HEALTH PLANS: The individual insurance market sucks; did I just catch AHIP in yet another lie?

You’re not exactly surprised are you? A Commonwealth Fund Study Says Individual Insurance Too Costly

The overwhelming majority — 89% — of working-age adults who shopped for health coverage in the individual market over the last three years were rejected for health reasons or found it too expensive <SNIP> Coverage was not affordable for 58% of the applicants, and 21% who had a medical condition were turned down, charged a higher premium or sold a policy that excluded the existing problem from coverage, the report said.

But don’t worry—that bastion of pure unadulterated research AHIP has its own study:

America’s Health Insurance Plans, an industry group, took issue with the study and its methodology — a telephone survey of more than 4,000 consumers — saying their impressions were not as reliable as the trade organization’s survey of insurance companies last year. The group also pointed out that its survey showed that 16 million people had individual health insurance and that the policies they purchased were more affordable than the Commonwealth report suggested and with richer benefits than employer-sponsored coverage.

Are they really saying that “individual health insurance policies are more affordable” AND have“richer benefits than employer-sponsored coverage.” Even on an acid trip there’s no way that Karen Ignagni and her lackeys can keep those two thoughts in their head at the same time without smoke coming out of their ears. I mean I know they’re well versed in lying but that one is about as stupid as possible. If only because by definition the distribution costs of selling individual policies massively exceed those of group policies. If they’re “more affordable,” it’s because their benefits are lower. And yes the benefits of most individual policies are worse than those of group policies, and most of them are consequently cheaper on an absolute dollar basis. But on a “dollar per benefit” scale they cost more. . Just one tiny study from Gabel and co in 2002 proving this is here

And that’s not even counting the fact that insurers underwrite the crap out of the individual market. AHIP’s own release confirms that  “Of those applicants offered coverage in the individual market, more than three-quarters received their requested coverage at standard rates, while 22 percent were offered full coverage at higher initial premiums.  Only 1 percent of offers included a coverage exception for a specified condition.” In other words the 20% of people who were potentially sick were underwritten. Duh! (And of course they don’t count people who were completely rejected, so their not bothering with the relevant denominator).

But back to the LA Times article. Please, please tell me AHIP’s being misquoted (and to be fair their own press release doesn’t quite say what the Post says they say), and that they meant “or” not “and”? Well let’s see—in a riposte to the paper I linked to in the previous paragraph which suggested that the individual market was poor value in Health Affairs back in 2002, this was written:

Administrative expenses are much higher for individually purchased insurance. Since each dollar of health insurance protection costs more in the individual market, it is not surprising that consumers in that market buy less of it

This is logical. It also would appear to completely agree with my point and rubbish the quote from the AHIP lackey research director in the LA Times. So who came up with this powerful and insightful analysis? It was Donald A. Young and Thomas F. Wildsmith. And who were they?

Donald Young is president and Thomas Wildsmith is a policy research actuary at the Health Insurance Association of America in Washington, D.C.

HIAA merged with GHAA to form AHIP shortly after that was published. Pity they didn’t bring their research team with them. At least they had some vague standards of honesty when they debated their corner back then.

CODA: By the way, I’m not exactly thrilled with any study done on the individual market. Even the massive RAND one in California had several flaws as I pointed out here, but no one in their right mind should trust anything AHIP says on the subject.

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16 replies »

  1. We’ve had group health insurance for the last 20+ years. In the last 4 years we’ve had to actually use it and it has been pure misery. Sure, everything is covered when you buy the policy but things change when you start using it. In-network / Out-of-Network, sheesh, seems like you don’t stand a chance. If something is out-of-network then standard/customary doesn’t apply so everyone can try and get you for everything they can. WHAT A MESS!
    Complaining hasn’t done me or anyone else I know any good in this arena so I’m proposing a public outcry. Go to my website http://www.stoprapingme.org and get involved. Send the images, I created to use on billboards and in newspapers, to everyone you can think of. (If you think I’m for real) I’m fed up but I don’t want the insurance companies to keep doing this to people.
    Contact me further with any questions.

  2. While undergoing chemotherapy for breast cancer I also acquired “chemobrain” which basically makes you feel “quite mentally challenged” esp. in the memory dept. I was certain, 150% certain that I had paid my Feb premium (knowing how important it was right at this time.) Lo and behold, nope, I forgot to pay it. I waited for my March statement only to find out I had been cancelled and guess what??? I can’t get insurance. No one will fricken cover me! I have a port in my chest that has not been maintained and I can’t even get checked to see if there is a recurrence even tho the cancer was invasive!! So, I figure I possibly pretty much wrote my own death sentence 🙁

  3. One thing I’d like to know is how much of the increase in health care insurance is due to offsetting losses in other claims (like 9-11, Katrina, etc).
    Any ideas?

  4. Alex– you are frankly being dumb. I have said many times that it’s a paraphrase and therefore they may be “misquoted”. As good reporters check their exact quotes and Girion is good.
    However, as paraphrased the paragraph reads thus:
    The group also pointed out that its survey showed that 16 million people had individual health insurance and that the policies they purchased were more affordable than the Commonwealth report suggested and with richer benefits than employer-sponsored coverage.
    The important part for your remedial comprehension is that the phrases “more affordable” AND “richer benefits” are combined by the “and” and both refer to “the policies they purchased” in which the word “they” refers to the “16 million people had individual health insurance”.
    There is no “or” in that sentence. You are wrong. Be a grown up and admit it.
    This does not resolve the point about whether the AHIP guy actually said that or not or whether he meant “or”.

