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HEALTH PLANS: More on buying individual health insurance, update on the Blue Cross cancellations

This is turning into pretty serious doodoo for Wellpoint.

Yesterday, WellPoint’s Blue Cross of California and its subsidiary BC Life & Health were sued for canceling policies retroactively. Of course the only policies they’ve been canceling were ones that they had to pay out on. Now health plans are in a bind in the individual market. Because we don’t have a universal risk pool, they are bound to be adversely selected against. (I explain why in my  Yin and the Yang article over at Spot-on)

But speaking as someone who just went through the rigmarole of filling in lots of application forms to get my own individual insurance, it’s clearly impossible to put your whole medical history on the form. The whole process, as I described a while back, is a complete disaster. In my case, having filled in exactly the same information on several places on the same identical (but separate) forms for both HealthNet and Blue Shield of California, they both wanted "more information". HealthNet sent me yet another form asking for exactly the same information as they’d asked for on the previous form. I put it on there and sent it back with a strong note telling them that they already had that information and that this was a waste of money. The good news is that they approved me at the underwritten rate (despite my gout and knee surgery history!).

Blue Shield instead wanted to go to the source. They wanted permission to get medical records from a doctor I’d seen last 18 months ago. I gave it to them, or rather to a unit they had subcontracted to. Apparently they have asked twice and haven’t got them yet. All that doctor did was write me a Rx for the gout medication which I declared on the form. The real joke is that Blue Shield was my insurer then and therefore already has this information in its own system somewhere, plus I put it in the application form. I haven’t seen that doctor since–for all he knows I could have terminal cancer.

The suits also accuse Blue Cross of using a vague, confusing and
ambiguous medical history questionnaire in an effort to trick
applicants into making mistakes that the company can use later to dump
them.

Too bloody right! The application process is so screwed up that there is no way that either the insurer won’t miss things, nor that someone who has a lifetime of medical records scattered all over the place won’t innocently miss something either. And you can be damn sure that the attorneys will find the best looking cases. And so they have. Pregnancy as a pre-existing condition? Oops.

Blue Cross also allegedly canceled coverage for
Laura Khatchikian of Los Angeles when she became pregnant with twins —
more than a year after she began paying monthly premiums.According to the suits,
each patient filled out the application honestly, was accepted for
coverage and paid premiums for months before being diagnosed with a
serious condition of which the patient was previously unaware. Yenny Shu of Los Angeles, for instance, says her coverage was canceled
after she was diagnosed with breast cancer at 46. In its letter
rescinding her coverage, Blue Cross allegedly told her that she failed
to disclose her exposure to the hepatitis B virus when she was a child.Other patients say they had, in fact, disclosed the information Blue Cross accused them of omitting. Dawn
Foiles of Riverside, for instance, says Blue Cross dropped her after
she had back surgery to replace a disc. Blue Cross, according to the
suit, rescinded her coverage because she purportedly failed to disclose
a history of back problems and previous surgery. But Foiles said she had listed a 1997 herniated disc operation on the insurance application in 2003.

The suits accuse Blue Cross of operating a "retroactive review
department" that systematically cancels policies that result in large
claims. It also claims that that Blue Cross looks for innocent
misstatements on applications to use as pretext to cancel coverage.

Now the state regulators are getting in the game, and by the way, it’s now a nasty big out of state insurance company that they get to have a go at!  California state insurance commissioner John Garamendi, who regulates BC Life & Health, and the Department of Managed Health Care, which regulates Blue Cross, are involved in the investigation. Garamendi, who has a history of handing out large fines, said "If we see a pattern with Blue Cross Life & Health, they are in deep trouble."

Of course given the popularity of health insurers, if it’s shown that they actually have a unit dedicated to retrospective policy cancellation, as the plaintiffs allege, Blue Cross can’t be looking forward to a jury trial either.

After all, once the jury understands the concept of a medical loss ratio, and how the insurers have been keeping a bigger and bigger percentage of the ever increasing premium dollar over the last five years–something that even I hadn’t noticed until Jonathan Cohn pointed it out to me recently–this could get really ugly. There’s plenty of evidence of very aggressive underwriting behavior by the biggest players, and Blue Cross has a history of being uglier than most. Plus Len Schaeffer came right out and explained that pricing and underwriting is how they make their money and the most important part of their operation. If I was the plaintiff attorney I’d be salivating for the chance to read that section of the McKinsey interview to the jury.

Something tells me that Wellpoint and the rest of the insurance industry should figure out where this can end up, and that they’d better get back on board with a policy initiative that gives them a role in the future. Remember the Clinton plan? After all Schaeffer, Glasscock, Rowe, McGuire and the rest of them have made their money (and plenty of it), but the next generation of execs and employees of these big insurers might well want to have a future. And this kind of story pours lots of flame on the single payer fire. The odds that there will be no insurance industry in 10 years time just got shorter.

