HEALTH PLANS/POLICY/POLITICS: Geography-lock–Why can’t you move individual insurance to another state?

This is how the cause of universal health care wins the hearts and minds….damn slowly and one by one. So I get an email exactly like this:

This is not something I have seen addressed anywhere and it pertains to the plight of the individual insurance plan holder. I have been enrolled in the same medical plan through a high profile insurance company since 1989. About 15 years ago I added my husband and later a child. Our premiums are larger than many people’s mortgage payments and we have $2500 deductibles and a host of out of pocket costs. We nonetheless are grateful to have insurance.

However, I naively thought that our coverage was nationwide…In fact, my original policy made repeated reference to the fact that our coverage was good in “50 states.” We relocated to another state a couple of years ago. We could not get new coverage without re-application and underwriting. However my husband was (successfully/surgically) treated for localized prostate cancer in recent memory and has moderate hypertension. It appears that this alone would cause us to be denied coverage and force him at least into a high risk pool and none exists in the state we moved to. So we were forced to return to the state where we have health coverage…

Why is it that HIPAA or coverage portability is limited to people in group plans? This seems so patently discriminatory to me. I have paid over $100,000 in health premiums alone with no interruption of coverage for 17 years as a self employed individual. And I have received NO tax credits for same. I am not able to change my location and improve our quality of life and am feeling increasingly desperate about the increases in our premium costs and our ability to even hold onto coverage which we have.

If you can explain this phenomenon I would be grateful. But more importantly, is there any medical watchdog group available to lobby on behalf of the individual? Would anything be served by a lawsuit? I have no confidence in legislators.

So I reply

The problem with the “coverage in 50 states” thing is that it’s OK for your state-based insurance company (and they all are as they’re state regulated) to cover you if you travel outside their state. But they are restricted from offering the insurance of one state to someone in another.  This is actually what the whole AHP argument is about, otherwise states which impose certain regulations on their carriers (e.g. New York) would find that a plan setting up in Guam or Montana or wherever) could offer much cheaper insurance in New York by using Guam’s rules. Of course when you move from one state to another you are switching insurance companies even if the corporate parent of that company is the same. And of course they will take that chance to underwrite you.

The only way around this for an individual is never to move (as you are finding out) or get an employer who’ll cover you in their group, or (most appropriately) to campaign for universal health insurance.

And my correspondent retorts

Honestly though, what can be the justification for ensuring that group policies are portable, yet individual policies are not? I am not sure what the parallels are in other avenues of industry, but if we can deregulate banks, why not insurance companies? Or perhaps it is another issue… This is evocative of a monopoly, replete with price fixing, bad faith, and discriminatory practices. I have no protection nor am I treated equally under the law–other than the fact that the insurance company cannot cancel me as long as I pay my premiums (and reside in the service area).

My premiums are basically whatever they say they are.  I know that individual policies are a fraction of their business but I am paying top dollar for the privilege. If I have uninterrupted service I don’t feel I should be treated as a different class by HIPAA.

We are healthy people for the most part who eat well, don’t drink or smoke. But hey, we are older, and between the Scylla and Charibdys of private insurance and Medicare. In the 10-15 years we have prior to Medicare eligibility we will spend a couple hundred thousand *more* dollars, and having done the math on what we have cost the insurer to date, we have more than self funded our own medical care. They have easily captured more than 75% of what we have spent.

They use age banding, tiering, and geographical/demographic data and god knows what else to determine the cost of the premiums, so I know they are not doing this for free…

When I pay my taxes I pay the employee and employer side. I don’t object to paying taxes or medical premiums actually. I know that medical costs are through the roof and that individuals and employees in group plans have to shoulder more of the burden. But again, this means we should receive equal treatment. Anyway, I would be more than willing to be the poster child for changing this process. But I think it has to happen through the courts. Is there any move afoot in Congress to level the playing field?

So I pull out the nuclear arsenal and start explaining the ERISA launch code sequence

The problem is that self-insured group plans are regulated by a Federal law (called ERISA) while individual plans are regulated by individual state laws. It makes no sense. Welcome to America.

Incidentally, group plans are no bargains either…but in terms of geographic coverage so long as the corporation can stay self insured, they avoid having to obey state mandates and therefore can offer similar benefits across the country. Because you are not a beneficiary of a corporation, you are subject to the individual law of each state and hence are starting afresh after a move.

I’m not sure what a court could do. ERISA has been to the Supreme Court and won. If Congress passes the AHP law it would allow an insurer to  offer insurance in a different state, but no one’s going to offer cheaper insurance to your family because they will underwrite you because of your husbands condition. The only solution is for a universal insurance nationwide risk pool–that’s what Medicare is. And that needs a political solution

And in the end we’ve at least got one more small business owner on board.

Thank you. At least I now understand the issues. I did vote for universal health insurance in the last presidential election so to speak but my guy did not win.

Now if we could only get the rest of the NFIB to see sense. But that won’t happen, so this frog will continue to boil one degree at a time.

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