also for any private health insurance available in the U.S.
The recent dust-up involving Ms. Fluke and Mr. Limbaugh was preceded almost a year ago by HHS Secretary Kathleen Sebelius’ promulgation of an “interim final rule” that all forms of contraception would be considered “preventive services” for the purposes of the Affordable Care Act. That interim final rule was made finally final in January of this year (though at least one stakeholder complained that the process was completed in a panic: “There was a notification this morning and the rule came out around noon”).
Since the Act states that preventive services shall have no cost-sharing, Sec. Sebelius’ rule meant that all health insurance policies sold in the U.S. after the middle of next year must cover procedures like vasectomies or tubal ligations and items like hormone pills—without requiring any deductible or co-pay.
Sec. Sebelius has described the rule a victory for consumers. In an opinion column published in USA Today earlier this year, she wrote:
One of the key benefits of the 2010 health care law is that many preventive services are now free for most Americans with insurance. Vaccinations for children, cancer screenings for adults and wellness visits for seniors are all now covered in most plans with no expensive co-pays or deductibles. So is the full range of preventive health services recommended for women by the highly respected Institute of Medicine, including contraception.
That’s not exactly right: Nothing covered by insurance is “free.” Someone has to pay for every check-up administered and every pill prescribed. Directly, that someone is the insurance company; ultimately, that someone is the person paying the monthly premiums for insurance coverage.
Using deductibles and co-pays (or the lack of them) to encourage insured people to use certain kinds of medical services is an old cost-containment strategy that HMOs used a lot in their heyday some 20 years ago. Famously, one California-based HMO removed all co-pay requirements if insureds visited chiropractors or acupuncturists—because those alternative care providers cost so much less than conventional doctors.
In effect, the Affordable Care Act will compel U.S. health insurance companies to operate like one giant HMO—encouraging certain types of care by means of low or no out-of-pocket expense when people use those services. And the “no cost-sharing” rules will be the main tool for this encouraging. Sec. Sebelius made this point plainly when she told a congressional committee: “The reduction in the number of pregnancies compensates for cost of contraception.”
Of course, preventing pregnancy is different than preventing diabetes. No one wants to have diabetes; but some people want to get pregnant and have children. Sec. Sebelius’s use of the phrase “preventive health services” blurs that critical difference.
Most health insurance plans have traditionally covered contraception—whether through procedures like vasectomies or tubal ligations or through prescription drugs like hormone pills. This is a rational cost-containment impulse. From a financial perspective, insurance companies would rather pay the relatively small cost of contraception than the relatively large cost of child birth (especially births which involve medical complications or specialized neonatal care afterward).
As a result, for generations, smart consumers have had to pay close attention to whether and how their health insurance policies covered childbirth. Most policies covered the costs of childbirth—or at least most of them—but some pointedly didn’t. And the policies that didn’t usually cost less.
This range of options for the health insurance that smart consumers could buy was made possible by a relatively free market in which insurance companies could offer products with different types and limits of coverage. Here’s an important point to keep in mind: The new “no cost-sharing” rules limit such consumer choice. And raises costs for everyone.
A critical distinction among different types of health coverage has always been how much an insured person has to pay out-of-pocket for various therapies and services. This is major way that an informed consumer can control how much he or she pays in premiums every month. Simply said, the healthier you are, the more cost-sharing (higher deductibles, co-insurance fees, co-pays, etc.) you want—because this usually means lower monthly premiums.
This is the equal-and-opposite rational response on the part of the consumer to rational cost-containment on the part of insurance companies.
It’s a dirty secret of the Affordable Care Act that it limits the availability of lower-premium policies—and of the rational interaction between health insurance consumers and health insurance companies. It limits consumer choice. The recent controversies further obscure this point.
In order to shop effectively for health insurance, you need to understand how coverage is priced. Or “underwritten,” in industry parlance.
This is an essential point. But ordinary consumers don’t think much about how health coverage is priced—because they don’t think about insurance like other goods or services they buy. Which contributes to the inefficiencies that sometimes screw up the health insurance markets.
Think about how well you—or maybe your kids, if you have any—understand the pricing of mobile telephone services. People usually know how many text messages or minutes are allowed each month under their phone plans, the costs of exceeding those limits, the speed of their connections, coverage areas and many other fairly technical details.
There’s not much demand for the analogous details about health insurance. And a quick Internet search confirms this: The information available on health coverage pricing at most consumer sites is so limited that it’s not useful.