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forex trading
Guest

It’s indeed a wonderful post showcasing the real face of health insurance companies in the market.

health insurance quotes
Guest

It’s sad what these health insurance companies did. These examples are what give the whole industry a bad wrap. I’m very please with the outcome and hopefully all insurance companies use these incidents as examples.

Blue
Guest

I can relate to this situation with the underwriting; it can be a very frustrating process. Sometimes well over a month!

Bob Mizell
Guest
Bob Mizell

UNICARE is threatening to rescind my individual insurance policy retroactively unless I accespt an exclusion waiver.
I had knee surgery in January due to mishap on tennis court.
1. They said I had a preexisting condition, and they said so based on doc’s note, which they did NOT have yet.
2. They ignored Creditable Coverage certificate
3. They did not reply to my written request asking what was preexisting, and when such condition occurred.
4. They claim they did not get doctor’s letter/medical opinions
5. They now say the fax # to fax info to “is an old fax #”.

Bob Mizell
Guest
Bob Mizell

UNICARE is threatening to rescind my individual insurance policy retroactively unless I accespt an exclusion waiver.
I had knee surgery in January due to mishap on tennis court.
1. They said I had a preexisting condition, and they said so based on doc’s note, which they did NOT have yet.
2. They ignored Creditable Coverage certificate
3. They did not reply to my written request asking what was preexisting, and when such condition occurred.
4. They claim they did not get doctor’s letter/medical opinions
5. They now say the fax # to fax info to “is an old fax #”.

Bob Mizell
Guest
Bob Mizell

UNICARE is threatening to rescind my individual insurance policy retroactively unless I accespt an exclusion waiver.
I had knee surgery in January due to mishap on tennis court.
1. They said I had a preexisting condition, and they said so based on doc’s note, which they did NOT have yet.
2. They ignored Creditable Coverage certificate
3. They did not reply to my written request asking what was preexisting, and when such condition occurred.
4. They claim they did not get doctor’s letter/medical opinions
5. They now say the fax # to fax info to “is an old fax #”.

Life insurance in Canada
Guest

To Susan: It´s really un unfair practice. The insurance companies are making their profits and don´t care about people. I´m not friend of government intervention into healthcare, but some regulation is here really needed. I have friends in Europe and they haven´t such problems with insurances, I would say the healtcare system is generally better than here.

Susan Easinsky
Guest
Susan Easinsky

I am currently issured by Unicare. since 05-01-006. Two months ago I received a letter stating theyh were to drop my insurance due to the fact that on Feb 21, 2006 I had an abmnoral pap smear of undetermined significance. I have had further pap smears that are now normal. This is unfair to all health insurers customers. I asked their underwriters if I had a bad mamogram would they then also drop me claims. She said that they would ask me to sign a wavier excluding me from claims made resulting in this mamagram. I then asked if my… Read more »

MANNY SERGE
Guest
MANNY SERGE

United providers can take back healthcare. Stop letting health insurance companies tell you how to practice medicine and make more profits than you. Join my commitee to unite all providers so providers can call the shots. A united provider commitee can take back healthcare by telling health insurance companies that if you tell providers how to practice and if you do not pay providers what they deserve then all providers will drop your health insurance company. This can only happen as one voice. Contact me at mannyserge@aol.com so we can start this movement.

HealthInsuranceShopper.com
Guest

I’d be the last person to advocate government intervention into healthcare, however, with the cost escalation and increased utilization and aging population, the affordability of health insurance nationally is ata crisis level and has been for years.
Health Savings Accounts are a growing way to mitigate high premiums by placing more of the onous of utilization and costs into the hands of the consumer.
If you live in Caliofnria and would like to examine your options, please vityi my web site http://www.HealthInsuranceShopper.com for instant Caliofnria Health insurance Quotes.
You may email or call if I can be of any assistance.

superinsurancesite
Guest

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Terence
Guest
Terence

BC Life & Health had a Market Conduct Examination performed in Spring of 2006.
June 21, 2007, BC Life & Health responded to the findings of the examination.
http://www20.insurance.ca.gov/cyberdocs/cyberdocs.asp?loginmsg=You+must+log+on+before+requested+page+can+be+shown%2C+please+log+on&user=
Click Guest search BC

Scott
Guest

Great Article, Very Interesting.
http://www.risksense101.com

Steve
Guest
Steve

No the highest cost for health care is in a suburb of Boston the second highest is Spokane WA of all places. Out of the top ten most expensive places to get health care California wasn’t on the list once.

Mary
Guest
Mary

The purpose of HIPPA was to fool the public into thinking that the law was intended for the privacy of your medical records, while in actuality, it allowed the US and even foreign governments to look into your records for any reason. Any health insurance company, even if you pay for the doctor or hospital visit yourself, is allowed to access all of your medical records. If you actually read the law and all the exemptions to privacy rights, you can see that the only people who are restricted from seeing your medical records are your spouse and your next-door… Read more »