Just in time to add fuel to the health insurance reform debate, the federal Department of Health and Human Services (HHS) has shone a spotlight on the industry’s practices of denying coverage to individuals with pre-existing conditions.
The report, “Coverage Denied: How the Current Health Insurance System Leaves Millions Behind,”scrutinizes health insurance company practices of denying coverage to or discriminating against Americans who have pre-existing medical conditions.
HHS noted that a recent national survey found that 12.6 million non-elderly adults – 36 percent of those who tried to buy insurance on the private market – were discriminated against in the past three years because an insurance company deemed them ineligible for coverage because of a pre-existing condition, charged them a higher premium, or refused to cover their condition.
“Another survey found 1 in 10 people with cancer said they could not get health coverage, and 6 percent said they lost their coverage because of their diagnosis,” HHS said.
The insurance company practice of denying coverage because of pre-existing conditions is not confined to serious diseases, the report noted. “Even minor problems such as hay fever could trigger prohibitive responses.”
“In 45 states insurance companies can discriminate against people based on their pre-existing conditions when they try to purchase health insurance directly from insurance companies in the individual insurance market. Insurers can deny them coverage, charge higher premiums, and/or refuse to cover that particular medical condition,” said the report.
An insurer could charge high premiums, deny coverage, or set a restriction such as denying any respiratory disease coverage to a person with hay fever, according to the report.
Some insurance companies respond to an expensive condition such as cancer by initiating a thorough review of the patient’s health insurance application. If the company discovers that any medical condition, regardless of how minor, was not reported on the application, it could revoke coverage retroactively for the patient and possibly all members of the patient’s family, the report said. The practice is known as rescission.
Companies can do this even if the condition found is not related to the expensive condition or if the person wasn’t aware of the condition at the time, the report charged.
“At least one company encouraged employees to revoke sick people’s health coverage through rescissions,” the report said.
“When a person is diagnosed with an expensive condition such as cancer, some insurance companies review his/her initial health status questionnaire. In most states’ individual insurance market, insurance companies can retroactively cancel the entire policy if any condition was missed – even if the medical condition is unrelated, and even if the person was not aware of the condition at the time,” the report said. “Coverage can also be revoked for all members of a family, even if only one family member failed to disclose a medical condition.”
Under terms of the proposed health insurance reform currently being debated in Washington, insurance companies would be prohibited from refusing coverage based on someone’s medical history or health risk. “Companies also would be barred from watering down coverage or refusing renewal because someone becomes sick,” the report noted. Companies would have to renew any policy as long as the policyholder pays the premium in full.
The report is available at www.HealthReform.gov.