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TechnoratiMany With Insurance Still Bankrupted by Health Crises
Health insurance is supposed to offer protection - both medically and financially. But as it turns out, an estimated three-quarters of people who are pushed into personal bankruptcy by medical problems actually had insurance when they got sick or were injured.
![[Claire and Larry Yurdin filed for bankruptcy when his insurance didn’t cover his medical bills. Erich Schlegel for The New York Times)]](http://www.commondreams.org/files/article_images/insurance-2.jpg "insurance-2.jpg")
And so, even as Washington tries to cover the tens of millions of Americans without medical insurance, many health policy experts say simply giving everyone an insurance card will not be enough to fix what is wrong with the system.
Too many other people already have coverage so meager that a medical crisis means financial calamity.
One of them is Lawrence Yurdin, a 64-year-old computer security specialist. Although the brochure on his Aetna policy seemed to indicate it covered up to $150,000 a year in hospital care, the fine print excluded nearly all of the treatment he received at an Austin, Tex., hospital.
He and his wife, Claire, filed for bankruptcy last December, as his unpaid medical bills approached $200,000.
In the House and Senate, lawmakers are grappling with the details of legislation that would set minimum standards for insurance coverage and place caps on out-of-pocket expenses. And fear of the high price tag could prompt lawmakers to settle for less than comprehensive coverage for some Americans.
But patient advocates argue it is crucial for the final legislation to guarantee a base level of coverage, if people like Mr. Yurdin are to be protected from financial ruin. They also call for a new layer of federal rules to correct the current state-by-state regulatory patchwork that allows some insurance companies to sell relatively worthless policies.
"Underinsurance is the great hidden risk of the American health care system," said Elizabeth Warren, a Harvard law professor who has analyzed medical bankruptcies. "People do not realize they are one diagnosis away from financial collapse."
Last week, a former Cigna executive warned at a Senate hearing on health insurance that lawmakers should be careful about the role they gave private insurers in any new system, saying the companies were too prone to "confuse their customers and dump the sick."
"The number of uninsured people has increased as more have fallen victim to deceptive marketing practices and bought what essentially is fake insurance," Wendell Potter, the former Cigna executive, testified.
Mr. Yurdin learned the hard way.
At St. David's Medical Center in Austin, where he went for two separate heart procedures last year, the hospital's admitting office looked at Mr. Yurdin's coverage and talked to Aetna. St. David's estimated that his share of the payments would be only a few thousand dollars per procedure.
He and the hospital say they were surprised to eventually learn that the $150,000 hospital coverage in the Aetna policy was mainly for room and board. Coverage was capped at $10,000 for "other hospital services," which turned out to include nearly all routine hospital care - the expenses incurred in the operating room, for example, and the cost of any medication he received.
In other words, Aetna would have paid for Mr. Yurdin to stay in the hospital for more than five months - as long as he did not need an operation or any lab tests or drugs while he was there.
Aetna contends that it repeatedly informed Mr. Yurdin and the hospital of the restrictions in policy, which is known in the industry as a limited-benefit plan.
The company says such policies offer value by covering some hospital expenses, like surgeons' fees or a stay in the intensive care unit. Aetna also says all of its policyholders receive significant discounts on the overall cost of hospital care. But Aetna also acknowledges that a limited-benefit plan was inappropriate in Mr. Yurdin's case because his age and condition - an irregular heartbeat - made him likely to require more comprehensive coverage.
"Limited benefits aren't right for everyone, and it clearly wasn't right for Mr. Yurdin," said Cynthia B. Michener, an Aetna spokeswoman.
Charles E. Grassley, the ranking Republican on the Senate Finance Committee, which is taking a lead on health legislation, says Congress needs to make "meaningful" insurance coverage more affordable and accessible. But "until that happens," he said, "any presentation of limited-benefit plans ought to be completely straightforward, and not misleading in any way."
Insurers like Aetna generally defend limited-benefit policies as a byproduct of the nation's flawed health care system, which they say makes it too expensive to adequately insure someone like Mr. Yurdin.
If everyone in the country were required to have insurance, the industry says - a mandate that Congress is contemplating - the costs and risks of insurance would be spread over a large enough pool of people to let insurers provide full, affordable coverage even to people with pre-existing medical conditions.
