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HEALTH PLANS/POLICY: Individual health insurance — going cheap!

Two people have mentioned this report from eHealthinsurance.com, so I thought I’d better address it. The first is from "friend of THCB" Brian Klepper at the Center for Practical Health Reform. He writes:

Here’s a report, issued a couple days ago, that is a striking example of the power of transparency information, applied to current individual health insurance pricing. eHealthInsurance.com ran a study to determine the lowest quotes available to non-smoking 30 year olds who purchased a $1,000 max deductible, 20% co-insurance, $3,286 out-of-pocket max plan.

They did this around the country, and then selected the lowest premium available for this profile in each location. Long Beach, CA had the lowest monthly premiums, coming in at $54. The lowest 10 cities – 7 are in California, 2 are in Arizona and 1 is in Ohio – all come in at less than $59. Pricing goes up from there: My hometown of Jacksonville, FL is 29th at $89.03. Las Vegas is 34th at 113.38. Dallas, Miami, Boston and NYC are 47-50, at $146.42, $151.20, $267.57, and $334.09 respectively. (The authors note that Boston and New York are subject to state-mandated guarantee issue and community rating). Still, the Long Beach premium is 61% of Jacksonville’s, 37% of Dallas’, 36% of Miami’s, 20% of Boston’s and 16% of NYC’s.

It is difficult to believe that even the combined differences in care and regulatory costs can account for such huge disparities. This type of information is a starting point for inquiry and action by industry leaders, regulators, and legislators. Congratulations to eHealthInsurance for publishing this revealing look at the industry.

The other post about the study is from a new heath care blogger (but a regular blogger on other subjects), Elisa Camahort, how is getting sponsored to blog about health care from the consumer’s view point, by eHealthinsurance.com. The blog is called Healthyconcerns and  has some discussion of the same study.  Elisa figured out that she could have saved a little if she’d used her sponsor’s service.

Interestingly Elisa’s Pilates teacher who was unable to get coverage because of a pre-existing condition, managed to sneak in the backdoor into insurance coverage by using short term coverage….that’s not a real solution. First it deliberately excludes people with virtually any major disease, then it runs out after a year or six months and can’t be renewed with that company.  You can usually renew it with another company, but over time you’ll run out of insurers.  Finally, you’ll want to get onto more stable long term insurance. 

I tired to do that via eHealthinsurance and my $70 quote became a $400 quote for the same coverage once they found that I’d had a prior knee surgery. So then I retreated to yet another short term insurance plan.  I presume that I could have kept playing that game for a while, but in the end I opted for a $200 a month premium for the same coverage via a small business coalition in California called PacAdvantage.  It’s not exactly a great rate, as everyone who can do better in the individual market is already in it, leaving a bunch of sickies in the pool, but I kid myself it’s better than the uncertainty of a short term policy.  And of course if the short-term guys figure out that sick people are using them to get access to insurance, they’ll extend those "excluded" groups to include more categories of potentially sick people.

Brian is right, though.  It’s good to have some transparency in pricing (although attempts to do that at the provider level are failing).  But the issue remains that in insurance we’re not really discussing apples to apples. And if you look at real health care premiums in different places, including underwriting averages et al, then they don’t match the vast discrepancies seen in this study — even though they are vastly different because of the difference in underlying health care costs, which are explained by Wennberg, not eHealthinsurance.

And  the idea behind these cheap health insurance products, promoted first by Blue Cross in California in the late 1990s, is theoretically to get more uninsured people into insurance.  But of course while we want to get them into the risk pool, these products are not going to remain viable if they let sick people buy them.  So that’s why they’re underwritten to death and why they’re not a solution to uninsurance. And of course you only really need health insurance if you’re sick. It’s the same old story of the bank only lending you the money if you can afford to pay them back — and then why would you want to borrow the money.

….and don’t start me on the impact of high deductible health plans on the community risk pool.

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Ray StricklandStephen BranchBlue Cross of CaliforniaCalifornia Health InsuranceRichard Ferri Recent comment authors
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Ray Strickland
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Visit http://www.benefit-advisors.com to learn more about florida health insurance and health insurance jacksonville. Also visit http://www.healthinsurancejacksonville.com for local information. We can help you if you have needs within Florida.

Stephen Branch
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Stephen Branch

I was just turned down for a PPO from Healthnet because I could not show a year of controlled high blood pressure records from my doctor. My doctor’s records were seized and I have been going to various clinics to obtain my Tenormin. My blood pressure is a little on the higher end when I go to these clinics so it looks like I am a bad reisk. I have proof of 10+ years of taking the same medicine for blood pressure control, so wouldn’t that seem to be worth something? I do not know where to turn for reasonable… Read more »

Blue Cross of California
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Its excellent to hear individuals health insurance prices are going down.

California Health Insurance
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Individual health insurance is great. It can be a major aspect to many lives.

