Individual policies: the subbasement of health insurance

Individual policies: the subbasement of health insurance
MinnPost illustration by Brian Barber

Freelance Japanese-English translator Karen Sandness is hoping her good health lasts until she’s eligible for federal Medicare benefits at age 65.

In six years of paying for an individual insurance policy in Minnesota, she has watched her monthly premiums increase 40 percent to $250 a month. The premium might not sound exorbitant until you factor in that she also hiked her annual deductible to $5,000 from $1,000 to keep the monthly bill down and that she never has met either deductible.

She also must pay 20 percent of out-of-pocket expenses up to $10,000 in-network and $25,000 for out-of-network. And her policy has a lifetime benefits cap of $2 million, so heaven forbid if she suffers a devastating illness or injury.

For all that outlay, she receives none of the upfront preventive care provided free or at minimal cost by employer-sponsored insurance plans to encourage regular screening for expensive diseases like cancer. No office visits are covered until she meets her deductible.      

The subbasement of health insurance
Welcome to the subbasement of the health-insurance market. If having no insurance is considered rock-bottom, having individual insurance is the next floor up. Some call it “house insurance,” thinking that by having it they won’t lose their homes to pay for a catastrophic illness.

But a Harvard study released this year found that nearly half of home foreclosures were tied to medical expenses. And another recent Harvard study found that 62 percent of personal bankruptcies in 2007 were linked to medical expenses and 78 percent of those filers had health insurance.
So, it’s understandable why Sandness, who holds a Ph.D. in linguistics from Yale University, casts a wary eye at the individual mandate proposed in the three major health-care reform plans before Congress.
“I haven’t had a mammogram since I moved here,” said Sandness, who moved to Minneapolis from Portland, Ore., in 2003. “I had one checkup in early 2004 and the doctor suggested getting those various tests and I looked at the various prices. … For example, a colonoscopy, something I’m supposed to have at my age, was more than my monthly rent, so I just haven’t had one since I moved here.”

She has health insurance, but virtually no health care.

If her experience is any indication and if the Massachusetts individual mandate is the model in federal reform, Sandness doesn’t expect significant improvement in costs, coverage or care.

High deductibles, significant exclusions
“Under a Massachusetts-style mandate, I would technically be ‘covered,’ and I would not be allowed to drop my insurance and take chances,” she says. “From what I understand, a lot of people in Massachusetts are too ‘rich’ to qualify for subsidies but too poor to buy anything but policies that have not only high deductibles but also significant exclusions.”

If Congress and President Barack Obama decide the responsibility for health insurance falls on the shoulders of individual Americans, all of us might want to pay more attention to what’s going on now in this underinsured subbasement and to what’s promised in the legislation. Anyone who has lost a job and is about to run out of COBRA benefits needs to pay particular attention if contemplating individual/family coverage.

Distribution of Deductibles in the Individual Market, 2002 to 2008

Distribution of Family Level Deductibles in the Individual Market, 2002 to 2008
Source: Minnesota Dept. of Health’s Health Economics Program

Though the individual segment is a sliver of the health-insurance market — 7 percent in Minnesota, 6 percent in the nation — it is expected to grow under an individual mandate. It’s already growing in Minnesota as some cash-strapped small employers have dropped group coverage, according to a report (PDF) from the Minnesota Department of Health’s Health Economics Program. Minnesota has under 250,000 enrollees in the individual market.

Two of the three main proposals (PDF) in Congress call for an employer “pay or play” mandate and a public insurance option; the other plan is from Senate Finance Committee Chairman Max Baucus, D-Mont., whose panel controls the purse strings. All three proposals include a premium subsidy or tax credit for lower-income Americans.

Changes would be needed to do mandate, experts say
The individual mandate is widely supported because it offers portability, i.e. a consumer isn’t dependent on an employer for insurance coverage. Though experts expect many employers will continue to offer coverage as they do now without a mandate, they say current practices in the individual market must change to make the mandate work. 

Last Tuesday, University of Minnesota health economist Jean Marie Abraham told a state Senate panel that proposed changes in the market are promising for the economy. “We see that having a reformed individual market that is transparent and that functions more smoothly could help to reduce job loss and promote workers’ productivity and job mobility including entrepreneurship,” said Abraham, who just returned from a one-year stint as senior economist on health care for the president’s Council of Economic Advisers. “That is the one very big positive related to the reform proposal.”

Right now, the market is not considered consumer-friendly or entrepreneur-friendly.

