Couple’s health insurance choices are bad and worse

Stuart and Cathy Selter recently learned that Anthem Blue Cross is cutting off sales of their plan, which costs them about $1,500 a month with a $2,500 deductible. They can either stick with that plan and pay higher premiums or switch to another plan with a higher deductible.

By David Lazarus – L.A. Times

April 19, 2011

Stuart and Cathy Selter of Agoura Hills were satisfied with their Anthem Blue Cross health insurance plan, which cost them about $1,500 a month in premiums and had a $2,500 deductible.

Now, they say, Anthem is moving the goal posts for their coverage. The insurer informed them recently that because it’s no longer selling their plan, the risk pool is shrinking and their premiums will rise.

Anthem didn’t specify how much the Selters’ rates could increase. But if fewer people are sharing the risk of an insurance plan, costs could rise dramatically.

“A shrinking risk pool will eventually mean that the only people left in the plan will be ones with preexisting conditions,” said John Barrett, a Pasadena health insurance broker. “Over time, rates would go up more than other plans.”

The Selters are in exactly that situation. Cathy is a Type 2 diabetic, making her uninsurable elsewhere — at least until a provision of the new healthcare reform law guaranteeing coverage takes effect in 2014.

So their only choice is to stick with their current insurance plan and face the prospect of rising premiums, or to switch to a different Anthem plan with a higher deductible or out-of-pocket expenses.

“Our choices are bad and worse,” Stuart Selter, 61, told me. “Why? Why do those have to be the only choices?”

Well, because health insurance in this country is primarily a for-profit business, and the Selters, along with about 14 million other people with individual insurance policies, aren’t profitable enough for multibillion-dollar insurance companies. So they’re being steered (“forced” would be another word) into more profitable plans.

“I’m a for-profit, capitalist kind of guy,” said Selter, who works as executive director of an educational foundation. “But I don’t believe you have to gouge the people who keep you in business.”

Peggy Hinz, an Anthem spokeswoman, said only that “sometimes we need to modify the range of plans we offer.”

She declined to discuss the rationale for no longer selling the Selters’ PPO 2500 plan or how high the premiums might rise with a dwindling risk pool.

Barrett, the insurance broker, said that when a plan is closed to new policyholders, most people simply switch to a different plan with the same or a different insurer.

“The only people who suffer are the ones with preexisting conditions,” he said. “They can’t go anywhere else.”

Like the Selters, who suddenly find themselves being squeezed.

“Anthem isn’t doing this because it’s evil,” Barrett said. “This is a business decision. That’s what capitalism is.”

True. But capitalism shouldn’t be unfair.

In the case of individual health insurance, policyholders enjoy no group rates or safety in numbers. They are at the mercy of their insurers, which is why rates have soared in recent years.

Nearly 151,000 Anthem policyholders in California will see their rates go up as much as 26% on May 1. Under pressure from state officials, Blue Shield of California recently dropped plans for another rate hike that would have meant cumulative increases of as much as 87% for some policyholders.

The average rate increase for renewals of individual polices last year was 20%, according to a survey by the Kaiser Family Foundation. Switching to a cheaper plan still entailed an average rate hike of 13%, the survey found.

“The individual insurance market is not a fair playing field,” said Ken Stuart, chairman of the California Health Care Coalition, a nonprofit organization that represents large purchasers of health insurance such as school districts, labor unions and the California Public Employees’ Retirement System.

“The inequities of the individual insurance market have been terrible for a long time,” he said. “People are at the mercy of the marketplace.”

I’ve long believed that a Medicare-for-all approach is the most equitable way of providing health coverage for people. At the very least, some sort of public option should be available for the millions of people who lack employer-provided insurance.

They’ll presumably have improved access to healthcare several years from now when so-called insurance exchanges are created under the reform law and insurers are prevented from denying coverage to people with preexisting conditions.

But that’s only if there’s a mandate for everyone to enter the system, and a number of lawsuits are pending that challenge Congress’ authority to impose such a requirement. Without a mandate, it’s difficult to see how these exchanges would operate if people could just wait until they get sick before seeking coverage.

In the meantime, insurers get to keep calling all the shots, and people like the Selters are presented with the miserable choice of having to pick between higher premiums and higher deductibles if they want to remain insured.

That’s capitalism. I get it.

But you’d think we’d be able to agree that there are some things — access to safe food, clean water, affordable healthcare — that shouldn’t be first and foremost about profits.

Or do I have that wrong?

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