Bob
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Bob

Sue – The health plan you have may be quite different from what is promoted on the AARP site. The plan there is a United Healthcare plan and is not a true group plan. The benefits are modest and rates are middle of the road, depending on which risk class is assigned. Underwriting is apparently modified but I am unable to get full details on their criteria. It appears the plan is HIPAA compliant and as such they are in a position to accept someone with creditable coverage and waive the pre-ex. They have 3 rating levels and your health… Read more »

Sue
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Sue

Bob, I appreciate your comments but do question them. First, the initial agent I used actually specialized in health insurance. I was a corporate officer of a $200 million publicly-traded electronics manufacturer and his firm was handling our group health insurance. He had sold me additional life insurance because his firm also handled life. When I decided to start my own small business I went back to his firm as a starting point in exploring health insurance options. We looked at several plans and selected the individual plan he felt was most responsive. Based their underwriting practices, I elected to… Read more »

Bob
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Bob

Sue – The AARP plan is not a true group plan but an association endorsed individual health plan. That’s not necessarily a bad thing, just different from true group. AARP as a general rule does endorse some decent plans but you can usually do better elsewhere. A life insurance agent who “dabbles” in health insurance is almost as dangerous as one who is brand new in the business. Life underwriting is as different from health underwriting as night & day. As an example, you can live with diabetes for a very long time if you take care of yourself. Some… Read more »

Sue
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Sue

Bob, I ended up with AARP and United Healthcare. It’s a fair policy and appears to be Group. AARP is one association that takes care of its own. I agree there are a lot of really questionable ones out there. I just got out of one that was ugly. Unfortunately, my original insurance agent was very little help. He had done my life insurance underwriting a few years before and really thought I be a breeze to insure–the life insurance policy had included a full physical/blood panel etc. that placed me in their lowest risk category. His individual health insurance… Read more »

gadfly
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gadfly

//Note to gadfly. Those who consider others to be untruthful probably feel that way because they themselves are not to be trusted.// Old wives’ tale, debunked by the Scientific American article. According to the article, the best liars have a strong capacity for self-deception. This has nothing to do with their ability to evaluate whether others are telling the truth or not. In terms of evaluating, the article seems to suggest that most people share the same flaw (whether they themselves have the “capacity for self-deception” or not): they associate confidence with honesty and vacillation or uncertainty with dishonesty. I… Read more »

gadfly
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gadfly

//I can tell you a consumer who is trying to find coverage, and get their claims paid without the assistance of a professional agent is probably throwing their money (and time) away.//
Now even more depressed about humanity. 🙁

Bob
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Bob

Sue – My apology for lumping your condition in with your neighbor. I should have made the distinction clear in my post. Your mention of “association-provided group insurers” gives me pause. Most association coverage is not true group insurance but rather individual policies that have been sanctioned by the association. As such, it is unlikely you have the protection associated with a true group plan. One marketer in particular takes great liberty in describing their coverage for the self employed. They talk about protecting their clients against being singled out for rate increase or cancellation. Fact is, most states prohibit… Read more »

Sue
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Sue

Bob, First don’t confuse me with my neighbor. She’s the one with the kid with asthma and the flaky agent. She was touting that policy when I was shopping health insurance last month, and the reason I went with a different option was exactly in line with what you’ve said. I can’t believe that her claims will get paid and my guess is that her agent’s practices will result in a greater number of his insured’s claims being questioned. I’m the person who is getting hit with a 25% premium increase because I’ve disclosed a heretitary hiatal hernia. Because I’ve… Read more »

gadfly
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gadfly

//been truthful and paid through the nose for it// Exactly. So have I in many ways. I find this so depressing. What I found interesting about the Scientific American article is that it pointed out that ironically more truthful people are perceived as less truthful because they get jittery if their conscience tells them they are approaching a lie. What this means is that because they are unsuccessful, the more truthful people are stigmatized as having something “wrong” with them. I actually wrote the author of the article about this. I hope he explores that particular aspect further. The insurance… Read more »

Bob
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Bob

Sue – Getting a “great” rate and nominal underwriting intrusion is fairly easy. Getting your claims paid is another issue entirely. If you want a plan that is perceived to be a “deal”, then lie. If you want you claims paid then you better come clean. My clients get their claims paid and they like it that way. As for those agents who encourage lying on the application to make the sale, well nothing more needs to be said about their character. Each carrier words their application in such a way as to dovetail into the policy that will eventually… Read more »

Sue
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Sue

//My clients know if they lie on the application chances are pretty good they will be found out and the outcome will not be pretty.// Interestingly enough my neighbor’s insurance agent was the one who suggested that she could fail to indicate her child’s asthma because she wasn’t regularly needing an inhaler. My insurance agents have typically taken your approach which is to recommend full disclosure. The end result for me has been higher premiums and aggressive underwriting, even though my hiatal hernia requires no treatment. The folks I see who are less truthful are getting great rates and if… Read more »