“Currently, the individual insurance market is a very difficult place in which to find quality, affordable coverage,” says Kathleen Stoll, director of health policy for Families USA, a Washington, D.C.-based consumer advocacy group pushing for affordable health care. “Plans in the individual market can refuse to cover individuals based on their health problems, and when they do cover individuals with health problems they usually charge them very high premiums. Plans can also refuse to cover services for health problems that they deem ‘pre-existing conditions.’ In addition, premiums in the individual market increase very rapidly, by double-digit percentages from year-to-year.”

Larger pool would spread the risk
But Stoll, Abraham and others think that proposed federal legislation offers significant protections for individuals and families. If insurers are required to cover anyone who can pay the premiums (a policy called guaranteed issue) regardless of pre-existing conditions, they will have a larger pool to spread the risk and therefore will be able to cover more of the nation’s estimated 46 million uninsured residents.

And, if a public insurance option becomes law — a very big IF at this point — they think more individuals will be able to afford coverage and get the health care they need.

Regardless of whether the option passes, sliding-scale premium subsidies are proposed for individuals and families making 300 percent (Baucus plan) or 400 percent (two plans) of Federal Poverty Guidelines. (The 2009 FPL level for an individual is $10,830; $27,570 for a family of four.) All three plans prohibit the lifetime benefit caps and annual limits now seen in the market.

“Under reform,” Stoll says, “insurers will no longer be permitted to refuse to cover people due to pre-existing conditions, to charge people higher rates due to their health problems, or to sell people policies that exclude coverage of their pre-existing conditions. … These are vast improvements over the current individual market, and the fact that they are included in both the Senate and House versions of reform bills holds great promise for individuals.”

‘Essential benefits set’
One of the key questions for Sandness, policy wonks and lawmakers is what kind of affordable preventive care and other services will be available with limited cost-sharing. Two of the bills include language to develop an “essential benefits set,” or a comprehensive set of services, for all insurance policies. One plan limits annual cost-sharing to $5,000 for an individual and $10,000 for a family.

Compiling a similar benefits list is about to get under way in Minnesota as a result of state health-reform legislation passed in 2008.

Though Minnesota has the second-highest number of health-insurance mandates (PDF) in the nation (Maryland is No. 1), nothing in current state statute requires insurers to offer “first-dollar” coverage of preventive screening costs or those 68 mandates. First-dollar means the insurer picks up the cost for the care without requiring significant cost-sharing from the policyholder.

Per Person Out-of-Pocket Limits in the Individual Market, 2002 to 2008

Per Person Out-of-Pocket Limits in the Individual Market, 2002 to 2008
Source: Minnesota Dept. of Health’s Health Economics Program

In other words, “the plan has to offer cancer screening but there’s nothing in law that says cancer screening is exempt from the deductible,” said John Gross, director of health-care policy for the Minnesota Department of Commerce, which regulates the insurance industry in the state.

Sandness and others could get first-dollar coverage if they are willing to pay significantly higher monthly premiums. When she tried to add a couple of annual office visits to her policy, she was told she would have to “reapply from scratch,” even though the insurer had 16 years worth of her medical records.

“In contrast, all I had to do to switch to a higher deductible plan was make one phone call,” she said. “The customer service agent took my policy number and told me that the change would be reflected in my next month’s premium, and so it was. This makes no sense, but I’m told that companies use this reapplication routine in order to look for excuses to drop the client.”

Such tactics are expected to be banned in proposed legislation.

Costs mean many skip preventive care
Meanwhile, Sandness and others with these bare-bones policies find themselves skipping preventive care and other services because of the costs.

“We don’t know at this point what the benefit requirements would be for any individual mandated coverage,” said Julie Brunner, executive director of the Minnesota Council of Health Plans. “It’s unclear from the federal legislation what is covered in an individual plan. We know people will be covered. We assume there will be some sort of basic benefit set that gets established. It’s unclear how much preventive care has to be in there, but there’s a lot of push and support for preventive services.”

Individual policies aren’t held to the same mandates as group policies in Minnesota. For example, an individual policy doesn’t have to include maternity care and mental-health services, said Robert Commodore, Commerce’s director of investigations and community outreach. The reasoning is to make these policies more affordable, but perplexed policyholders often call Commerce with questions about what their policies actually cover.

Brunner, whose nonprofit trade organization represents group health plans, empathizes with the confusion over individual-plan coverage. “This part of the market just sort of accelerated. I have a brother who is self-employed and I try to help him think through this stuff and I just get flummoxed.”

Complaints are growing
Commodore oversees the Commerce Department’s Consumer Response Team, which fields questions and investigates complaints about individual and group health-insurance policies. Though individual policies are a small slice of the overall market, complaints about them are growing and represent close to half of all health-insurance complaints in Minnesota. In 2007, the team looked at 536 complaints about individual policies out of 1,244 gripes altogether, according to a data run prepared for In 2008, Commerce tallied 604 individual plan complaints out of 1,215 filed.

