January 2008
Arthritis and hay fever excluded
Insurers can be inconsistent. In 2001 the Kaiser Family Foundation, a nonprofit group that studies health policy, commissioned
a study that created seven hypothetical insurance customers with a range of health conditions. They were as diverse as a young
woman with seasonal hay fever requiring allergy shots and an occasional antihistamine medication, and an HIV-positive man.
The researchers asked 19 insurers in eight states to put those profiles through their real underwriting process, for a total
of 60 applications per customer.
Every insurer turned down the HIV-positive man, and all of the other “applicants” were medically underwritten at least some of the time, including the young woman with hay fever. Insurers rejected five of her applications. In 46 cases, they agreed to cover her only at a higher cost or by excluding coverage for her hay fever (or in three cases, her entire upper respiratory system).
A hypothetical 62-year-old, overweight, smoking, hypertensive retired salesman got rejected outright 33 out of the 60 times and accepted at “standard” rates only twice. The remaining offers either cost more, reduced benefits, or excluded from coverage his entire circulatory system.
Maggie Frazier, 59, of Cumming, Ga., is facing just such a problem. She has rheumatoid arthritis, but her symptoms are in remission as long as she takes a drug called Enbrel, which costs $1,731 a month. Her current $1,120-a-month plan is being dissolved because of dwindling participation. She says that she cannot secure new coverage except with an exclusion for the rheumatoid arthritis and any illness associated with it, but she also can’t afford the $2,200 monthly bill for replacement insurance plus the Enbrel. “Do I put myself in the poorhouse,” Frazier says, “or do I drop my insurance, pay for Enbrel myself, and hope nothing else happens to me for the next six years until I can go on Medicare? You see where my rock is. I’m at the hard place.”
As the Kaiser underwriting study documented, people like Frazier, with existing health problems, may be able to get insurance only if it doesn’t cover those very problems. In 37 states, insurers can exclude pre-existing conditions permanently, and most of the others permit insurers to exclude pre-existing conditions for some length of time after enrollment, typically six months to two years.
“Companies will put an exclusion on a condition for three years, but the three-year period won’t start until you stop getting treated for the condition, such as going three years without needing a prescription for allergies,” says Jay Norris, an insurance broker from Broomfield, Colo.
“In some states, you don’t even have to know you had the condition,” says Gary Claxton, director of the Health Care Marketplace Project at the Kaiser Family Foundation. “Something as simple as dizziness noted on a chart, or an innocent visit to a chiropractor, may be enough.”
Every insurer turned down the HIV-positive man, and all of the other “applicants” were medically underwritten at least some of the time, including the young woman with hay fever. Insurers rejected five of her applications. In 46 cases, they agreed to cover her only at a higher cost or by excluding coverage for her hay fever (or in three cases, her entire upper respiratory system).
A hypothetical 62-year-old, overweight, smoking, hypertensive retired salesman got rejected outright 33 out of the 60 times and accepted at “standard” rates only twice. The remaining offers either cost more, reduced benefits, or excluded from coverage his entire circulatory system.
Maggie Frazier, 59, of Cumming, Ga., is facing just such a problem. She has rheumatoid arthritis, but her symptoms are in remission as long as she takes a drug called Enbrel, which costs $1,731 a month. Her current $1,120-a-month plan is being dissolved because of dwindling participation. She says that she cannot secure new coverage except with an exclusion for the rheumatoid arthritis and any illness associated with it, but she also can’t afford the $2,200 monthly bill for replacement insurance plus the Enbrel. “Do I put myself in the poorhouse,” Frazier says, “or do I drop my insurance, pay for Enbrel myself, and hope nothing else happens to me for the next six years until I can go on Medicare? You see where my rock is. I’m at the hard place.”
As the Kaiser underwriting study documented, people like Frazier, with existing health problems, may be able to get insurance only if it doesn’t cover those very problems. In 37 states, insurers can exclude pre-existing conditions permanently, and most of the others permit insurers to exclude pre-existing conditions for some length of time after enrollment, typically six months to two years.
“Companies will put an exclusion on a condition for three years, but the three-year period won’t start until you stop getting treated for the condition, such as going three years without needing a prescription for allergies,” says Jay Norris, an insurance broker from Broomfield, Colo.
“In some states, you don’t even have to know you had the condition,” says Gary Claxton, director of the Health Care Marketplace Project at the Kaiser Family Foundation. “Something as simple as dizziness noted on a chart, or an innocent visit to a chiropractor, may be enough.”
