Health insurance law misses goals
27 02 08 - 12:00
Letting companies deny coverage for prior ills hasn't increased number of insured, study finds
By Daniel Lee and Eunice Trotter
daniel.lee@indystar.com
A change in state law that allows health insurance companies to deny coverage of pre-existing conditions has failed, as promoted, to increase the overall number of Hoosiers with health insurance.
In 2004, Indiana lawmakers supported the argument that insurance companies would cover more residents if they didn't have to bear the risk of costs associated with pre-existing conditions, some as minor as acne or bunions.
At that time, Indiana was one of the last two states that prohibited such exclusions.
In the three years since the law passed, the number of Hoosiers covered by private insurance increased less than 0.2 percent, according to Kaiser Family Foundation, a research organization based in Washington, D.C. The group also found that the number of Hoosiers with no insurance increased by about 50,000.
Though the dominant reason for the increase in the uninsured was the loss of employer-sponsored group insurance, the Kaiser study says states that allow insurance companies to limit eligibility or increase premiums due to a person's health history contribute to an increase in the number of uninsured.
High premiums and deductibles make the insurance unaffordable, and the very problems for which health coverage is needed are excluded from coverage, the study says.
Sen. Patricia Miller, R-Indianapolis, sponsored the change in Indiana law and hoped it would reduce the number of people denied health insurance.
She also wanted to limit the increasing number of people who had no choice but to seek insurance through the state's high-risk insurance pool, which covers people who can't get insurance from any other source. The pool was facing insolvency.
"We believed having some insurance was better than having none at all,'' Miller said.
Miller said she's had no complaints.
Rep. Craig Fry, D-Mishawaka, opposed the measure and still thinks it benefits only insurance companies. He called the measure just an effort by the insurance industry to "take advantage of people who need health insurance."
Rich Collins, chief executive of Golden Rule Insurance Co., an Indianapolis-based subsidiary of UnitedHealth Group that sells individual policies, said Hoosiers have access to a strong and competitive health insurance market.
Collins said his company offers coverage to more than 89 percent of applicants.
"The fundamental issue is that health care is expensive," he said.
Pilot project preceded change
When legislators were considering the pre-existing condition waiver law, a handful of insurance companies participated in a pilot project.
Those companies had to report the number of people who applied for private insurance, how many were approved or turned down, and the conditions that were excluded from coverage.
Miller said there were no complaints during the pilot project, so insurance companies were given the OK to exclude an applicant's pre-existing conditions for up to 10 years.
According to reports filed then with the state Department of Insurance, acne, asthma, joint problems and migraines were just a few of the dozens of conditions for which the insurance companies required pre-existing condition waivers, excluding those conditions from coverage.
Of the 1,778 people who applied for coverage from 2004 to 2007, 67 percent of applicants were rejected, reports to the insurance department show.
The companies that participated were small companies, all located outside the state. American Community Mutual and Continental General Insurance Co. were among the five participants.
Indianapolis-based insurance giant WellPoint, which operates Anthem Blue Cross and Blue Shield, didn't participate in the project but is now able to write private health insurance policies in Indiana excluding coverage of pre-existing conditions.
However, as with the other insurance companies in the state, WellPoint is not required to provide the state with information about their private insurance applicants and the company's decisions about them.
A WellPoint spokesman said the company turns down 15 percent of applicants. About 30 percent to 35 percent of those who are accepted with pre-existing conditions or risky lifestyle behaviors, such as smoking, face waivers excluding coverage. And they face higher rates.
Costs keep many uninsured
Individual health insurance remains elusive for many Hoosiers because of the costs.
"It is our single biggest budget buster," said Jenni Russ, 34, Indianapolis. She said her family spends almost as much on health insurance as on housing.
In Indiana, average annual premiums for individual plans were $2,504 for single coverage and $5,302 for family coverage in 2006-07, according to a study released in December by America's Health Insurance Plans, an industry association. Most policies had annual out-of pocket limits of $5,000 or less.
But costs can vary widely.
"It's a really difficult market for everybody," said Karen Pollitz, project director at the Health Policy Institute at Georgetown University in Washington, D.C. "It's like an onion; there are all sorts of layers of difficulties. If one of the difficulties doesn't trip you up, another one will."
People with pre-existing conditions face tough scrutiny when applying for individual health coverage.
Jim Bradley, 60, Indianapolis, said he was rejected numerous times for individual coverage because of his hypertension and sleep apnea. He submitted 76 pages of his medical history in an effort to get coverage.
He was finally able to get a policy for catastrophic illnesses through his employer but was not able to get private insurance. The policy includes a $5,000 deductible, the amount that must be paid out-of-pocket before insurance kicks in, and $9,000 a year in premiums.
"I don't want free health care. That's not what I'm asking for," Bradley said. "But I would like to pay a fair amount."
Insurers point out that Hoosiers without insurance have other options, including the state's high risk pool and the Healthy Indiana Plan, a new state insurance program for the working poor. The poor and the elderly typically have low-cost options for coverage.
But the middle class is experiencing growth in the numbers of uninsured, according to Kaiser.
After a search for a plan, Jenni Russ landed a private insurance health plan. It has a $2,500 deductible per person and includes prescription benefits, although maternity services are not covered.
"I feel like we're in a good situation," she said. "It's been a long six years to get to that point.''
Call Star reporter Daniel Lee at (317) 444-6311.