Rip-Off: Does Your Health Insurance Cover As Much As You Think It Does?

Posted by Digby, Hullabaloo at 8:31 AM on July 1, 2009.

I've written a few posts about this aspect of the health care crisis and it's a serious problem for a lot of people in the individual insurance market. This story in the NY Times lays out the problem in all its ugliness: people are basically buying worthless insurance and paying high premiums for it:

Health insurance is supposed to offer protection -- both medically and financially. But as it turns out, an estimated three-quarters of people who are pushed into personal bankruptcy by medical problems actually had insurance when they got sick or were injured.

And so, even as Washington tries to cover the tens of millions of Americans without medical insurance, many health policy experts say simply giving everyone an insurance card will not be enough to fix what is wrong with the system.

Too many other people already have coverage so meager that a medical crisis means financial calamity.

[...]

“Underinsurance is the great hidden risk of the American health care system,” said Elizabeth Warren, a Harvard law professor who has analyzed medical bankruptcies. “People do not realize they are one diagnosis away from financial collapse.”

Last week, a former Cigna executive warned at a Senate hearing on health insurance that lawmakers should be careful about the role they gave private insurers in any new system, saying the companies were too prone to “confuse their customers and dump the sick.”

“The number of uninsured people has increased as more have fallen victim to deceptive marketing practices and bought what essentially is fake insurance,” Wendell Potter, the former Cigna executive, testified.

Mr. Yurdin learned the hard way.

At St. David’s Medical Center in Austin, where he went for two separate heart procedures last year, the hospital’s admitting office looked at Mr. Yurdin’s coverage and talked to Aetna. St. David’s estimated that his share of the payments would be only a few thousand dollars per procedure.

He and the hospital say they were surprised to eventually learn that the $150,000 hospital coverage in the Aetna policy was mainly for room and board. Coverage was capped at $10,000 for “other hospital services,” which turned out to include nearly all routine hospital care -- the expenses incurred in the operating room, for example, and the cost of any medication he received.

In other words, Aetna would have paid for Mr. Yurdin to stay in the hospital for more than five months -- as long as he did not need an operation or any lab tests or drugs while he was there.

They market these policies as catastrophic care policies: at least you'll be taken care of if you have a heart attack or get run over by a bus. You give up things like Doctor's office visits visits and prescription drug coverage and you pay huge deductibles just so you'll be covered if the very worst happens. And this is what they end up with.

There is no reason why the congress can't fix this one. They should mandate a decent level of coverage for catastrophic care -- you know, the very thing this fellow thought he was buying. Just making a disclaimer on the pretty brochure isn't enough. The insurance companies can't be allowed to sell policies that don't cover necessary medical expenses. That's just theft.

And this fellow should have been able to buy into a better plan than the crap he was offered. A plan like Medicare maybe. He's 64. Is there really any reason why someone like him shouldn't be able to buy directly into Medicare for a fee? I recall that the idea of allowing those over 55 to buy in was on the table at one point and it sounded like a good idea to me. Americans all tell the pollsters they want a lot of health care options. What's wrong with that one?

Tagged as: health insurance, health reform, health costs, public option, underinsured

Digby is the proprietor of Hullabaloo.