Los Angeles Times
Jennifer and Greg Danylyshyn of Pasadena, Calif., are conscientious parents. They keep proper car seats in their used BMW, organic vegetables in the family diet and the pediatrician’s number by the phone.
They don’t have access to the group medical insurance offered by many employers. She’s a stay-at-home mom. He’s a self-employed music supervisor in the TV and film industry. So they buy individual policies for each family member.
As careful consumers, they shopped for the best deals, weighed premium costs against benefits and always assumed they could keep their family covered.
Then last spring Blue Shield of California stunned them with a rejection notice. Baby Ava, their happy, healthy 7-pounder, was born with a minor hip joint misalignment. Her pediatrician said it was nothing serious and probably temporary.
Still, Blue Shield declared the infant uninsurable. The company foresaw extra doctor visits, “the need for monitoring and an X-ray.” Ava’s slight imperfection “exceeds ... eligibility criteria for acceptance,” Blue Shield said.
The family’s experience is symptomatic of the nation’s health-care crisis. Ineligible for group insurance, millions of Americans are paying more for individual policies that offer less coverage and expose them to seemingly arbitrary exclusions and denials.
The health insurance system has become increasingly expensive and inaccessible. It leaves patients responsible for bills they understood would be covered, squeezes doctors and hospitals, and tries to avoid even minuscule risks, such as providing coverage to a newborn with no serious illness.
At the heart of the problem is the clash between the cost of medical care and insurers’ need to turn a profit.
Today, four publicly traded corporations — WellPoint Inc., UnitedHealth Group, Aetna Inc. and Cigna Corp. — dominate the market, covering more than 85 million people, or almost half of all Americans with private insurance.
On Wall Street, they showcase their efforts to hold down expenses and maximize shareholder returns by excluding customers likely to need expensive care, including those with chronic diseases such as asthma and diabetes. The companies lobby governments to take over responsibility for their sickest customers so they can reserve the healthiest (and most profitable) for themselves.
Meanwhile, insurance premiums are becoming a heavier burden on employers, many of which say that rising health-care costs cut into their ability to compete and, in some cases, to survive.
As a result, the percentage of Americans covered by traditional group health insurance has declined steadily. Nearly 46 million U.S. residents have no insurance at all. Medical debt has become a leading cause of personal bankruptcy and a growth business for collection agencies.
Even some top insurance executives agree the system is inefficient and sometimes inhumane.
Bruce Bodaken, chief executive of Blue Shield of California, says that universal coverage is the answer.
Bodaken says government should mandate that everyone obtain health insurance and that insurers sell to all comers regardless of their health — similar to a plan proposed by California Gov. Arnold Schwarzenegger and defeated in that state’s Legislature last year.
The rationale of universal coverage, the norm in other industrialized countries, is that costs are manageable when everyone is covered because the risk pool includes the young and healthy to offset the older and sicker.
“One of the basic goals of universal coverage should be to change the health coverage business from avoiding risk to balancing health risks and focusing primarily on quality, service and cost-effective delivery,” Bodaken wrote recently in the policy journal Health Affairs.
In the absence of such a system, and with group coverage increasingly unavailable, more and more Americans are left to rely on individual health policies. They are more expensive for all but the young and healthy and often provide fewer benefits.
They also are lightly regulated. Unlike group plans, which must accept all qualified applicants and can’t base a member’s premium on his or her medical history, individual plans in most states are free to cherry-pick the healthiest customers.
Insurers can reject applicants for even mild pre-existing conditions. People have been turned down for individual policies because they have hay fever, have suffered from jock itch or use common medicines such as anti-cholesterol drugs, records and interviews show. Even those lucky enough to have insurance are uncertain they can keep it or count on it in a crisis.
During her pregnancy, Jennifer Danylyshyn’s regular visits to her obstetrician were covered by her Blue Shield policy. So was the delivery of Ava on March 24. The couple expected that Ava would be covered as a matter of course.
When the company rejected the baby because of the hip misalignment, her parents appealed with the help of their pediatrician.
“Certainly, this cannot be a condition which warrants the denial of insurance benefits; especially to this beautiful, healthy baby girl,” wrote Dr. Stephanie A. Heller.
Blue Shield refused to budge.
Meanwhile, the Danylyshyns kept to their well-baby schedule. Ava received her regular checkups, weigh-ins and vaccinations. But the doctor bills went to the couple, not to Blue Shield.
Then, before Ava began to crawl, her joint problem corrected itself. Presented with a clean bill of health from an orthopedic specialist, Blue Shield agreed to insure Ava — after six months and more than $2,000 in unreimbursed care.
The insurer agreed to cover only Ava’s future medical needs. The tab for the care she had received was her parents’ responsibility.
Blue Shield spokesman Tom Epstein called Ava’s case “a good example of what’s wrong with the current system and why it needs to be fixed.”
Insurers insist that they can’t stay in business without excluding chronic disease sufferers, known in the industry as “clinical train wrecks.”
But companies in the individual market also want to avoid even marginal risk — adopting a practice some insiders call “hangnail underwriting.”
Even nonprofits such as Blue Shield of California are obliged to follow prevailing market practices, lest they be swamped with the highest-cost customers.
“That’s the game,” said Cindy Ehnes, director of the California Department of Managed Health Care. Risk selection, she said, “must be part of every insurer’s strategy or else they potentially will get all the bad risk.”
Insurers trying to lure the healthiest and most profitable customers are devising less expensive, stripped-down policies aimed at younger buyers.
Tonik, for example, offers a line of low-priced individual plans with deductibles as high as $5,000 a year. It is a product of WellPoint Inc., the parent of Anthem Blue Cross of California, and promises starting premiums as low as $74 a month.
The plan provides no maternity care, excludes most mental health coverage and is limited to generic drugs.