A Commonwealth Fund study titled “Failure to Protect: Why the Individual Insurance Market Is Not a Viable Option for Most U.S. Families” (PDF) found that 41 percent of adults with individual plans in 2007 said they did not get needed care because of the costs, up from 24 percent in 2001. “Survey participants were asked whether they had avoided or delayed getting needed medical care because of its cost, including whether in the past year they had skipped a medical test, treatment, or follow-up recommended by a doctor, not filled a prescription, not gone to a doctor or clinic when sick, or not seen a specialist when a doctor or the respondent thought it was needed,” according to the study.

An essential benefits set is expected to address that issue, but Minnesota plans to get a head-start on any federal legislation. 

“Some of the major thinking behind that (set) is precisely because of the trend around higher deductibles,” said Julie Sonier, director of the Minnesota Health Department’s health economics program. “While those kinds (higher deductibles, etc.) of cost-saving tools do lower premiums, people cut back on care. … The idea is to construct a smarter benefit set that encourages more use of what people should be getting.”

Deductibles have been going up
Minnesota started seeing the high-deductible trend kick in for individual plans not long after the last double-digit premium increase (19.5 percent) in 2002. In that year, 38.7 percent of individual policyholders had deductibles ranging from $1,000 to $1,999, according to a report (PDF) from Sonier’s health economics program. By 2008, however, 40.5 percent of the deductibles were in the $2,000-$2,999 range and 26.7 percent were $3,000-plus.

Individuals also accepted higher out-of-pocket limits to try to control costs of their premiums. In 2002, 45 percent of individual policyholders shouldered a $2,000-or-less limit; by 2008, 50.3 percent opted for the $2,000-$2,999 category and 25 percent for $4,000-plus by 2008 (vs. 9.6 percent in 2002).

Individual enrollment in high-deductible plans with pre-tax Health Savings Accounts also doubled between 2005 and 2008.

Premium Increases in Minnesota’s Individual Market, 1999 to 2007

Premium Increases in Minnesota's Individual Market, 1999 to 2007
Source: Minnesota Dept. of Health’s Health Economics Program

As individuals took on more of the so-called cost-sharing, premium rates continued to increase but in the single digits: 6.1 percent in 2003; 1 percent in 2005; and 3.4 percent in 2007. In 2004, the rate actually fell 1.1 percent. 

Blue Cross and Blue Shield of Minnesota, which dominates the individual market with nearly 70 percent of the business, increased its individual product offerings this spring from 22 to 38 with varying degrees of preventive care and office visits. But consumers continue to show a strong preference for high-deductible plans, according to the Blues.

“We’ve seen strong sales at the high (high-deductible) end,” said Phil Stalboerger, vice president for policy and legislative affairs for Blue Cross and Blue Shield of Minnesota, and a former director of legislative affairs for the Commerce Department during the Jesse Ventura administration. “We recently offered our highest deductible ever — $15,000 — and it’s proving to be extremely popular.”

Why? “Some of it is cost and a comfort level with the kind of coverage they need,” said Stalboerger. “I think it’s about personal risk tolerance, too.”

Minnesota task force about to meet
A state task force will start meeting in September, Sonier says, to make recommendations “around a benefit set that provides coverage for a broad range of services and technologies that are clinically effective and cost-effective and lower enrollee cost-sharing for things that are cost-effective.”

At the federal level, even Republicans are asking economists to crunch the costs for high-deductible individual insurance policies that keep premiums manageable but will offer more preventive care.

Stephen Parente, a health economist and associate professor of finance at the University of Minnesota’s Carlson School of Management, has spent his summer crunching some of those numbers for a few Republicans and Blue Dog Democrats in Congress (he would not name them). Parente and a partner also run a consulting firm, Health Systems Innovations, which uses a simulation model to calculate costs of various proposals from Congress. 

“I get these requests from Republicans and Blue Dogs or someone inside Ways and Means who want to come up with a compromise,” Parente says. “They’ll say, ‘OK, here’s what we propose. We want this subsidy. We propose this tax. How many people does it cover and how much money does it cost?’ “

He has testified on Capitol Hill, and he was a volunteer health-finance adviser for Sen. John McCain’s presidential campaign. And he is involved with the state task force devising an essential benefits set.

“The thing that’s intriguing to me is every time someone basically says no to one of these (individual) policies and they’re not getting it (coverage) at work, that’s another uninsured person,” said Parente, who once worked for the Blues. “You can make the insurance market work. … The question is, How can you get people more likely to choose these things given that the level of uninsured is as high as it is?”

