It’s Time for Health Insurers to Wise Up

Sometimes companies appear blind to obvious problems. That’s been the case for some time with health insurance carriers. In an age when medical insurance is a must, the companies have managed to put many individuals in jeopardy because of lost coverage. They’ve also unnecessarily complicated the claims process.

One of the major problems is what happens when people covered by group policies change jobs, lose jobs, get divorced or simply grow up and leave the family. Every time there’s a change like that, there’s a potential for lost coverage.

For most people, switching to a new carrier at a new job, or even obtaining individual coverage, is no problem. But the situation is far different when the individual has been under treatment for a medical condition and faces the possibility of recurring problems.

In most cases, this pre-existing condition will be excluded from coverage when the person obtains a new insurance policy.

Very Expensive

At present, many group plans offer the right to convert to an individual policy without losing coverage for existing conditions to those who have to leave the group.

But the conversion privilege is hardly what it should be. In some cases, the conversion policies provide less overall coverage than what was included under the group plan. What’s more important, these policies are astronomically expensive. For instance, an individual in one group plan receives broad coverage at a cost of a little over $100 a month. The conversion policy costs $360 a month.

Fortunately, a new federal law, effective as companies renew their annual insurance contracts, requires employers with group medical plans to make continuing coverage available for three years after an individual leaves the group. The individual has to pay for the coverage but can be charged no more than 102% of the rate the company or the individual, or the two together, paid under the group plan.

Even this law is inadequate, however, because of the three-year term placed on it. Any limitation on term leaves those with existing conditions, like, say, a chronic heart problem, with a potential for lost coverage and exposure to possibly massive medical expenses in the future.

The failure of the industry to come to grips with the problem on its own argues for stronger national standards. Either pre-existing condition limitations should be removed when an individual shifts from one insurance carrier to another, or the previous insurer should continue to be liable for coverage of any continuing treatment.

Unneeded Red Tape

The insurance companies also continue to build unnecessary red tape into the filing of claims. One Los Angeles executive who recently underwent surgery wound up with a four-inch-thick file of forms that he had to file to cover bills from various care providers. Such complexity may discourage the filing of some legitimate claims, particularly by elderly policy-holders who have difficulty handling their own accounts.

In an age of computers, when information on policy-holders can be easily retrieved electronically, insurers still require the filling out of extensive forms containing information already in the files. They are too quick to reject claims over supposed lack of documentation. And when they do pay the claims, the forms notifying the policy-holder of that payment often provide confusing information about who’s been paid what, and why.

That’s just for starters. Take families with two wage earners and overlapping group policies. It can be a full-time job getting the two insurance companies to pay their fair share. Policy-holders file multiple forms, often get back letters asking for more information from the other carrier, and thus are forced to file even more forms. In some cases, carriers are so unaware of the world around them that they still automatically make the husband’s insurance the primary source of coverage when two policies are in force.

It’s past time for the insurers to get themselves better organized. It should be possible to file a single form with one of the companies and have them do the rest on their own.