POLICY/HEALTH PLANS: The perils of the individual health insurance market…revisited

So last week arrived with bad news. For the last year and a half I have bought my health insurance from Blue Shield of California via a group called PacAdvantage. PacAdvantage is an employer-buying coalition that had its origins back in the mid-1990s as the Cal HIPC—a forerunner of the never-were regional health alliances. Still if you are an employee of a company between 2 and 50 employees you can buy from a choice of somewhat overpriced health insurance plans from PacAdvantage.  The cost is about double what it would be buying in the individual market if you are “healthy”, but about half what it would be if you’re medically underwritten against….all for the same high-deductible plan of course.

How can I as a solo operator buy into this? Well I’m a member of an association called the SF Media Alliance which as one of its side benefits allows you to buy in.  Well those of you who’ve been following at home know where this is going. All the people who buy in are of course those who can’t get it in the individual market at the “healthy” rate, so the Media Alliance as a whole is likely to be a bad “client” for PacAdvantage. So PacAdvantage is kicking Media Alliance out (I suspect there’s a lot of legal jumbo I don’t know about going on behind the scenes). But the basic reason is that there’s bound to be a lot of sicker than average people buying from Media Alliance even though I have filed zero claims in the past 18 months, nada.

So I started looking around to see what I could replace it with. One option is to pay into my domestic partner’s plan (and I may well end up doing that) but I’d rather just buy a cheaper high deductible plan like the one I have, as I don’t intend to use much care in the next year and will have a stack of cash in my HSA ready to cover any expenses if I do need it. (This is not an endorsement of a certain THCB commentators ideas, it’s just me responding to the atrocious incentives in the system).

So over the coming weeks I’ll document my experience here, remembering that yesterday AHIP was boasting about how wonderfully its members were making the whole process for the blighted consumer

I start with my first visit to the eHealthinsurance Blogshotsite.  You may note that they seem to have bought out all my Google Adwords (at least they own the whole box at time of writing). They of course are a broker not an insurer themselves, but as they are the leader in the online insurance broking space I assume that they’ve spent a little time talking with the insurers for which they act as a channel about how to “delight the customer”. (Snicker, snicker)

I’ve had insurance via them before, but most of my info seems to
have got trashed when I logged back on, so I first tried to figure out
if it was worth getting regular insurance — given my knee story had
made me a pre-existing condition the last time I signed up and sent my
quote for a $2000 deductible plan with Blue Shield from $70 to $400 a
month, after I was underwritten. I IM’ed with the eHealthInsurance rep
who told me to call them instead to talk to a real insurance agent.
First person to answer the phone was the guy who’d just IMed me telling
me to call. He put me onto someone else (presumably a licensed agent)
who said that the insurers look back an unlimited period of time
because they want to underwrite you, and there’s no specific cut off.
(Not many favorable hints there! I was hoing for him to tell me that
Blue Shield looked back 2 years, but Blue Cross only one, or something
to give me the impression he was on my side. Silly me!)

OK, I thought. I can buy a 12 month short-term policy like I had
previously, after all I know they just exclude really sick people not
those of us who’ve had presumably one-time surgery. Life has changed a
little since the wild days of 2003. For a start the same coverage that
was $70 a month then is closer to $120 now. That’s a little lot more
than a 10% annual increase! And after I went through spending 10
minutes filing out the form, it told me my policy was to start the next
day. Whoops, I need to change that but I couldn’t figure out how. So I
IMed with the customer service rep again. Here’s the conversation:

Rep: Welcome to eHealthInsurance’s live chat service. How can I help you today?

Matthew Holt: OK, I’m filling in the short term insurance form for
Blue Shield. it wants this to start today. I want it to start in one
month. Where do I tell it that?

Rep: Are you sure that it is a short term application?

Matthew Holt: yes.

Rep: Ok if the effective date is wrong on the short term then you
need to start a new application when you first put in your gender and
date of birth. There was an option under that to change the effective
date That is where you need to go back to and them the application will
be for the right day Then you would need to answer yes and just go on
with the application

Matthew Holt: you mean I have to start the whole thing again?