Scenarios to include preventive care, prescriptions
Parente and others have been looking at various high-deductible scenarios that would yield lower premiums but still have a built-in component for low-cost preventive care and prescriptions for generic drugs for maintenance of chronic conditions.

Karen Sandness also has crunched her own numbers this summer. For her, reform can’t come soon enough.

“I did some math the other night,” she said, “and realized how much medical care I could have afforded if I didn’t have that monthly premium being automatically withdrawn from my bank account: namely, several office visits per year and all the tests I’m not getting.

“Since I would be bankrupt if I had to pay the full out-of-pocket costs for my policy anyway, I am just about ready to bail out of my insurance policy entirely.”

Casey Selix, a news editor and staff writer for, can be reached at cselix [at] minnpost [dot] com.

UPDATE: Some answers to questions about individual health insurance, by Casey Selix, Friday, Aug. 28, 2009

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Comments (27)

  1. Submitted by Peter Soulen on 08/24/2009 - 07:37 am.

    I have a question.

    “Two of the three main proposals (PDF) in Congress call for an employer “pay or play” mandate and a public insurance option”

    Does this mean what I think it means? Currently I and my spouse and 6 year old son are covered under my employer’s plan. My contribution to this plan totals about $4,750.00 per year. My employer covers 70% of the total so that means that the total cost per year for that plan runs almost $15,000.00.

    I see that employer contribution as part of my pay package. What happens to that money if I opt into a public option? Will that money that my employer was spending on the plan I was in – be automatically re-directed into the public system to help pay for the public option that I would be enrolled in, or does my employer just get to keep it? That might be good for my employer but not so much for me.

    Currently that’s about $12,000.00 of benefit to me… If my employer decided to simply drop health insurance for us or just take 12K off the top of my pay I would be in serious trouble. What happens to all the money employers are currently paying into health insurance plans if large percentages of people like me start opting out and joining the public plans? I follow this debate pretty closely and I have never been able to get a good handle on this point. What’s everybody think?

  2. Submitted by Tim Nelson on 08/24/2009 - 09:17 am.

    The idea that I would end my boycott of health care (enabling), if the cost were lower is pure fantasy.

    Proud to be uninsured in a world gone mad.

  3. Submitted by dan buechler on 08/24/2009 - 10:07 am.

    For about a year our family had to be individually insured due to un/underemployment. I still don’t know why I was initially declined for coverage until we tweaked the payment/benefit mix.
    It did affect the way we used coverage. I skipped a doctor visit once because of concern for what the outcome could possibly do to my insurability. Fortunately I’m fine but I am watching my caffeine intake.
    Another time or two we waited an additional day to see if our kid’s minor illness would clear up. Yet another time a family member had to go three times to the doctor due to continuing pains all paid with cash out of pocket. Fortunately more elaborate tests were not needed. I am a person who had a kidney stone and even asked that the next time I had one I would be willing to pass on the MRI (this was when we had great coverage).
    On another note regarding the open town halls a female reporter of yours should speak to the angry women if possible.I was reading an oxford history of the U.S. and they mentioned the influence of Concerned Women for America and sure enuf its website is very anti obama. This could make for a very interesting article. See Rachel Maddows interview of Frank Schaefer a former political operative, writer and filmaker.

  4. Submitted by T J Simplot on 08/24/2009 - 10:12 am.

    There is a reason why health insurance companies deny people coverage who have pre-exisiting conditions. If they had to take everyone, it would be very easy for people to go without insurance and then sign up for it when they need it.

    Here in MN, most health plans have a $5 million lifetime max. This is INCREDIBLY hard to reach. Those that do typically have a lifelong medical condition and are not due to a catastrophic incident.

    Also, here in MN we have a program called MCHA. it is insurance for people who have been or would be denied insurance because of a pre-existing condition. More people need to know about it because it does provide affordable coverage for individuals with health conditions. In fact, I think a national version of MCHA would be a good thing.

  5. Submitted by Peter Soulen on 08/24/2009 - 10:28 am.

    Wow Tim, you’re a brave man. If you can show me how to boycott serious illness, injury or death, I’m with you!

    I wanted to correct my numbers from my post above.
    My contribution to my employer’s health insurance plan totals $176.88 each two weeks. That’s $4,245.12 per year. $4,245.12 is 30% of $14,150.40 so the difference, or what I would stand to lose in benefits from my employer if I opted into a public plan – would be $9,905.28 That $9,905.28 if folded into my hourly wage would be a $4.75 raise per hour!