Mr. Yurdin worked at TEKsystems, which employs people for short periods as contractors for other companies. TEKsystems says it does not pay for the contract workers' health benefits, but it does enable them to purchase individual policies with limited benefits so they have at least some coverage.
"There's no way we make this sound like regular coverage," said Neil Mann, an executive vice president at Allegis Group, which owns TEKsystems.
Although Mr. Mann acknowledged that the plan Mr. Yurdin purchased excluded routine hospital care, he said he thought it still provided value to employees who wanted "peace of mind."
True peace of mind, however, comes with a much higher price tag. When Mr. Yurdin no longer qualified for the Aetna coverage after he left TEKsystems and his eligibility eventually ended, his only option was a special state plan in Texas for people who are at high risk for expensive medical care. He has been paying more than $1,000 a month for comprehensive coverage, compared with the roughly $250 a month he was paying for the Aetna plan.
But as of Wednesday, his future insurance problems are largely solved: he qualifies for Medicare because he turns 65.
Many insurers, as part of the Congressional overhaul of their business, say they expect the demand for limited-benefit policies to fall. "Until the nation achieves the universal coverage that we strongly support, some individuals will want to be able to choose limited indemnity products, but with comprehensive health reform we think that need should diminish," said Simon Stevens, an executive at UnitedHealth.
UnitedHealth drew criticism last year for selling policies with sharply limited coverage through AARP, the advocacy group for older people. One of the plans capped reimbursement for an operation at $5,000, for example, although many procedures cost at least several times that amount. After Senator Grassley began investigating its sales practices, UnitedHealth agreed to stop offering the limited AARP plans.
Mr. Yurdin and his wife say it was not clear that he was liable for tens of thousands of dollars in hospital bills until after he had the first two of what would eventually be four operations. St. David's says it tried to persuade them to apply for charity care, under which the hospital would absorb much, or all, of the unpaid bills.
But the couple says a lawyer advised them to turn to bankruptcy as the way to be certain they would not be left with too much debt. "I knew we were getting way, way over our heads," Mrs. Yurdin said.
While Aetna disputes the Yurdins' and the hospital's version of events, it also says it has tried to clarify the language it uses to describe the coverage. In its most recent brochure, the fine print describing the limits to "other" hospital services now defines what they are in a footnote on the same page and warns that the excluded expenses could be "significant."
Senator John D. Rockefeller IV, Democrat of West Virginia, who is also on the Finance Committee, has introduced legislation that would require insurers to be more clear about what they do - and do not - cover. He says he advocates such a change, even if Congress cannot agree to a more sweeping overhaul of the health insurance industry.
But advocates for broad changes to the health care system say Congress can succeed only by making sure health reform goes beyond giving every American a buyer-beware insurance card. One such person is Len Nichols, a health economist for the New America Foundation.
"Conceptually," he said, "insurance means normal people should not go bankrupt from serious medical conditions."
23 Comments so far
Show AllRev. Jimmy Joe: If you take away the health care benefit from the non-management government employee, be prepared to pay that employee what the private sector pays. I am retired from a non-management professional position in the public sector. Throughout the entire time I was paid about 65% of what I would have made had I worked in the exact same capacity for the insurance industry. You tar all civil service people with the same brush. Teachers (requiring a Masters degree) do not make what Cops or Firemen make with just a high school diploma. Would you want to take the risk that a fireman does? Big City cops are paid two to three times the amount that a town constable makes. Don't abuse those who make your city or state livable.
My wife and I have insurance and are presently going through a grievance procedure against a local physician who wants to charge us for services he did not provide us though we told him while I was in the hospital that because he did not recognize our insurance company, we did not want his services and would find a physician who does.
This is because the hospital told the doctor to see me in spite of our notice to them that we have insurance and our face off with the doctor in my hospital room telling him we did not want his services.
What is a person supposed to do who does not have insurance and cannot choose their physician? Our billings are enormous even with insurance. I can see how most anyone could be bankrupted by one four day hospital visit.
WE NEED THE CHANGE TO MINIMUM COVERAGE FOR ALL NOW AND COMPETITION WITH THE ROBBER BARONS OF THE MEDICAL INDUSTRY TO CREATE REASONABLE PRICING.