  5. I read the paragraph, it isn’t a quote and you’re stil wrong. You have a reading comprehension problem.

  6. alex….your point would be true if the word used was “or” but the word used was “and”. Go back and read the quote. It clearly connects the two ‘facts’ and does NOT set them up as alternatives.

  7. I understand the construction of the sentence. Your argument was that AHIP claimed individual insurance was both more generous and more affordable. But they never said that. AHIP claimed individual policies were a) more affordable that the study suggested and b) that policies can be purchased that have benefits that exceed those of employer-based coverage (which is demonstrably true).

  8. Don. It would be better if everyone was in one big risk pool. Period/Full stop.
    How we arrange the financing and delivery of care is a secondary question. Our current “insurance” system adds no value to anyone apart from insurance company stockholders and executives, and the few good things that insurers do could continue under a different system.

  9. Matt,
    So 16 million are covered by individual health insurance. That’s a bad thing? Wouldn’t it be a lot better if everyone were covered by community rated individual health insurance? Wouldn’t it be better if every company were required to have one national or state or regional risk pool for all individuals who bought individual policies?
    Is there a study of the individual market that you can recommend?

  10. Like I really want fake Health Insurance sold by an MLM. I am not stupid enought to go from a bad HMO to a worse Discount Card. I need Health Insurance, not Diners Club!!

  11. Hi Mr. Watson,
    Just to clear something up regarding your post, ERISA does not apply in my case. Individual Plans are not subject to ERISA, only employee benefit plans fall under ERISA.
    Upon further inspection of the Medicare letter, did Pacificare erroniously put me in their system to bill under Medicare?
    The letter says the following:
    Important Notice to Medicare Eligible’s About Your Previous Prescription Drug Coverage
    “The amount Pacificare expects to pay on average for prescription drugs for individuals covered by the above referenced plan in 2006 is less than what standard Medicare prescription drug coverage would be expected to pay on average. This is important because this means that if you enroll in a Medicare Part D Plan and you have not had Creditable prescription drug coverage you may incur a Part D late enrollment premium penalty equivalent to 1 percent per month for each month you were not enrolled in Medicare Part D or did not have Creditable prescription drug coverage.

  12. No, Alex that’s NOT what it says. The auote may be wrong but the “in the CMWF study” refer to the “more affordable” not to the following phrase about “richer benefits”.
    I am due to hear back from the reporter, but as written, the quote is a straight lie……and given AHIP’s track record…….

  13. The last comment about the conduct of the insurance company of the lady with the kidney tumor is just one more example of the way that insurance companies save money at the expense of the healthcare consumer and get away with it. Making a claim against an HMO is a worthless endeavor, as a result of the Supreme Court’s decision that HMO’s are protected by the ERISA laws. Another one of the insurance companies successes from their propaganda machine and lobbying prowess that has succeeded in buying off the majority of Congress. If we do not put a stop to it, they will soon pass legislation in Congress that will mirror that of the state of Texas, where I formerly practiced law. There, if you are rendered brain-damaged or paralyzed by medical error, you will be lucky, even if you can prove it, to recover for yourself $75,000 in compensation for your life of pain and disability. That is what they have tried seven times in the last four years, and have vowed to keep on trying. Michael Townes Watson, author of America’s Tunnel Vision–How Insurance Companies’ Propaganda Is Corrupting Medicine and Law. http://www.StopMedicalError.com.

  14. They forgot to take into account Post-Claim Underwriting that takes place on individual policies as soon as the individual makes a claim!!
    I am in my early thirties and had no symptoms of any health problems. I had a full body scan because my father was having one and wouldn’t do it unless I did it with him. He was fine, but I had a tumor in my kidney that turned out to be cancer.
    I had surgery to remove the tumor but the doctor left positive margins. His follow up plan was to have a scan in three months to see if the cancer came back. I later found out through an email list for kidney cancer patients that this was not right and asked to see my Pathology report. What I found was that not only did I have positive margins, but I also had a very aggressive form of kidney cancer. When I called the Cancer Society, the nurse told me to have my kidney removed right away.
    At this point, I lost all faith in my care and flew out of state to a hospital that specialized in kidney cancer surgery. My HMO, Pacificare waited until the day before the surgery to deny coverage for this second surgery even though my request asked for a decision no later than 72 hours from the date of the request. When I got home, I received a cancellation notice saying that I lied on my application and my policy was cancelled. They claim I knew I had kidney problems when I signed up for the insurance which is absolutely false.
    A few days later, I received a HIPPA Certificate that showed that I had coverage for about 8 months with them. How this was going to help, I have no idea. Then at the end of the month, my premium bill arrived as usual, so I sent in a check which they cashed right away. Today, they sent me information regarding Medicare Part D coverage for medication even though they should know that I am over 30 years away for being eligable for Medicare.
    My lawyer finds their behavior wonderful for my case, but I find it absolutely disgusting. Not only do I have to fight cancer, but I also have to fight my HMO who I believe tried to kill me to avoid the expense for another surgery.

  15. Matthew: “Are they really saying that “individual health insurance policies are more affordable” AND have“richer benefits than employer-sponsored coverage.”
    AHIP: “The group also pointed out that its survey showed that 16 million people had individual health insurance and that the policies they purchased were more affordable than the Commonwealth report suggested and with richer benefits than employer-sponsored coverage.”
    Me: No, they are saying that it is more affordable than the Commonwealth study indicated, you have to read the whole sentence. Otherwise I could say that Matthew Holt said “Even on an acid trip…I know…individual policies….are more affordable…and have richer benefits.”