    I want a public option to succede. If I could join up with that for not too terribly much more than I am paying now I would do it. I’m one of the ones who sees a benefit in covering everybody. Not only to my bottom line but to those who need health insurance but can’t afford it. I believe it’s a moral obligation to cover the same people for which we currently mandate education, fire and police protection, Social Security and Medicaid and the whole list of other government programs that keep us safe in the workplace or on the roads and un-poisoned by bad food or drugs. You can’t tell me the government messes up everything it touches. It’s just not true.

  6. Submitted by myles spicer on 08/24/2009 - 10:45 am.

    Exacerbating this sad state of affairs in the health INSURANCE (not health CARE) industry, is those unemployed and underemployed who are currently on COBRA. They are not yet calculated in the individually insured numbers; but there are thousands in that predicament who will soon (9n the next few months) be facing Sandness’ situation. Making matters even worse, I personally know of several folks who will almost surely be declined, and end up without coverage (the “basement” of insurance protection). How we maintain such a flawed and outrageous system is totally incomprehensible to me!

  7. Submitted by Casey Selix on 08/24/2009 - 11:19 am.

    Peter has some excellent questions. I’m trying to track down some employment/insurance experts who might have the answers and will try to provide an update later. I can say that there is considerable debate about how to entice employers to continue to offer health coverage to their employees with or without a mandate. Some think that the penalty proposed in an employer mandate is not steep enough to deter employers from just dropping coverage benefits altogether and paying the penalties instead.

  8. Submitted by Richard Callahan on 08/24/2009 - 12:09 pm.

    You’re proudly uninsured Tim? Are you willing to agree not to be treated in an emergency room should you be injured accidentally? If so, then I fully support your decision. Otherwise, you are a foolish hypocrite.

  9. Submitted by Peter Soulen on 08/24/2009 - 12:18 pm.

    Casey, the usual suspects are also lining up against the “employer pay or play mandate” too. Thanks for posting that term. It helped me to research and understand better what that is, and how it addresses my original question.

    Opponents of pay or play point out that it would be detrimental to employment. Especially to low wage workers. If an employer looks at the numbers, (if the “pay” portion of the equation is sufficiently punishing), and comes to the conclusion that the employee’s value to the company will not match the minimum wage plus what the employer will have to pay for that employee’s health plan, the employer will drop that employee. A employer can only pass so much of the cost of insurance on to the employee. Minimum wage is minimum wage…

    From the numbers I have been looking at it appears that if health care and health care insurance is not reformed , the cost of health insurance will become so steep and employers will be passing on so much more of the cost to employees, that we will effectively be working – not for wages but for health care insurance!

  10. Submitted by Joel Shinder on 08/24/2009 - 12:19 pm.

    Blue Cross Blue Shield is a huge disappointment. Isn’t it a so-called not-for-profit? Why? How? Doesn’t it spend insureds’ premium dollars on advertising, gifting (zoo animal adoption?), and the operation of so many plans that any possibility of efficiency evaporates? My first-dollar benefit is only $300. That won’t cover a basic preventive physical (with lab work) at my doctor’s office. Where did all that tobacco settlement money go? My premiums have just skyrocketed since the cash began to flow to BCBS. And, like many, I’m a healthy non-smoker on an individual plan with bells and whistles silenced, a high HSA deductible, and in not one year have I reached the deductible. So far the only benefit is the contractual pricing arrangements with providers…who may well make less annually than upper echelon BCBS administrators.

  11. Submitted by Bernice Vetsch on 08/24/2009 - 12:53 pm.

    Thanks for this excellent article. The low-premium/high-deductible plans seem to be a clever way for the insurance industry to collect mega-billions in premiums while shouting HA HA HA when they never have to actually pay for health care! Their profits will only continue to multiply under the Daschle et al plan(s) — at our expense as patients and taxpayers.

    The Onion captured the essence of the current situation in Washington with a front-page article called “Congress Deadlocked Over How to Not Provide Health Care.”

    Republicans will most surely vote against any plan that makes it to the floor because they don’t like Obama. I see faint signs of hope that the administration will soon admit that “bipartisanship” means only do-what-we-on-the-right-want-or-the-heck-with-you and pass the House plan by themselves without delay. (It is the least objectionable plan so far.)

    Fortunately, the progressive Democrats in Congress will NOT vote for a plan without a strong public option. Thom Hartmann has suggested making Medicare the public option (great idea!!!) and Howard Dean spoke for that idea on Face the Nation yesterday.