Can somebody prove that we need the insurance profiteers?
H.R. 676 - single-payer health care for all is the obvious answer.
But, since it's being suppressed by the moneyed interests, it will take a massive grassroots effort to pass it - and we must pass it.
HCHP and its related organizations have been working for years organizing this effort. Next national event is Rally and Lobby Day Thursday, July 30th, 2009 in Washington DC. For details call 800 453 1305 or email info@healthcare-now.org
The US spends over 16% of GDP on so-called health care at least double what the rest of the devloped world pays; The only country in the developed world (even Taiwan) and many developing countries (eg. Costa Rica, Cuba) with a parasitical system that profits from your illness and death. Bankruptcy from medical costs would be a national outrage in so many other countries, here it is just normal daily happening. If this happens to me I will refuse to pay and flee the country forever.
Take this, the trillions given to the bankster crooks, the draconian cuts in prorgrams, foreclosures, and the rewards for criminal corrupiton and the people should be taking to the streets outraged. We need a general strike to get the attention of the ruling oligarchy, nothing else works. The people of France, Italy, Germany, the UK, Ireland, Czech Republic etc. are not taking the crisis sitting down, why should we?
We need someone with a national voice to lead the charge and call for it, any suggestions? I would say Michael Moore, but I think he has been co-opted into the Democratic elite.
Fortune 500 ranked Aetna #85 for 2007, a year in which they had $1,701,700,000 in profits off $25,568,600,000 in revenues.
Yet, by Oct 29, 2008, Aetna's third quarter profits were down 44%. Why? According to Fox Business News interview with Aetna's CEO, Ron Williams: investment loses tied to the global financial crisis.
Mr. Williams is not worried about his health care having recieved $19,924,027 in total compensation for 2007.
Aetna was doing well in the first half of 2008 due to rising membership numbers and a raise in premiums. Fiercehealthcare, a site for health care execs speaks glowingly of Aetna's ability to pay out as little as possible in actual medical costs saying, "Clearly, one factor was its respectable medical benefit ratio, i.e. the percentage of each dollar of premium it spends on healthcare costs. The ratio was 81.9 percent this quarter, compared with 81.5 percent in the same quarter last year."
Sadly, the second half of 2008 showed Aetna's profits sliding badly. Their 4th quarter showed another 57% drop DUE TO INVESTMENT LOSSES. UnitedHealth Group and Wellpoint also had a drop in profits due to both making ponzi scheme investments (NCFE, anyone?) as well as the sinking economy reducing the number of people left working.
Aetna had increased enrollment It increased its medical enrollment by 848,000 and had 17.7 million customers, but lost money on it's "investments." So, despite rising enrollment, rising premiums and successfully not paying for care, Aetna lost money in the casino. It's not that health insurance isn't profitable. It is. Very. The need for government to mandate buying Aetna's product is part of the Wall Street bailout.
Oddly enough, if you go bankrupt first, then you can get free health care. Worked for me.
Insurance should not be part of health care at all. All monies for health care should go to paying those providing care (and educating/employing new physicians and nurses at reasonable cost) medicine and assisting machinery/devices. The money required should be drawn from a pre-determined percentage of taxes - just as right now over 50% of our tax money goes toward war/defense. What poses a greater threat to the average person... A foreign enemy or catastrophic illness? A lot more people in America are at risk from illness and absent care than have ever been threatened by any foreign power.
At the real core of this issue is that we need to divy the tax pie by the will of the people rather than letting our corporate owned politicos spend a meager portion of our money making our lives better and a whole lot on chasing their own agendas. If we could vote on our budgets (as small towns/cities do for local budgets) in annual meetings, we would get what we pay for - not what some lobbyist paid for!
Live Simply So That Others May Simply Live
Sioux Rose
MAINESTAY: Well and humanely stated case.
The insurance companies are claiming that the uninsured are the problem, that they are what causes care to be expensive for the insured. If the insurers prevail and the purchase of insurance is mandated, what restraints will be put on them to contain costs and/or to not make a killing off of this government-enforced customer base?