Rep: Yes if the effective date is wrong, because you cannot make
changes to the application like that on a short term application. Sorry

Matthew Holt: is that your fault or Blue Shield’s?

Rep: Blue Shield’s. It is their application

Matthew Holt: but the damn thing hasn’t left your site yet?

Rep: I know but that is just how it is done I am sorry

Matthew Holt: What happens if I just leave it and complete it the
day before I need coverage which will be after the effective date?

Rep: If there is an older effective date, the approved date will be day after submission date.

Matthew Holt: OK so rather than starting again, I should just finish and submit the day before I want it then

Rep: technically yes

Matthew Holt: It’s quite amazing to know that Blue Shield is quite
that incompetent. Are you SURE that it’s them and not you…before I
publicize this?

Rep: It is their application…. I don’t know who’s exact fault it
would be to starting a new application if the effective date is wrong.
But it is their app we just help you apply and get the application to

Can anyone spot the obvious customer service problem here?  Answers
on a postcard please. Meanwhile, I’m not much closer to figuring out
what I should do, but I know that the easiest thing for me with
eHealthinsurance is to leave it to the last minute.

Check in next time in the ongoing saga of whether Matthew will ever
get his health insurance, and the strange tale of which drugs may make
you uninsurable….

Categories: Uncategorized

Tagged as: ,

21 replies »

  1. I don’t want to get into another long debate over HSAs (I missed the last one). But essentially, my concern is the following:
    1) First and foremost, they fail to resolve the underlying problem with health care namely, medical trend as a multiple of inflation. There may be a one-time pick-up in savings but increases will mirror non-CDHP plans. Nice addition but they do not change anything.
    2) They fail to adequately resolve the issue of the uninsured and underinsureds. Most people in these situations have limited income and therefore tax savings don’t really mean a whole bunch to them. Also, the affected population are generally not savers hence the concept of putting money away into an account (and foregoing instant gratification) is a stretch. When you add up the funding and the insurance component the price may still be unaffordable to many who can’t afford it today.
    3) The concept of saving and rollovers is great but “life happens”. You can end up needing surgery unexpectedly and then a few weeks later your wife needs to go to the ER (not to mention the kids). There are multiple opportunities to blow thru the funds. I know you are protected through max OOP, but at that point you basically are paying the same under traditional medical plans.
    4) These plans can be abused by employers. There is no requirement that HDHP to combined with a funding mechanism. And even if they are, there is requirement that an employer pay for any of it. Thereby, reducing their benefit. Not all HSA’s have 100% coverage after the ded. And personally, I think those 100% coverage plans are underpriced and within 1-2 years you will see those plans eliminated or priced out of the market.
    5) The funding account becomes a pot of gold for providers. The allowed medical use definition for tax-free access to these funds is broad. I can see plastic surgeons convincing people to tap into their accounts for all sorts of things that normally would be covered under their medical plan. Then when “life happens” where does the money to pay the deductible come from? Sure we can fault the patient for unwise financial decisions, but how does that help them pay for the needed surgery?
    6) Currently, purchasing health care is not like grocery shopping. There is no pricing consistency or transperancy and CDHP plans will not improve the situation.
    In conclusion, I think they are an interesting addition to a benefit matrix. And for those who need an additional tax shelter, its great. I am not knocking the plans outright. However, I do not feel they are final solution. And I don’t believe they will make sense for everyone. In Florida, the State offered HSA to its employees for the 1st time in 2006. Less than 1% enrolled. Nationally, I have heard the average is between 4-7%. I think it works for some people and that’s great.

  2. John C, caution with the HSA huh? Is it the maximum out-of-pocket for consumers and the insurance companies paying 100%, including drugs, that’s so scary for you?
    Most people would prefer to pay their deductible with pre-tax dollars. That includes vision and dental expenses. Even single parent mothers pay FICA tax of 7.65%. There is no FICA tax on employer HSA deposits. Many single parent mothers are paying income taxes too, federal and state.
    Please explain why you have to raise the “caution flag” on HSAs. Maybe I’ll agree.

