The Failure Of The Individual Market For Health Insurance

A major reason why health care reform is needed is the failure of the free market to provide reasonably priced health care to those on the individual market. An op-ed in The New York Times describes the problems faced by one affluent family when their company was bought out and they attempted to purchase insurance on the individual market:

The truth is that individual health insurance is not easy to get.

I found this out the hard way. Six years ago, my company was acquired. Since my husband had retired a few years earlier, we found ourselves without an employer and thus without health insurance.

My husband, teenage daughter and I were all active and healthy, and I naïvely thought getting health insurance would be simple.

Why did we even need insurance? First, we wanted to know that, if we had a medical catastrophe, we would not exhaust our savings. Second, uninsured patients are billed more than the rates that insurers negotiate with doctors and hospitals, and we wanted to pay those lower rates. The difference is significant: my recent M.R.I. cost $1,300 at the “retail” rate, while the rate negotiated by the insurance company was $700.

An insurance broker helped me sort through the options. I settled on a high-deductible plan, and filled out the long application. I diligently listed the various minor complaints for which we had been seen over the years, knowing that these might turn up later and be a basis for revoking coverage if they were not disclosed.

Then the first letter arrived — denied. It never occurred to me that we would be denied! Yes, we had listed a bunch of minor ailments, but nothing serious. No cancer, no chronic diseases like asthma or diabetes, no hospital stays.

Why were we denied? What were these pre-existing conditions that put us into high-risk categories? For me, it was a corn on my toe for which my podiatrist had recommended an in-office procedure. My daughter was denied because she takes regular medication for a common teenage issue. My husband was denied because his ophthalmologist had identified a slow-growing cataract. Basically, if there is any possible procedure in your future, insurers will deny you.

The broker then proposed that the three of us make individual applications. Perhaps one or two of us might be accepted, rather than the family as a group.

As I filled out more applications, I discovered a critical error in my strategy. The first question was “Have you ever been denied health insurance”? Now my answer was yes, giving the new companies reason to be wary of my application. I learned too late that the best tactic is to apply simultaneously to as many companies as possible, so that you don’t have to admit to a denial.

When faced with situations such as this, many go without insurance while others wind up with expensive, high deductible policies which often provide limited coverage. While one of the more worst examples, earlier this month I had a patient come in with a newly purchased health insurance policy which had an annual limit of $150 in coverage. Health care reform is not a “government take-over of health care” as conservatives claim. It is a reasonable act of government stepping into an area to provide necessary regulation when the market has failed.

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1 Comment

  1. 1
    Mugwumpie says:

    RT @RonChusid: The Failure Of The Individual Market For Health Insurance #p2 #p21 #hcr #topprog http://bit.ly/gQef0P

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