The Healthcare “Haves” Don’t Realize Their Risks

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Politicians and the special interests that support them want to scare the public into believing that healthcare reform will bring rationing, yet they refuse to admit that our current system operates under extreme rationing. By covering certain groups of people through employer-based plans, Medicare for seniors, and Medicaid for the poor, the healthcare industrial complex can lull a large enough population of so-called “haves” into mistakenly believing that as bad as the system is now, they’ll end up with less if major reforms are instituted.

Separating the reality from the rhetoric, the people who perceive they have the most to lose by healthcare reform would actually stand to gain by it. So let’s start with the so-called “haves” – people who have employer-sponsored insurance to understand how vulnerable they really are.

Employer-Sponsored Health Insurance:
For all the speculation about employers dropping coverage if health reform is instituted, employees should understand that an employer is under no obligation whatsoever to provide health insurance to its workers under our current system. Employers can drop coverage at any time. In a tough economic climate where there are far more workers than jobs to fill them, employers know they could easily find people who would accept a job without health coverage.
One of the favorite buzzwords that Republicans and the so-called “free market” crowd like to use is “choice.” They proclaim that if the government offered a “public option” to compete against private insurance plans that would limit healthcare choices. Yet employees do not have a “choice” now. If you don’t like your employer’s plan, there’s nothing you can do about it.

Employer-sponsored health insurance is never portable. If you lose or leave your job, you lose your insurance. This is why both sides of the healthcare debate are being misleading when they state that “if you like your current coverage and your doctor, you can keep them.” If you change employers, most likely your new employer offers a different insurance plan with a different network of doctors and providers.

Employer-sponsored insurance is group insurance, meaning that you cannot be rejected for any medical reason. But when you start a job with a new employer, your new coverage will not cover a pre-existing medical condition for a certain period of time (anywhere from the first six months to one year depending on what state you live in). For example, a diabetic is responsible for paying for 100% of their treatment costs during the period of exclusion.

The nation’s largest employers self-insure and hire a health insurance company to act as the plan’s administrator. Medium-sized businesses purchase insurance from a health insurance company. And health insurers are allowed to medically underwrite all groups except those companies of 50 employees or less in most states. The “free marketers” try to convince young people to be opposed to healthcare reform by saying they would pay more if everyone in America had to have health insurance. Yet if you’re young and most of your coworkers are middle aged, adverse selection by the health insurers insures your policy’s benefits will be lower and your premiums higher than if you worked for a company where most of the employees are in their twenties.

Even if an employee believes they are following the rules of their employer’s plan, they could face some unexpected expenses. For example, you could have surgery performed by an in-network plan surgeon at an in-network hospital or outpatient facility. But if an out-of-network anesthesiologist or other non-network provider participates in the procedure, your employer’s policy may not cover their costs associated with the procedure. You will be responsible for paying the difference (“balance billing”). Saying you didn’t know will not excuse you from paying the bill.

Many people who know they would not pass medical underwriting or have a chronic condition stay in a job they despise just to keep health coverage for themselves or a family member. Or they won’t change jobs because they cannot afford to pay for care during the pre-existing condition exclusionary period. So how much “freedom” and “choice” does an employee actually have if they live in fear of losing their employer-based coverage?

Individuals:
So what if you don’t have employer-sponsored insurance, you’re not old enough for Medicare, and not poor enough for Medicaid? You could try to obtain an individual policy. Try is the operative word as individual health insurance policies are medically underwritten. Far more applicants will be rejected than accepted.

Most people are under the illusion that only people with a “pre-existing condition” get rejected for individual health insurance. They mistakenly believe that a pre-existing condition refers to a person who is obese, has diabetes, cancer, AIDS, had a heart attack, etc. While this is correct, the public should understand that insurance companies define a pre-existing condition to be anything that they believe could be an underwriting risk. High cholesterol, blood pressure, allergies, skin rashes, irregular menstrual cycles, past drug or alcohol use, treatment for depression, participating in extreme sports – all these things and more are grounds for rejection. Family medical history and any other potentials are treated with the same level of caution by insurers as if they were actual diseases.

Once you’re rejected, your medical history is usually sent to the industry’s Medical Information Bureau (MIB) so it can be shared with other insurance companies so they know you’re a bad risk.

If you do get a policy, you should be aware the insurance company will do everything possible to reject any sizable claim or try to rescind your policy altogether. Insurers will make every effort to get your doctor to acknowledge that your condition probably existed before your insurance policy became effective.

Additionally, individuals should carefully read their “Certificate of Coverage” to understand what their policy’s annual out-of-pocket maximum is as well as the policy’s benefit limits and exclusions. Often individual procedure limits such as outpatient surgeries might be substantially less than your overall policy’s annual and lifetime limits.

Uninsured:
The politicians and the free marketers believe a hospital’s emergency room is the solution to those who can’t obtain insurance. The hospital will stabilize your condition, but then you’re on your own. If you have any financial assets whatsoever, the hospital will seize them to pay for your treatment. If you do not, the insured population will subsidize your care.

Insurers of last result such as state run high risk pools, are not consistently available in all states. Rejected insurance applicants often face waiting lists or high risk pools that are closed to new applicants, and the Blue Cross & Blue Shields who used to be insurers of last resort no longer provide that function in most states.

Medicare:
For all the talk that the nation should not want “government-run healthcare,” I have yet to hear a senior citizen who would willingly give up their government plan.

Seniors on original Medicare pay 20% of the Medicare rate to Medicare providers for treatment. Most seniors on original Medicare purchase a “Medigap” supplemental policy to help defray the 20% seniors are responsible for.

Medicare Advantage Plans were created during the Bush Administration. Private insurers are reimbursed more for these plans, yet seniors are more financially at risk than in traditional Medicare. Seniors in a Medicare Advantage Plan who fail to ensure that all of the providers who treat them are in-network providers, could be faced with a bill if one of the providers involved in their care was out-of- network. Likewise if a senior on a Medicare Advantage HMO does not obtain a written referral from their primary care physician prior to each specialist visit and medical test/treatment.

Seniors who sign up for Medicare Advantage and then want to switch back to the government’s original Medicare program can only do so during open enrollment season each year (November 15 to December 31; coverage takes effect Jan 1). What’s worse is that seniors who switch back to traditional Medicare from a Medicare Advantage plan might not be able to obtain a Medigap policy as these supplemental plans are allowed to medically underwrite. The cheapest premiums are for seniors who take a Medigap policy at the time they become eligible for Medicare. Once you’ve developed a pre-existing condition, it’s too late for Medigap coverage.

Medicare Part D (prescription drug plan) was created during the Bush Administration. In keeping in line with their “free market mantra,” only private insurers offer Part D coverage. Healthcare reform would mitigate the “doughnut hole” in Part D.

Conclusion:
Now that you know what the risks are under our current system, it’s time for everyone to acknowledge that rationing is running rampant and getting worse every year. Isn’t it better to develop a new healthcare system that prohibits the rationing I’ve described while only permitting rationing based upon effectiveness of care?

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