Minor medical conditions lead to insurance denials

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Applicants dismayed as minor medical conditions lead to insurance denials or big

hike in premiums By Sandy Kleffman Contra Costa Times 07/04/2010. Ralf Burgert

had no idea how costly toenail fungus could be. The San resident got rid

of the common infection by treating it with the prescription medication Lamisil.

It was the last thing on his mind when he applied for a health insurance policy

on the individual market a short time later.

He could not believe the response: Because of the toenail fungus, an insurer

informed him, he would be in a higher-risk insurance pool with a 50 percent jump

in premiums. Burgert was flabbergasted.

" I'm in perfect health, " said the 43-year-old nurse practitioner. " Except for

the toenail thing, I haven't had any illnesses. Of all the diseases you can

have, it's as close to a harmless one as you can get. All it does is make your

toenails white and kind of thick-looking. "

The insurers are " just doing it because they can, " he said.

Consumer advocates say they are often perplexed by the minor health issues that

can create serious problems for people seeking health insurance. Each company

sets its own policies.

Common conditions such as asthma, sleep apnea, allergies, ear infections, mild

depression, migraine headaches, and joint sprains can trigger denial of

insurance or higher premiums, the state learned in 2006 when it required

insurers to submit information on their underwriting policies.

" The things that people have been denied for raise the question if simply living

is a pre-existing condition, " said , executive director of Health

Access California, a consumer advocacy group.

In 2014, when new health reforms take effect, insurance companies will no longer

base coverage decisions on a person's health history, a practice known as

medical underwriting.

Applicants who have medical issues will be guaranteed coverage at standard

rates, and most people will be required to obtain insurance.

But until then, many people with pre-existing health conditions will continue to

face the same hurdles that became a major talking point in the drive to health

reform.

Consumer advocates say they want to make sure that insurance companies do not

become more aggressive with denials or dramatically hike premiums for those with

pre-existing conditions during the next four years.

" The insurers now compete based on their ability to deny (coverage) to anybody

who might actually need care, " said. " That will change, but not in the

near-term, and that's a problem we will have to reckon with.

" It's particularly important to be vigilant between now and 2014, " he said. " We

would like to see that the regulators closely monitor the denial rates for

pre-existing conditions and the reasons for the denials. "

Insurance industry representatives call such concerns misguided and say they do

not expect any major changes in underwriting policies before 2014.

" We have a competitive market in California, so health plans want people to buy

their coverage, and they will charge a competitive price, " said

ston, president and CEO of the California Association of Health Plans.

He noted that the insurance industry generally supported eliminating medical

underwriting and guaranteeing coverage to applicants, as long as the change came

with a government mandate that most people buy insurance.

Pre-existing conditions are not an issue for the 21 million Californians who

have group insurance, usually provided through employers, because group plans

accept people regardless of their medical histories.

But it can be a big worry for the 2.5 million Californians who buy insurance on

the individual market.

California and many other states will soon set up new high-risk pools for those

who have found it difficult or impossible to obtain coverage.

California will receive $761 million to fund this new pool, a dramatic increase

over the $33 million for the state's existing high-risk pool. But this money

will not cover everyone with pre-existing conditions, and some may find the

still-to-be-determined premiums too costly.

As a result, many people with pre-existing conditions are expected to remain in

the individual market during the next four years and experience frustrations as

they attempt to find coverage, consumer advocates say.

People have been rejected for such common conditions as acne and high blood

pressure, said Judy Dugan, research director for Consumer Watchdog.

" If you are pregnant, (insurers) will run the other way screaming, " she added.

" They don't want to insure a baby until they have looked it over to make sure

it's absolutely healthy. "

A Fremont doctor said she was shocked when one insurer rejected her application

because of her eczema, seasonal allergies and a brief bout with viral

meningitis, despite a full recovery.

At age 45, Angelique Green, chief medical officer of the Tri-City Health Center,

considers herself very healthy, with low cholesterol. She has never smoked, and

her hobby is hip-hop dancing.

" To say no to somebody and not even try to work with them, that's just wrong, "

she said. " It was very frustrating. "

ston would not comment on individual cases, but he said the coverage

decisions make sense from the insurers' standpoint, and they help keep plans

financially viable. The goal is to avoid having an insurance pool with mostly

sick people whose medical bills far exceed the premiums they pay, he said.

Group plans can insure everybody because they have a large pool of generally

healthy employees and their dependents.

" As groups get very large, then the risk is spread more widely, so the really

high-cost care for a few people is balanced by perhaps hundreds of people who

are generally quite healthy, " he said.

But in the smaller individual market, actuarial analyses determine what the

typical costs are for someone with a particular condition, or for someone who

uses a specific medication. The firms deny coverage or charge higher premiums

when they deem conditions too expensive.

Sometimes, a seemingly minor condition may lead to bigger problems, so insurance

companies base decisions on that likelihood, said Kasabian , vice

president of communications for the California Association of Health Plans.

In New York, Massachusetts and New Jersey, people pay the same standard rate for

premiums, regardless of their health status. But ston noted that because

this is not coupled with a mandate to buy insurance, " sick people get great

coverage, and healthy people drop out and the prices go up far in excess of

(what happens in) California. So it's an alternative model, but it comes with

much higher costs and a lot of people having no coverage. "

Nationwide, only a small percentage of people are rejected for coverage, said

another insurance industry representative. A 2009 survey of insurers by

America's Health Insurance Plans found that they offered coverage to 87 percent

of applicants who underwent medical underwriting, said the group's spokesman,

Zirkelbach.

Of those offered insurance, 29 percent were quoted standard premiums, 36 percent

were at lower rates, and 34 percent were at higher rates, the study found.

Consumer advocates such as say people with pre-existing health conditions

often encounter serious problems in obtaining coverage that hopefully will be

resolved in 2014.

" Many people find it bewildering that it's exactly the people who need coverage

who are the ones who cannot get it, " said.

" As more and more people get denied for smaller and smaller medical problems,

both the industry and individuals have figured out that this is not

sustainable, " he said. " The system is broken. "

Redwood City resident Terri Mullen agrees. When she experienced work-related

stresses in 2008, her doctor suggested she see a therapist and try anti-anxiety

medication. Little did she realize the problem this would cause.

When she later applied for an individual insurance plan, a firm told her she

would be in a high-risk pool with much higher premiums because the therapy and

medication were signs of a serious mental illness.

Now, she says, " I'm not stressed out anymore — I'm mad. "

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