    See Thom Hartmann’s August 17 article. “Dear President Obama: A Modest Medicare Proposal,” at

  12. Submitted by T J Simplot on 08/24/2009 - 01:35 pm.

    I’m not telling anyone to boycott serious illness or injury. I’ve been in the insurance biz for 15 years and I can tell you that there are people who would gamble and go uninsured and then sign up when they need. Is it foolish? Yes. Especially in case of an accident. But I deal with people everyday that do it already. Surely more would do it if they could sign up whenever they want.

    Ever tried to sign up for individual dental insurance? Good luck getting covered for anything besides cleanings for at least a year. The same reasoning applies. With out the waiting period, people would wait until they got a cavity and then sign up for dental insurance.

    I can tell you that here in Minnesota, insurance companies do not fit the norm across the country. They are heavily regulated, non profit, spend less than 10% on admin costs, and honestly do care about their members. There is not a lot of competition here because companies want to make money. The three big players (BCBCM, Medica, HealthPartners) make it because of their shear volume of members.

    The one area I never hear talked about in health care reform is how is it going to lower the cost of services. How is an MRI, office visit, x-ray going to get cheaper? It’s great to get more people covered, but that’s not going to make services any cheaper.

  13. Submitted by Rebecca Hoover on 08/24/2009 - 01:41 pm.

    If you listened to Amy Klobuchar’s conference call last night (Sunday, April 23, 2009), you couldn’t help but notice that Amy does not seem to know anything at all about all of the people stuck with these individual policies. Instead of feeling some urgency to help these individuals and the 22,000 that are dying each year because they do not have health insurance, in a rather condescending tone of voice, Amy said she wanted to be sure “we take our time” on health care reform. Amy made it sound as if getting health care reform done in ten to 25 years might even be reasonable.

    Amy has done almost nothing to push for health insurance reform at a time many Minnesotans are hurting. She sounds more like a Republican than a Democrat. Also, her bragging about who she talked to in Washington D.C., rather than talking about the very little she has done is more than a little irritating. I think we need a new senator.

  14. Submitted by Bernice Vetsch on 08/24/2009 - 02:01 pm.

    Perhaps a delegation of Progressive Dems like Keith Ellison, Rep. Wiener of New York, Senator Bernie Sanders, and a few more of the folks who really do Get It should visit Senator Klobuchar and conduct an information session.

    She was not involved with health care as a prosecutor and has had a busy year. Such a meeting would give her a chance to learn about the problem and to see what Democrats should be doing to achieve reform that benefits CITIZENS/VOTERS instead of corporate interests.

  15. Submitted by Tim Nelson on 08/24/2009 - 02:28 pm.

    I didn’t say I wasn’t a foolish hypocrite, only that I was proud.

    Both may be sins, for all I know.

  16. Submitted by Sandra Peterson on 08/24/2009 - 02:47 pm.

    Excellent article – thank you! My husband and I, in our mid-50s, recently joined the individual health insurance “community” after 37+ years of employer-provided insurance. The experience has been so stressful – filling out the application was bad enough but came the “decline to insure” letters. I had jogged that morning and eaten my oatmeal for breakfast and then opened up the first “decline” letter – and was shocked. After an appeal and negotiations, we were kindly offered very high deductible policies, which we accepted. Still, we know that we are vulnerable to “recission” if we ever get a serious illness. We will likely not seek the health care we need because of out-of-pocket costs. We have no idea if the job market will ever have a place for us again.

    This article didn’t mention the most-horrible problem with individual health insurance – recission. I’d love to know two more things:
    1) how many people are denied individual insurance, by age group? 2) how many policies are cancelled when people become ill, by number and percent?

    Are these statistics available? Thanks.

  17. Submitted by Tim Nelson on 08/24/2009 - 03:18 pm.

    The Washington Post article says that the fine will be capped at $750 for not having insurance. It used to be $1000 in a previous version. The cost to opt out is getting cheaper all the time.

  18. Submitted by Greg Kapphahn on 08/24/2009 - 04:17 pm.

    Even MN Comprehensive can leave a great deal to be desired. As a member of the clergy who didn’t join my denomination’s health care plan within the grace period after I was ordained (I was covered by my then-wife’s policy). I later discovered that my denomination’s policy was just as shameless at finding excuses not to allow someone onto their group policy as any private insurer ever dreamed of being.

    Since that time, I have ended up on an individual policy – 1992-95 – American Family, which wasn’t too expensive, actually, but in 1998, when I was actually in better health and better shape at 44 years old, I could not even get an individual policy for a reasonable cost (one company turned me down cold, another offered at $700/month).

    Since that time I have been insured by the Minnesota Comprehensive Healthcare Association whose premiums have been very high as well and have risen as rapidly as any other insurance company.

    Now, at 55 years old, I’ve just switched my deductible to $1,000 (having only once in ten years met the $500 deductible I previously had). This meant that instead of my premium going to $848.35/month, it dropped back to $630.77.

    As to the person who asked about the Tobacco money… Governor Pawlenty sucked it all into the general fund so he didn’t have to raise taxes on his rich friends.

    There’s also a 6% “provider fee” charged on medical services in MN which, by law, was set up to underwrite both Minnesota Care (our version of Medicare for those in poverty) and to help keep the premiums of MN Comprehensive lower. Those funds have also been sucked up for the general fund by Governor Pawlenty.

    Somehow the AMA which was powerfully opposed to that “provider fee” because they claimed this exact thing would happen, have been deathly silent when it was done by a Republican Governor to, again, protect his rich friends from tax increases. Talk about a double standard!

    But I’m in better shape than a secretary I know whose entire paycheck goes to pay for her MN Comprehensive premiums.

  19. Submitted by Peter Soulen on 08/24/2009 - 04:30 pm.

    Hi Sandra. Start here:

    The link will get you to place that is only slightly narrowed down. You will need to dig deeper to find the numbers you are looking for, but I’m sure they exist.

    FYI, the number: “47 Million” uninsured Americans you hear so often has its origins in the Census Bureau reports.

  20. Submitted by Casey Selix on 08/24/2009 - 04:51 pm.

    Sandra Peterson raises good questions about rescission. I have not found any stats on how common this is in Minnesota or the nation yet, but I am checking a number of sources.

    Meanwhile, a brief about rescission or post-underwriting practices just came out today from the Robert Wood Johnson Foundation. Minnesota uses the “Objective Standard,” according to this study, which means that “only conditions for which an individual has received actual medical care qualifies as a preexisting condition.”

    Minnesota also offers a government-run consumer-appeals process for those who are denied insurance or dropped after they were covered.

    Here is the link to the RWJ study.

  21. Submitted by dan buechler on 08/24/2009 - 05:36 pm.

    Sandra, thank you for your letter. I can add 2 things. After being unemployed for 2 months in 2008 I was hired on by a small company. The day after I was eligible for health coverage I was fired/laid with no prior warnings or any but good performance. Perhaps I shoud not have disclosed that I had taken efforts to improve my health like using a CPAP machine or having taken a stress treadmill test or having gone to a chiropractor twice for a prior work related strain. Fly the flag boys God loves ya!
    Anyways I had also heard in a documented report on MPR last December that many people end up having end of the year tests, or procedures due to their policies. Well let’s see missy I’m getting work on my knee done might as well schedule jr. for that optional surgery now rather than next year or we will pay twice.

  22. Submitted by L.A. Krahn on 08/25/2009 - 09:48 am.

    “We recently offered our highest deductible ever — $15,000 — and it’s …extremely popular.”

    Why? FEAR & A complete lack of a legitimate public option.

    Insurers are mafioso entities that add no value to our health care “system”. Insurers are regulated just enough to create a veneer of respectability. Insurers influence legislation in MN enough to make themselves and their shoddy products the only option for health access.

    Unless you drop out. For many, premiums might be better spent on preventative care and new running shoes and local vegetables, all negotiated directly & locally. What if… eveybody just dropped their crappy insurance product and tossed those dollars into a kitty that paid out health benefits at pre-negotiated rates?

    Why then you’d have a revolutionary concept called the Minnesota Health Plan.

  23. Submitted by Peter Soulen on 08/25/2009 - 10:24 am.

    YES! I have been posting the link to that web site in every comment section of a health care story at the Strib I can find. Try convincing those marble heads that there’s something more important than the status quo, (money) though…

    Mention Christian charity to them and they want to know what a porn star has to do with anything…

  24. Submitted by Dan Gerber on 08/27/2009 - 07:04 am.

    #1 wrote:

    > Does this mean what I think it means? Currently I and my
    > spouse and 6 year old son are covered under my employer’s
    > plan. My contribution to this plan totals about $4,750.00
    > per year. My employer covers 70% of the total so that
    > means that the total cost per year for that plan runs
    > almost $15,000.00.

    I have an individual plan through MCHA (mentioned by #4,18)
    am 54, and have pre-existing conditions. My employer (small,
    fewer than 20) doesn’t offer medical insurance. My costs
    for an individual policy for myself at $2,000 deductible
    will be just over $4,600 for this year, and I’m at wits
    end about what to do for next year. For a number of years, I was on MNCare, but lost that last December. My employer
    does help through a company benefit by paying $120 a month
    toward medical expenses, which I use to help with the

    I took this policy out to take care of one of my pre- existing conditions (which were what got me into MCHA
    because I needed a denial letter from an application for
    a lesser expensive individual policy that “well” people
    can get). Following an outpatient surgery at the end of
    July, I had dizziness after I got home, and sat down
    on a chair in the kitchen only to fall off the chair and
    bump my head on the floor. Long story short, I refused a
    ride by ambulance to the ER to get checked for injury (out of pocket expense!) and was able to get a ride from a neighbor. Two nights (the first was in the ICU), 2 CT scans, then an MRI to get a better look at what the CT
    scans found (benign, not related to the fall) and now
    you’re talking some serious pocket change. The overall
    bill from the hospital was 8 or 9 times the cost of the
    surgery! Did I mention that my annual out of pocket costs
    are limited to $3,000? My total costs for this year will
    approach 40% of what I earn.

    Now about MNCare. My daughter was covered under my plan
    until she graduated from college. While she was in high school and college, I had full hospital coverage which
    took care of major surgery and an outpatient surgery. Once
    she was dropped from my policy I saw that my MNCare plan
    changed; hospital coverage had dropped to an annual $10,000 cap. Later when I reported a change of increased income, I was dropped from coverage because of my earnings, and I scrambled to find an individual policy. My monthly MNCare premium for just myself was $58; quite affordable.

    With the new state budget, income (although NOT asset limits) have changed, and I could get MNCare coverage again.
    After my recent experience, anything more than a day or
    two in the hospital is a scary proposition. The total cost
    before insurance paid was $17,200 for my dizzy spell!

    From my experience, MNCare is great for routine kinds of things: screening, checkups, meds, etc. Even with the cap
    on hospitalization, my recent outpatient surgery would have been covered. I don’t know what’s worse at this point:
    raising my deductible to a more “affordable” $5,000, or
    rolling the dice and hope I don’t need hospitalization and
    get affordable routine care. As has been said before, with
    high out of pocket costs, people tend to ration the care
    they seek.

    Another article here mentioned the increase in the number of
    people applying for MNCare and the long wait for approval.
    This is not new; I had to delay my major surgery while my
    renewal was being processed. For every renewal proofs for
    income, assets, etc. are required. My parents even had to
    search boxes one year for a 1960’s passport to prove my
    citizenship, because I was born outside the U.S. My im- pression from the long waits on phone calls to talk to someone was that they’re very understaffed and that that’s no accident; make it difficult to get help, and people will just give up.

    To paraphrase a Haitian proverb, “the rich man says ‘that
    guava (fruit) is rotten’; the poor man says ‘let me see.’
    I’m that poor man, and single payer sure looks good to me.

  25. Submitted by Casey Selix on 08/28/2009 - 04:19 pm.

    Just wanted to let readers know that I have attempted to answer some of your questions about rescission, rate of insurance denial, and policy cancellations in an Aug. 24 post. Here is the link:

  26. Submitted by Sherry Gunelson on 08/29/2009 - 01:39 pm.

    MCHA is required by state law to charge at least 125% of regular insurance rates. At the time I got on it, MCHA was run by BlueCross Blue Shield, the same company that rejected the people to get them on MCHA. (BlueCross BlueShield & Medica were the only two insurance companies offering individual policies.) MCHA is now run by Medica.

    Anyways, premiums go up at least 20% a year, often more. We went from a $2,000 deductible (each) to a $10,000 deductible each. The lower deductible policies become unaffordable. Especially as you age, since in addition to the 20% plus annual premium increases, your premiums go up drastically as you get older.

    BCBS did actually take my two kids on so they are not on MCHA. They did helpfully tell me to put the policy in the youngest’s (9 yer old) name, because they would drop them if they started using it a lot and that would probably happen to the oldest first.

    But who needs change.

  27. Submitted by Sandra Peterson on 08/31/2009 - 02:22 pm.

    Many thanks to Casey for follow up articles and referrals. I will be calling the Minnesota Department of Commerce Consumer Response Team.

    I’ve worried that seeking care would put us at risk of policy cancellation and now pretty much know that we must not seek care for two years while we are “on trial”. But if policies are easily cancelled, why do any of us in the individual market even buy insurance, often the high-deductible variety? We pay premiums, they don’t cover anything for the first several thousand dollars, then can cancel policies (probably without even a thank you for the free $s we gave them) when it might begin to cost them.

    I’ll be doing more research, including trying to better understand Minnesota Comprehensive, pre-existing conditions, and if it is rescission-proof. I hate the cost but it would be good have some sense of security whereas I feel none now.

    Once again, thanks to Casey for these most valuable articles. I also appreciate the honest, intelligent comments. 🙂

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