In what has to rank as the ballsiest move of the year, managed care giant United Healthcare has come up with a ‘guaranteed insurability’ product for anyone fearing they will lose their health insurance and be unable to obtain coverage in the individual market.
For a fee of a mere 20% of the actual premium, individuals can buy a guarantee from United that they will be able to buy individual health insurance if they need it in the future.
What a deal.
Who’s going to buy this? A really tiny market comprised of very healthy paranoid individuals with more money than brains.
Recall that people working for employers with 20 or more full-time employees who leave can still get the same health care benefits for 18 to 36 months, provided they pay the full cost of the premium plus a small upcharge for administrative fees.
HIPAA requires insurers in the individual market guarantee renewability of coverage in most situations.
So, who’s left? Anyone who thinks they will lose their group coverage and their COBRA coverage will expire who also won’t be able to get individual coverage and doesn’t believe there will be meaningful changes in regulation of medical underwriting and treatment of pre-existing conditions. Perhaps my earlier characterization was inaccurate, and the market is not tiny but infinitesimal.
As applicants will have to qualify up front, UHC will (wherever possible) do their medical underwriting and rating for folks applying for the ‘Continuity’ product. So, if you are covered under a group program and have a pre-ex (as many do), you’re not likely to get that condition covered by UHC (in states that allow that practice).
What a great country.
Dec
5
I think this is outrageous that they are preying on people’s paranoia right now. This type of behavior is what gives managed care a bad reputation!
Terrible, terrible, terrible. This sums up our healthcare system in our country. So….what else is going to happen. This is even more than outrageous.
Joe, I don’t believe this is an accurate statement(s):
“HIPAA guarantees that individuals can purchase coverage in the individual market if they have had “creditable coverage” in the group market;”
From my understanding; “creditable coverage” only applies when an individual is going from group to group coverage. Further, I don’t believe creditable coverage will guarantee an individual that has pre-exiting conditions (or not) an individual insurance policy on the individual market.
Speaking from personal experience, I was denied coverage on first attempt at converting from an expiring COBRA to an individual (family) plan by a major California insurer. They used the denial to coerce me into accepting a plan with a higher premium and a much higher deductible. Ultimately I was insured but with much higher out-of-pocket costs. BTW, the my pre-existing condition that led to the denial? A sprained knee 2 months prior.
Scott – thanks, you are correct. Appreciate the clarification.
Paduda
Joe,
HIPAA does provide for group to individual portability. Most states made their high risk pools the vehicle for meeting this requirement rather than requiring individual carriers to be involved.
Check this link for state by state provisions.
http://www.nahu.org/consumer/healthcare/topic.cfm?catID=190
The point is that most people DO NOT UNDERSTAND what their options are, they only have to buy in to the idea that they may have difficulty obtaining insurance down the road, and want to make sure that they have some insulation against that. Young, healthy people who may only be paying a couple of hundred a month for insurance coverage can tack on this policy for a low dollar amount and have some sort of guarantee for the future. What UHC is not saying is whether the rate will fluctuate with premiums as one moves from employer to employer, utilizes services, and gets older. If the fee is tied to premiums year-to-year then this is one big gravy train for UHC. Even if one can lock in at the 20% on one’s current premium, it is still a lot of money for nothing for UHC. Which is something they are very good at getting.
The point is that most people DO NOT UNDERSTAND what their options are, they only have to buy in to the idea that they may have difficulty obtaining insurance down the road, and want to make sure that they have some insulation against that. Young, healthy people who may only be paying a couple of hundred a month for insurance coverage can tack on this policy for a low dollar amount and have some sort of guarantee for the future. What UHC is not saying is whether the rate will fluctuate with premiums as one moves from employer to employer, utilizes services, and gets older. If the fee is tied to premiums year-to-year then this is one big gravy train for UHC. Even if one can lock in at the 20% on one’s current premium, it is still a lot of money for nothing for UHC. Which is something they are very good at getting.
COBRA “coverage” ENDS if an employer goes out of business because it basically extends coverage under an existing plan to a larger number of people. If the plan ceases to exist, so does the coverage. This leaves both current employees and recently laid off ex-employees suddenly without healthcare. For a substantial number of people, its not possible for them to find coverage at any price. For people with chronic conditions, this translates into a life shattering disaster.
This wasn’t such a large problem a few years ago because companies would generally take years to downsize and then often, mergers might allow COBRA coverage for the downsized. But now, companies are folding with little warning and this leaves people high and dry. It exposes a major weakness in how we pay for healthcare.