The costs of health care are out of control because there is no limit on pricing. A hospital administrator can order up a multi-million dollar appliance from GE at GE's asking price and pass the cost along to the insurers. The insurers just up the premium to their customer. The patient goes in and pays whatever it costs and worries later about the consequences. If you mandate the insurance step of this process, what have you done to manage price increases? Nothing. You've given the insurance company even more ability to pass on the cost to the customer and potential patient. We will pay an ever greater percentage of our shrinking incomes to an industry who has no reason to care about that.
Part of the cycle of healthcare costs has already had government intervention. The government intervened in the late 80s to exempt Group Purchasing Organizations from what are called safe harbor provisions. Government created a legal monopoly with legalized kick backs. We pay whatever they charge. The process and the profits are opaque.
Similarly, there are drug purchasing cartels. The purchase of insurance is also a similar situation, and here are the insurers asking the government to make their position more profitable and more secure. All of these businesses are very profitable and spend a lot of money influencing government to make them even more profitable.
While investigating the GPOs, it took me awhile to find out which congressman sponsored the original legislation. I believe it was a Medicare bill in 1987, in the 100th Congress. The bill's sponsor was Rep. Willis D. Gradison, Jr. of Ohio. He was not alone, he had 47 co-sponsors. The intentions were probably good, however, the outcomes have not been good, but attempts at further oversight have fallen by the wayside over the years.
Oddly enough, Rep. Gradison later resigned from his congressional seat. In 1993 he left to lobby for, and be president of, the Health Insurance Association of America. That is the association today with the seat at the table that you might recognize as AHIP.
So making government collude with the for-profit interests of this vital public concern has not worked out well in the past. It has helped to create the very problem that the insurers now say doing more of is the solution.
Another excellent post.
Private insurance vampires are the reason our health care system is so hopelessly broken and corrupt. They need to be cut out entirely, and until this is done nothing of substance is going to change.
We need Single Payer NOW!!! Demand it!!!
For all intents and purposes, health insurance in the USA is legalized theft. Either a public / private hybrid like Switzerland, where there is a basic level of care guaranteed by the state and extras offered by insurance companies can be purchased; or better yet, single payer, are increasingly the only real options in face of the increasing rapacity of the private "health" insurance industry in the USA. If either option I mentioned comes to pass and there is much gnashing of teeth in the corporate board rooms of the health insurance and drug companies, they will only have themselves to blame...as their greed killed their golden goose.
And in Switzerland, by law all private health insurers must be non-profit.
The assumption that private for-profit "insurance" is worth having at all needs to be revisited.
"they will only have themselves to blame...as their greed killed their golden goose."
You could also be talking about the administration and congress that has deep sixed any possibility of health care for America with their absurd demands for passage of anything they put up. And require that you don't read the bill before you vote. Fools.
But as of Wednesday, his future insurance problems are largely solved: he qualifies for Medicare because he turns 65.
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The only line in the article worth reading.
Medicare for all.
Problem Solved.
HR 676.
Excellent comment. Anything other than a single payer system like this is watering the wind.
From the article:
"'The number of uninsured people has increased as more have fallen victim to deceptive marketing practices and bought what essentially is fake insurance,' Wendell Potter, the former Cigna executive, testified."
If you could understand insurance, you wouldn't buy it.
"Health Insurance" in the U.S. is a complicated fraud based upon policies that are packs of lies.
They depend upon more lies to convince people that the health care in Canada, France, Sweden, Spain, Italy, Japan, South Korea, Austia, the Netherlands, Denmark, Switzerland, Norway, Finland and Cuba isnt'better than in the U.S.
Ask any citizen of those nations who has visited the U.S. for a few months and they will tell you that the U.S. is horrible in comparison.
The truth is that corruption in the U.S. is so bad it is dragging down the whole world. The Health Insurance industry is PURE CORRUPTION.
The only thing you need to know about private medical insurance is that a corporation is legally required to maximize profit for its stockholders; if you or I buy insurance company stock, we want the company to sell policies only to low risk customers and fight like hell not to pay claims.
Trying to make private insurance provide universal, comprehensive, affordable medical coverage is like trying to make a submarine fly...it ain't gonna happen.
The author takes 33 paragraphs to explain what could easily be explained in one or two paragraphs, and fails to address the only possible solution (single-payer) in any of those paragraphs.
Very well put Ray. Excellent comment.
To the point.