  3. I have met with ehealthinsurance staff and I believe they are OK. About as good as your average broker. I think ehealth provides a valuable tool for price comparison and for some folks it makes sense for them to buy through them. In my opinion, they are a broker like any other broker.
    The method they use for listing of plan options is no different than what a broker does sitting at a kitchen table.
    I believe the best way to purchase insurance is through a trusted honest broker(and I’m not agent). And for the most part, many agents are honest and trustworthy (inlcuding ehealth).
    Regarding HSAs, i think that as an additional tax shelter for those that need to think about those things its great. Otherwise, I think caution should be exercised.

  4. Ditto John C
    Matthew telling everyone to get “Short Term” insurance is so wrong.
    You seem to know more than me about the bid rigging ehealthinsurance. All I know is they can’t be trusted and their employees are not properly trained as is so clear with Matthew’s interactions with them.
    I don’t know why ehealthinsurace makes consumers get such crap insurance. Ehealthinsurance is just too dangerous and refuse to answer this blogs questions like they said they would months ago.

  5. I have been an undewriter for Individual & Group policies in Florida for over 10 years (and also a brief stint as an agent). Short-term policies are not the way to go unless your are highly confident about the what kind of permanent insurance you will have afterwards.
    From the insurance side, I have worked with ehealthinsurance in the past. They use a ranking of plans where a carrier can pay to move to the top of the list.
    If you are self-employed and have the income level where tax savings mean something to you, then consider an HSA.
    My 2 cents

  6. Exactly correct Josh. The internet is pretty messy and uninformative. I just tell people that your individual health insurance salespeople should have an effective date on their personal tax free HSA of 1/1/97, the first day. Any other effective date would make your agent too lethargic to even believe. That seems to work pretty good for me. What is your date Josh?
    Josh: Are you informing your group-employee-clients that they can keep their health insurance if they have a stroke and can’t work anymore? How about MS? You are right Josh. Most agents are like [[[YOU]]].

  7. Look, not all agents/brokers are like our friend Ron. And, of course, not all agents/brokers are unethical and want to take people “to the cleaners”. The individual market is a difficult one (our agency writes both group and individual), and I can’t imagine going through some internet portal to navigate the messy marketplace.

  8. We had a thread on banning Ron a while back and the overall vote seemed to be that we should let him do his loony thing. As it was I’ve limited him to 10 lines per comment. As yet I don’t have an ignore feature for individual comments.

  9. Matthew, too funny. I just got off the phone with Karen Davis, President of the Commonwealth Fund, she just informed me that she herself puts sick employees to COBRA for insurance termination. I told her she should do a “survey” and ask employees that if they became too sick to work, would they like to keep their insurance? I told her I bet over 50% would want to keep their insurance. She corrected me and said, “I would guess 100% would want to keep their insurance.” I couldn’t believe my ears, ha ha. If you would give me more than 10 lines I would tell you the rest. It’s too pathetic.

  10. I’m the only one defending individual insurance Troll. Individual insurance supporters are not banned from most online communities either, grow up. The newspapers already banned President Bush’s HSA comments this week, so be happy Troll. But, Commonwealth Fund got their “survey” of 12 HSAs printed across America today. This PROPAGANDA even has LIES in it, pathetic. The source: HealthDay, too funny. I will keep you informed of what my research uncovers, the bozos.
    Look Dr. Novack AZ “put to print” these LIES!!!!

  11. Matthew, you should really ban this Ron “the sales pitch” guy and perhaps delete his comments.
    These trolls spewing garbage diminish the experience and are off-limits in most online communities.

  12. voiceofreason, this topic is about purchasing “individual insurance” which Matthew has switched to “short term” insurance. You say I’m “just a salesman” and need to be banned, like Goebbels would in NAZI Germany. Really voiceofreason, if I’m wrong just say why instead of calling me a nut. I notice you didn’t have the courage to suggest “short term” is better than “individual medical” when people get sick. I also pointed out how the NCPA lied, that should make you happy. Your name is false advertsing on who you really are. Sometimes there are opinions that no one should hear. Matthew, anytime you need to ban me I will survive.