So, in this column, I’m going to pretend that the pricing of health insurance coverage is something that a precocious 12-year-old would want to understand as well as she does her phone plan. And I’ll try to explain it on those terms.
When an insurance company sets up a health coverage policy, it looks at two things:
1) the coverage offered by a particular type of health insurance policy, and
2) the individual (or group of individuals) being covered by that policy.
Some companies refer to these as “primary” (related to the policy) and “secondary” (related to the individual insured) underwriting factors. In industry jargon, a company “prices” the coverage and “rates” the individual insured.
A jargon warning: The terms “underwrite,” “price” and “rate” are used somewhat interchangeably in the insurance industry. Some companies use the terms strictly, separating their slightly different meanings; others use them loosely. In any case, the three terms refer to steps in the process of figuring out how much to charge for coverage.
An insurance company will usually start by pricing the coverage in question. And this is trickier than pricing other types of insurance, for several reasons.
1) Health insurance policies do not follow industry-standard forms, as homeowners and auto policies do. Most insurance companies write their own health policies, which means there can be big differences between one company’s contract and another’s. It also means that industry-wide payment numbers and trends mean less to a specific company when pricing health coverage than when pricing homeowners or auto coverage. (Though health insurance companies do use industry-wide numbers as a “control” to compare against their own.)
2) Payments made under an individual health insurance policy can vary dramatically, year to year. And in total. These payments are more difficult to model or otherwise predict than payments made under life or property coverages. Even when a health policy has a lifetime coverage limit (recently prohibited by the federal Affordable Care Act), most claims don’t involve payments that come anywhere near that limit in a given year. But a few do…and it’s very difficult to predict which those few will be.
3) Government programs—primarily Medicare and Medicaid, but also others—influence the cost of medical care services paid for by private-sector health insurance. While the reimbursement formulas used by the government plans are public information, they can have unintended consequences or other unpredictable effects. And, based on where and to whom a company sells its policies, government programs have a greater or lesser effect on payment histories. In some regions, Medicare sets the market prices for all health care services.
So, there are lots of variables involved in pricing coverage. The best way to account for them all is to keep track of the various payments the insurance company has made under the various types of health policy it offers.
Historically, the most common types of health policy have included:
traditional indemnity-style coverage
managed-care coverage
catastrophic or “high-deductible” indemnity coverage
major medical coverage
disease- or condition-specific coverage
Medicare supplement (a/k/a “Medigap”) or other specialty coverage
Not every company offers all of these coverages; and some companies break one of these categories into multiple sub-categories.
A health insurance company pays actuaries to track its history of payments (sometimes called “losses”) made under each type of coverage. And those actuaries will cross-reference the payment histories by the type of policyholder making claims. So, for example: The actuaries can tell senior management that the company makes an average payment of $6,900 each year on an indemnity policy sold to a 50-year-old woman and an average payment of $3,400 each year on a major medical policy sold to a 30-year-old man.
This sort of proprietary payment (or “loss”) history is extremely important to health insurance companies; it forms the foundation of the company’s pricing formula. From this perspective, it’s easy to see why the insurance company considers its payment history the “primary” factor in pricing coverage.
Next comes the “secondary” factor—namely, you.
In most cases, “you” means a group of individual insureds organized by their employment with one company or entity; in some cases, “you” means an individual buying his or her own coverage. In either case, the “secondary” pricing factors include personal characteristics that are mentioned most often in simplistic consumer-advice columns:
age
height/weight
location of residence
blood pressure
smoker/non-smoker
alcohol use
other health status (especially any genetic tendencies or chronic conditions)
personal financial/credit history
If you’re buying health insurance through an employer or other group, these secondary factors are less important but may affect the amount of your monthly premiums or necessary deductibles and co-pays. If you’re buying coverage as an individual, they are more important and may determine whether you’re insurable at all.
So, a health insurance company has its proprietary, “primary” pricing factors in place already when you apply for coverage. It then asks you for information—by means of its policy application form and, in some cases, a blood test or physical exam—to help it gather data on “secondary” rating factors.
If you meet the minimum parameters of insurability, the company uses a formula (also created by its actuaries) that assigns various values to each of the “secondary” factors. For example, if you’re more than 20 percent over average weight for your height, the formula may add X points; if you don’t smoke, it may subtract Y points; etc.
When the total number of points related to all “secondary” factors is determined, this is converted to a secondary rating factor—often between about 2.0 and about -0.5. Then, the primary average payment amount for the type of coverage you’re seeking is multiplied by the secondary rating factor to produce a “working” or “basic” premium.
This working premium is then increased to account for statutory requirements related to required reserves, permitted profit margins, contributions to government-run insurance pools or other costs. (These increases to the working premium are how most so-called “health care reform” schemes generate the funds that they need to subsidize health coverage for the uninsured.)
At this point, the insurance company usually compares the working premium to other premiums it charges insured people or groups; and, if yours is too high or low, the insurance company may bring it back into range by adjusting required deductibles, co-pays or coverage limits.
The result of these several modifications is a final premium which you—or your employer or insurance group—have to pay.
Hi. My name is James Walsh. The producers of this site have asked me to write a twice-monthly column on health insurance topics for consumers. This is the first of what I hope will be many useful takes on the current state of health coverage in the United States.
A few quick notes about my qualifications. For the last decade, I have been the editorial director and publisher of the Merritt Manuals, a multi-volume technical reference encyclopedia used by insurance companies, risk managers, agent/brokers and claims adjusters. The Insurance Training Collection, an educational tool based on the Merritt Manuals, helps agents throughout the United States get and keep their licenses. I’ve also written or edited consumer books on risk and insurance, including the bestsellers True Odds: How Risk Affects Your Everyday Life and Get Your Claim Paid.
But enough about me. The purpose of this column is to give you, the reader, two things:
1) a working understanding of how health insurance policies work and the health insurance marketplace operates; and
2) practical tips for buying the best coverage for the best price.
This column won’t promote certain companies or products; I’ll focus instead on information that will help you make the best health insurance buying decisions for yourself and your circumstances.
You know your health insurance needs better than anyone, better even than experts and professionals. The first step in buying the right coverage is to focus attention on your situation and needs. To that end, here are seven basic tips that you should keep in mind when shopping for health insurance:
1) Know yourself and your family. This simple point is important because who you are—including your age, gender and health history—is the most important factor when it comes to setting up and pricing health insurance coverage. And “you” is not always a single pronoun; a couple has different needs than a single person…who has different needs than a family with young children.
2) If you have a family, getting health insurance coverage for some members may be easier than for others. While it’s easiest to insure everyone under a single policy, it might be more effective to insure kids under one policy, adults under another or individuals with specific health issues separately. This requires organization on your part—but can yield better results, in terms of cost, coverage and claims paid.
3) Know your own health history and the histories of everyone in your family. Surprisingly, some people prefer “not to know” about their overall health—especially if they have family histories of conditions like high blood pressure, cancer or genetic diseases. But this kind of “ignorance is bliss” outlook doesn’t work well for anyone in today’s world.
4) Understand that insurance policies are contracts between you (sometimes called “the insured”) and an insurance company (sometimes called “the carrier). Most terms and conditions can be negotiated, if you are informed and determined. Finding a good independent insurance agent can help this process. A lot.
5) Some people in the health insurance field hide behind legal jargon and tell consumers this or that request is “illegal” or “against the law.” Most insurance-related laws and regulations (leaving aside the Affordable Care Act of 2010) put requirements on insurance companies, not insurance consumers. There’s not much—short of outright fraud—that an insurance consumer can do that’s against the law. In most cases, the main risk that an aggressive consumer faces is that his or her policy gets cancelled or rescinded at some later date.
6) Insurance, by industry tradition and design, is difficult to shop for on a comparison basis. Health policies and contracts are structured in such a way that “apples to apples” comparisons are difficult; but you can make effective comparisons by learning some essential jargon and knowing standard policy components.
7) The health insurance marketplace is going through more radical change than at any time in the last 50 years. In many cases, even experienced professionals aren’t sure what current laws or regulations require…or what current market conditions mean for specific types of coverage. This can make some professionals (whether they work for insurance companies, broker/agents or government regulators) nervous and defensive. But the good ones will admit that industry standards are changing fast—and will work with you to answer questions or find solutions.
Clearly, the Affordable Care Act of 2010 (known in many circles as “Obamacare”) has affected—and will continue to affect, even if it’s modified or repealed—the market for health insurance coverage in the U.S. So, this column will look at that law often and from various angles. But I’m not interested in partisan politics or repeating talking points from political party or another…or one trade association or another. My only interest is in analyzing the law and related regulations for how they will affect how you buy health coverage.
There’s an old saying in the insurance industry: The best kind of insurance is the one that pays when you need it. My main goal in this column will be to help you get that kind of health coverage.
More specifically, in the coming weeks and months, this column will consider the following topics:
getting health coverage for children and “young adults”
how health insurance rates are regulated—and how quickly the premiums you pay can rise
how you can measure the financial strength of an insurance company—using credit ratings and statistics like medical loss ratios, etc.
what to do if you are turned down for health coverage by a private carrier or government program
how standard health insurance pays for preventive care, alternative care and other non-standard therapies
what you can do if/when your health insurance coverage is cancelled
what you can do if your insurance doesn’t cover a specific treatment or type of care—or decides a treatment is “experimental,” etc.
how “Obamacare” compares with “Romneycare” and other earlier versions of health insurance reform
how to compare group health plans with individual health plans
using and dealing with Medicare and Medicaid
what happened to the popularity of HMOs, PPOs and other types of “managed care”
whether Health Savings Plans or other non-traditional programs will work for you
how hospitals and doctors consider various types of insurance coverage
the role that cash plays in the marketing of medical care
Putting together these articles, I will be assisted by a team of researchers and writers with great experience in health insurance and health coverage issues. This team includes:
Gus Herrera, a co-author and contributor to such books as Hassle-Free Health Coverage and Kids and Health Care;
Callie Branaugh, an assistant editor/researcher for the Merritt Manuals (and daughter of the novelist Seamus Branaugh) who has also contributed to consumer insurance books such as Family Money and the Insurance Buying Guide.
Let me end this first column with a quick story.
About two years ago, a young woman called my office asking to speak with me about one of our consumer insurance books. I was worried it might be a complaint about some fact or opinion in the book—but it was a thank-you call. The woman was a single mother who’d bought a copy of Kids and Health Care. The book had helped her get her kids insured under a state-run program. She told me: “I knew there was information on the Internet about getting them insurance. But I didn’t know where to start. I mean, this stuff is intimidating. Your book explained it well enough that I felt like I could ask the right questions.”
This column will try to make this stuff less intimidating.
Recently, it was announced that the Obama administration is changing and improving the way customers appeal to their health insurance companies when they’re denied a claim or when their health insurance coverage gets canceled. According to an article in the Associated Press entitled, “Feds move to improve health insurance appeals,” the legislation will start in 2011, to give time to insurance companies so they can deal with its complexities.
The new protections will apparently protect at least forty million people when they take affect next year. The downside is that these protections don’t cover plans that were already in effect when the new health care legislation took place, as most of these are employer-provided health insurance plans. These are mostly meant to help those who are mandated to get individual health insurance over the next several years. However, Assistant Labor Secretary Phyllis Borzi said rules for appeals under employer-based health insurance plans will be getting revised as well in the future.
So how does the new process work? First, customers are required to appeal directly to their health insurance company. If they’ve denied for a second time, they will then have the option to take their appeal to an independent, third-party reviewer, whose decision will be binding.
States have until next July to bring their laws in line with these federal guidelines, so they have a year to get their act together. Personally, I can’t really see a downside to consumer protections such as these. Allowing the customer to have another avenue of appeal for their claims — one that’s legally binding — can only help customers who having issues with their insurance companies. One would also hope that this would make insurance companies more accountable for their actions so as to avoid this appeals process altogether. It’ll be interesting to see how this plays out once it takes effect.
With our economy the way it is these days, sometimes people forget that the backbone of our economy are small businesses. Small businesses not only grow into large businesses, they also do quite a bit of the hiring as well, something that is desperately needed in today’s economy. Sadly, according to a story in the Los Angeles Times entitled, “Health insurance rate hikes hitting California small businesses could hurt state’s economic recovery,” small businesses are facing yet another hurtle that, as the title of the article says, could hurt the economic recovery of not just business in California, but elsewhere as well.
According to the article, health insurance companies are raising their rates anywhere from fourteen to seventy-six percent depending on the companies involved. This is causing small businesses to either stop hiring altogether, or to lay off workers if they wish to keep health insurance coverage, while some companies are getting rid of insurance altogether, which doesn’t help make them more competitive when they ARE trying to hire new talent.
The result of health insurance companies raising their rates — which is happening for a variety of reasons, such as inflation, claiming to have priced plans too low before, so they now need to raise rates, or losing money on other plans — could be that small businesses either stagnate or go out of business entirely. This is a real problem if we want to start seeing economic recovery, which will rely on more small businesses hiring workers, which they can’t do if they can’t afford health insurance for more employees.
According to the article, health insurance premiums have risen 180% cumulatively over the last decade for small businesses, while they have only risen 146% for larger businesses. This is a serious problem that, if left unchecked, could hamper not only growth in California, but other states like Texas, Ohio, Florida and so on. Sadly the article doesn’t talk about any solutions because small businesses usually can’t negotiate their terms, similar to individuals.
Hopefully the situation will come to a point where small businesses can afford insurance, enough that they can also afford to hire new people. With our economy in such dire straights, small businesses need to be supported, not gouged.
We don’t usually cover COBRA related topics here, because honestly it doesn’t pop up in the news that often, but that’s likely to change in the coming months, especially with how the recently-signed health care reform law changes things for COBRA recipients. The story we’re looking at today, “Health Insurance Dilemma: COBRA Subsidies Will Soon Run Out for Many” from DailyFinance, talks about how COBRA is about to run out for many people, and what people can do once they do lose coverage.
COBRA, if you’re unaware, COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, and was passed in 1986. It’s a federal program that grants individuals who have lost their jobs health insurance coverage. Back in February, 2009, President Obama signed the American Recovery and Reinvestment Act, which increased government subsidies on COBRA to 65% of the premium, greatly decreasing what recipients would have to pay. This, in turn, saw nearly a doubling of enrollment into COBRA.
Well, at the end of this month, those subsidies will run out, leaving a lot of people using COBRA what to do next. Sadly, people leaving COBRA have few options under current law, even fewer if you have pre-existing conditions. Many health insurance companies currently won’t take people with pre-existing conditions — though that is changing, thankfully. Certain people are also eligible, under the Health Insurance Portability and Accountability Act, or HIPAA, to purchase individual health insurance policies despite pre-existing conditions, but only within sixty-three days after their COBRA policies expire.
Another wrinkle is that people are only eligible for COBRA for eighteen months. After that, you’re on your own. Options such as high-risk pools — which begin next month — will be available, and state-run Medicaid programs are available for those who qualify. Though some people may find more options once the health care reform legislation fully takes effect, for right now this causes an odd situation for a lot of people.
The main crux of the article is not to sit idly by and wait to make a decision. With hard deadlines for coverage, people under COBRA need to move now, not May 31st when the coverage runs out.
One of the big parts of the debate over health insurance and health care reform is the high cost of health care, medicine and so on. In their recent spate of rate increases, Wellpoint blamed the high cost of health care as the primary reasons why their rates are increasing as much as thirty-nine percent. Part of this equation is the medicine that goes into health care, and is a large part of the costs of health care that are trying to be brought down. While it’s difficult to convince drug companies to reduce their costs — since they do make so much money, it’s understandable — the Governor of Montana has an idea that might help…get drugs from Canada.
In an article entitled, “Montana governor wants to get drugs from Canada,” from the Associated Press, they write on how Governor Brian Schweitzer wants to get approval from the federal government to purchase drugs from Canada at prices much lower than they would be if purchased domestically. He hopes to get a deal with a Canadian wholesaler that will, hopefully, save the state possibly forty percent out of the $100 million now spend on medication for the state’s Medicaid program.
This is an idea which has been debated before, and is currently being debated now by both the Obama administration and the pharmaceutical industry. They warn that getting drugs from across the border wouldn’t include protections from dangerous drugs, or drugs that are ineffective. Schweitzer counters by saying, “These are the same drugs from the same places,” when talking about Canadian pharmaceutical companies.
It’s times like these, with people losing work, losing health insurance, states making less money from tax revenues and so on, that are causing more people to think along different lines. Even if these lines have been touched on before, these are stressful times that have a lot of people reconsidering ideas that might have been shot down in the past. While this proposal from Montana’s governor isn’t a new idea, now just might be the right time for it to actually happen.
Will this actually happen, however? It’s hard to say, but given our current economic climate, I’m sure other states and municipalities are considering measures like these to save much needed funds. We’ll have to see if this idea makes any headway, but it’ll be an interesting fight to watch.
Hello and welcome to this installment of the Weekly Health Insurance News Roundup. In this installment, we’ll look at a few articles that have to do with money and health care or health insurance, usually regarding how to save it, which is something everyone is concerned with these days. Our first article comes to us from the Charlotte Observer and is entitled, “Savings accounts may be future of health care.”
