Guest Column: 'Insurance poor' workers can't afford health care

To the vast numbers of people without health insurance, those who have it are extremely lucky because they have coverage provided or subsidized by an employer or the means to purchase their own.

Those feelings are generally reinforced by the media with stories addressing how a lack of insurance compromises health, or how children with insurance enjoy better health.

Health insurance seems to be the great panacea.

The current economic turmoil makes having insurance seem even more valuable as people are losing their jobs and their insurance. Some are able to afford the rates mandated by the Consolidated Omnibus Budget Reconciliation Act, but many are not.

'Insurance poor'

Yet for many people who have insurance, necessary health care remains an elusive dream. These individuals and families are members of a relatively new, but growing, group of the "insurance poor." The costs of their monthly insurance premiums are such a great burden on their budgets that they cannot afford the co-insurance and/or deductibles for needed care.

Some of these people are currently unemployed or laid off, but the vast majority are among the self-employed and small-business entrepreneurs - the same group that experts believe to be the strength of our multifaceted economy.

Here's a case in point. The details are true, but the names have been changed.

John and Mary own a small business with no full-time employees other than themselves. The business generates decent revenue and provides a reasonable income. They have maintained small-business health insurance coverage by purchasing separate policies to qualify for the minimum of two employees. They are both 60 years old and have experienced and recovered from some serious health conditions in the past decade. They have five years before qualifying for Medicare.

For many years, John and Mary were able to keep their health insurance costs in the area of $700 to $900 per month by making minor adjustments to office co-pays, deductible levels and prescription co-pays. But in the past three years, their premiums have risen to more than $1,700 a month, despite aggressive coverage adjustments, including raising their deductibles to $5,000 each and increasing out-of-pocket costs for doctor visits and prescriptions.

The cost of insurance has had such a major impact on their daily budget that they cannot afford to take advantage of their insurance. They feel protected to a certain extent in case of a major health incident, although a 30 percent co-pay could create serious problems.

Aside from the annual premium inflation, the rates in this case also were impacted by these key factors:

• John and Mary had relocated to Missouri from another state. Since the insurer was franchised by state, they were subject to the re-underwriting of their policies. The increase, due to state law, was limited to a 67 percent increase of their existing premiums.

• Their insurance company was acquired by another and the subsequent policy realignment resulted in another premium increase.

• Both of them hit the "premium bump" of turning 60.

The bottom line, according to John and Mary, is that the increased premium costs have usurped the discretionary money that could have been spent toward their overall health care. Perhaps that explains why a good number of hospitals around the country are seeing a decrease in patients and revenue.

Solving the coverage conundrum

Although there does not seem to be any sure cure for the health care/insurance dilemma, steps can be taken to reduce or eliminate some of the more glaring defects. Some experts believe the only real solution is a total dismantling of the system and development of a new one.

Here are some suggestions to consider:

1. Once-and-done underwriting. Eliminate the ability of insurance companies to re-underwrite policy risks based on an interstate relocation or company acquisition.

2. Equalize health care pricing. The health care industry must be allowed to set a fair and singular price for services and procedures rendered - and that price should be the price to all, insured and uninsured alike.

3. Eliminate "age bumps." Establish a premium baseline at the time of initial underwriting, much like a standard premium whole life policy. Aging should be factored into the premium structure to avoid "age bump" increases.

4. Maintain physician-managed care. All too many physicians complain that treatment is being directed by the insurance companies, not the physicians, to the detriment of the patient's health.

At present, the political and societal health care focus is on the uninsured, but there is a significant segment of the "insured poor" that is flying below the radar. If we are to truly tackle this monumental problem, we must look at it in its entirety, and everyone must get involved. The solution does not lie with politicians. The solution will only be the result of open and honest discussion among every facet of our society. We've been walking around this elephant in our living room long enough; let's start dealing with it.

Jack Burke is editor of ProgramBusinessNews, a twice-monthly newsletter for the insurance industry, host/producer of Audio Insurance Outlook and president of Branson-based Sound Marketing Inc. He can be reached at jack@soundmarketing.com.