  13. Ron, you manage to derail comment thread after comment thread into petty bickering. I’m sure the blog equivalent of the Cato foundation would be a better home for you, wherever it is.
    Matthew, please, please ban this guy. Your comments could be so much more productive without him. He uses every comment thread to hype what he sells, which amounts to advertising. Either he’s a nut, or he’s taking you for a ride, or both. This isn’t a free speech issue, because you own this site and he’s just a salesman with too much time on his hands.

  14. Fred, if your daughter gets cancer do you want her to be covered by:
    1 – Ron’s individual health insurance where she can’t be singled out for insurance termination so she will be safe and able to fight her sickness.
    2 – Matthew’s “short term” insurance where your daughter will automatically have her insurance terminated in the middle of her cancer and then her odds of dying is increased dramatically.
    I told Pam that Matthew says he is smarter than 99.5% of American consumers and is purchasing short term insurance. Pam said, “Most Americans have more common sense than your buddy Matthew.” You are smarter than Matthew too Fred, trust me.

  15. Matthew,
    I find myself in the same boat as you. So I am very keen to see how this turns out. I have to agree with your comments. If you are ignorant then I am in trouble. I also am a little confused by Rons comments which amount to “Trust me”. Ron would you mind coming up with some objective evidence as to why Matthew is wrong?
    Fred Trotter

  16. I’m just saying that if you buy a short term plan and go skiing again and break your neck, then the short term ends again, and then you have 2 problems instead of just your bum knee now. Really Matthew, people in the know, don’t get a short term like you Matthew. You will be complaing that we don’t have Socialized Medicine even more if you get a short term and then get a brain tumor and your short term health insurance ends. This is not a complicated issue and I’m so surprised the ehealthinsurance bozo didn’t point that out to you. Come on Matthew you tight-wad. Real insurance doesn’t cost that much more than short term, grow up and quit sending goofy messages to an uninformed public.

  17. Ron. Funny that you think I am an uninformed consumer but at the same you think all consumers should buy health care on the individual market. Given that I, blowing my own trumpet just a little bit modestly, know more about health care than 99.5% of Americans, what exactly are the prospects for getting “informed” consumers into this process, and not having unethical agents and brokers (which, OF COURSE, there is no chance of you being one) take them to the cleaners? After all it happened big time in the corporate market with AIG screwing allegedly spohisticated buyers.
    Meanwhile if you recall, you can’t sell insurance in California, and you’d underwrite the crap out of anyone who needed it. So essentially you’re a waste of time…again.

  18. You can just enroll yourself Matthew, our software is better than BC of CA, figures. Here are your rates for a “short term” with our company with the San Fran Zip code, 94101, for a 42 year old bloke.
    $2,500 deductible pays to $2 million costs = $69.70/month
    But, if you get a brain tumor a short term policy is a bad idea, ha ha. It should be illgal for someone as uninformed as you to purchase insurance on themselves. I should pick for you, and you should just trust me. You’re bum knee is pre-existing and a $40,000 surgery won’t be covered, sorry. To bad I wasn’t your agent before you went skiing, you falling flat-lander.

  19. In a word Matthew, “Trust.” I have already told you how ehealthinsurance was bid-rigging. They won’t tell you the truth, like I do. 1st) lucky you’re in CA and not MI because in MI you’re bum knee would make you uninsurable, by state law. Oh sure, you can get Blue Cross that max RX is $2,500 and not HSA Qualifying, crap really, so you would be screwed. Plus, the $14 an hour phone bozo is not trained properly. So, we have an uninformed consumer (you Matthew) being hozed by an untrained CA fruitcake. A deadly mix. You need my wife Matthew, Pam. We call her Pam-Star. She wouldn’t trust you to fill out a short term app properly so she would have your preferred ED (Effective Date) and ask for your VISA and it would have been already done, you schmuck. But of course, PamStar is the smartest person on the planet on medical-underwriting and individual insurance with America’s largest insurance company with individual insurance and a tax free HSA. Yes, we are coast to coast and nobody else is even close.
    Call toll free 1-877-Save101 – Ask for PamStar (9AM – 4PM EST)
    Hear PamStar’s tax free HSA Voice: