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And then there are people who no longer have health insurance. The recession has created many such people because of layoffs or companies closing. And many Americans now shop for individual policies. Turns out it's a lot harder to get an individual policy than you might think. Here's Sarah Varney of member station KQED.
SARAH VARNEY: During the last economic bust, I got laid off and couldn't afford to keep paying for health insurance through my old employer - what they call COBRA payments. I applied for an individual plan through Blue Cross, but I got a letter saying I was denied. I was 28 at the time and had no health problems. I was thin, athletic. In fact, I'd done a triathlon and biked from San Francisco to Los Angeles twice.
Blue Cross told me it was because my medical records showed I'd gone to the doctor complaining of stomach pain. The pain had long since gone away, but Blue Cross said if I wanted insurance, my doctor would need to fax a note guaranteeing I didn't have stomach cancer. He faxed the letter, and eventually I got a plan. It makes you wonder though. If Blue Cross didn't want to insure me — a healthy 20-something - how on Earth do actuaries determine who's a good risk and who's not?
Mr. JEFF FLUKE (InGenix): It's very scientific and it's very fact-based.
VARNEY: Jeff Fluke is an underwriter with the risk management company InGenix. Fluke says actuaries first calculate average health costs over a broad population - 28-year-old women, say, or 50-year-old men. Then the underwriter adjusts those averages based on your medical history and health status — your height, weight, whether you have high blood pressure, or ever had asthma or hay fever.
Mr. FLUKE: Maybe there is a heart condition. You know, how long ago was it? What was the treatment? Are you on treatment now? What are the medications you're taking - because some medications are very expensive and some aren't.
VARNEY: These complex algorithms boil down to, will you cost the insurance company more money than they can make off your premium?
Mr. TOM MILLER (American Enterprise Institute): This is a very crude world where sometimes insurers and customers are very short-term oriented.
VARNEY: Tom Miller is a fellow at the American Enterprise Institute, a conservative think tank.
Mr. MILLER: Unfortunately there's a fair amount of rapid churning, particularly in the individual insurance market, because people aren't in it for a long period of time.
VARNEY: They get a new job with insurance or they get on a spouse's policy. So insurers typically look at the return on their investment over 18 months. To keep costs down, they want to avoid paying for predictable high-cost events like childbirth. And that, says Tom Miller, makes the individual market a punishing place for young to middle-aged women.
Mr. MILLER: Really is a family cost, but it will show up as a female-related cost pattern, whereas younger men in particular, but even older, won't go to the doctor as often.
VARNEY: Women are more likely than men to get annual exams and see the doctor when they're ill. And in most states they pay a price for it. For example, in California women pay up to 39 percent more than men for similar individual policies, even when maternity benefits are excluded. California and several other states are now considering legislation to ban the use of gender in pricing individual policies. Ten states already do so, including New York, Minnesota and Montana. Insurers stopped using race decades ago. David Magnus directs Stanford University's Center for Biomedical Ethics.
Dr. DAVID MAGNUS (Stanford Center for Biomedical Ethics): One view is that you shouldn't discriminate based on characteristics over which you have no control. That doesn't really work or apply in this particular market, since the number one factor that's often taken into account in health insurance is one over which people have no control, and that's age.
VARNEY: Despite these concerns, health insurance companies sold individual policies to almost 11 million Americans in 2006. And that number is likely to rise in the current economy. So what if you're one of them? Well, there's not much you can do to protest higher premiums based on gender, age or other factors if your state permits it. You can shop around though. One Web site, eHealthInsurance.com, helps you at least compare plans with similar benefits. And there's some new help for workers laid off after September 1st, 2008.
If you had employer-sponsored health insurance and qualified for COBRA coverage, the federal government will now pay 65 percent of your premium for up to nine months. And that even includes laid-off workers who initially turned down COBRA coverage because they thought it was too expensive. They now have a second chance to sign up.
For NPR News, I'm Sarah Varney.
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