According to the article, local business leaders are noticing that, while still a small percentage, health savings accounts are becoming increasingly more and more popular, and enrollment is growing quickly. According to the article, around eight million people have health savings accounts, up over thirty percent from the previous year and a seven-fold increase from 2005.
People are finding health savings accounts attractive for several reasons. First, the money put into this accounts, whether by themselves or through their companies, is entirely theirs. Secondly, since they have a finite amount of money to spend, since they have a finite amount of money to spend on their health care, which makes them spend both more wisely and more efficiently. This, in turn, helps people save money, due to more finite control and better awareness of their health care spending budget. Overall, as health savings accounts become more popular, it’ll be interesting to see how these fit into any plans for health insurance and health care reform in the future.
Our next article comes from Kiplinger.com, and is entitled, “3 Things to Avoid When Trying to Cut Health Costs.” This article looks at, incidentally, three things one could look at when trying to save money on their health insurance costs. The first of these is premiums, and the article suggests not focusing too much on the price of the plan premium. According to the article, paying a lower premium for a health insurance plan with less coverage can cost you more in the long run due to having to pay more for medical expenses should they occur. This leads to their second point, coverage. The article suggests that buying high-deductible health insurance coverage could save you a lot of money in the long run, even though you might have to pay a higher up-front deductible. Finally, the article suggests being wary of COBRA, since it can get very expensive after subsidies end.
Our final article takes another tack on this issue. It’s from the Miami Health Examiner and is entitled, “Beverage tax considered to fund health insurance.” According to the article, Miami residents are paying the most money for their health insurance out of anyone in the nation. Apparently a family of four there in 2008 paid $20,282 for health care costs. Lawmakers there are therefore considering taxes on alcohol and sweetened beverages — two things alone that can cause their own health care problems — to help pay for skyrocketing health care costs. I honestly think this is a very interesting idea, but whether it takes off is anyone’s guess.
This concludes this issue of the Weekly Health Insurance News Roundup. I hope you have found it informative, and until next time, have a happy and healthy day.
Are you between jobs and are worried about medical insurance? Have your health benefits been lessened? If you answered, “yes” to any of these, you may be in need of short term medical insurance plans. Well, we’re here to help. In this article, we will teach you how to find short term medical insurance plans and quotes online. We’ll teach you everything that you need to know so that you can get insured quickly without breaking your pocket book. After all, medical insurance is extremely important. Let’s get started.
Decide what you need ahead of time. Are you interested more interested in the length of the term or in the price? Do you only need short term medical insurance plan coverage for a short time? Your situation may be different if you are self-employed versus working for an employer. Either way, ask yourself what the most important parts of the plan should be BEFORE you start looking for a suitable company. This way you won’t waste a lot of time when searching.
Take your time researching insurance plans. Finding the best short term medical insurance will take a bit of work but if you’re diligent with your efforts, you can find a great medical insurance plan that meets your individualized needs. The absolute best way to find a plan, is to ask friends and family members for referrals. You can also ask your existing insurance provider for assistance or a referral to a suitable company. Most times, you will find a reputable company by following this route. If you are unsuccessful in your efforts, you can also go online to find great quotes and find a company that is excited about conducting business with you.
Go online. When you’re online, do a search for short term insurance quotes with one of the major search engines. In most instances you will find a plethora of sites that offer free quotes. Visit ones that look promising. Evaluate their overall look and feel of their site, their company profiles, and offers for free quotes. This will give you a general feel for their insurance offerings and professionalism. Complete the short application forms to get a detailed quote and don’t be afraid to inquire about their price structure and coverage benefits. Short list those companies that you are most interested in. Then, check forums and even the Better Business Bureau at bbb.org to make sure that no complaints have been filed against them.
Do a comparison of benefits. Not all insurance plans are alike. Therefore, you’ll need to do a side-by-side comparison of the benefits and terms of the short term medical plan which will inevitably save you a lot of headaches down the road. Be careful not to make your decision solely on price. You may decide to go with the lowest cost option but it may not be the best option for you and your situation.
Contact any proposed companies to see how their customer service responds. Do they have online representatives available ready to assist? Is there a live phone number you can call if you have a problem? Are they responsive, friendly, and ready to help? What hours are they available should you need to reach them online or by phone?
Complete the application process. Once you do this, you’ll be able to choose a suitable company, fill out the formal paperwork and get covered. However, just make sure that you read and understand any agreements before you sign up and submit your first premium. By doing this, you will choose the best company for your individualized needs. Good luck!
