Other Voices: Don’t bet your life on health insurance
My health insurance was “the best out there,” according to a spokesman for the National Association of Self Employed. The NASE had “shopped the industry” for its 300,000 members. Its plan had a million dollars in coverage. It was so exclusive, you had to join the NASE to get it.
Contrary to media reports, this insurance wasn’t “cheap.” Premiums cost me more than Foundation Health, more than Health Net, more than plans from Blue Shield.
Within months, the policy cost my entire nest egg. It left me owing nearly a quarter million dollars in medical bills. It drove me into a five-year battle to avoid bankruptcy and save my business, working at least part-time every day of those years except Christmas Days.
This wasn’t a matter of reading the fine print ” because the big print said, against an American flag, the NASE had done the reading for you. Years later, I learned the NASE’s allegiance was not to its 300,000 members nationwide but to one insurance company in Texas.
Los Angeles lawyers Tony Stuart and George Gallegos spent nearly $100,000 in out-of-pocket expenses on my behalf and three years preparing a case for jury trial in Nevada County. After numerous postponements, the trial was set for May 2 this year, only to be quashed by Judge Albert Dover. He denied us our day in court and characterized our claims as a matter of “buyer beware.”
In that case, I feel compelled to warn all insurance buyers what to beware of:
Within weeks, NASE-style Association Health Plans (AHPs) may be approved by the U.S. Congress. Such plans do sound really good on the surface. That’s why I bought into one.
The charismatic idea is that small businesses could form associations across state lines. They’d have “group clout” while shopping for insurance among national companies.
The danger lies in direct ties between associations and insurance companies. If a mechanic tells you a used car is in perfect condition, and you learn after a breakdown that the dealer had paid the mechanic to mislead you, you’d call it fraud. In health insurance, such issues are clouded in complexities, and laws have not kept pace.
The NASE sells products of the Mega Life and Health Insurance Company of North Richland Hills, Texas. Other associations also market Mega plans, and the entities are interwoven with a company formerly known as UICI. Business Week Magazine said UICI was sold last September for $1.7 billion. Today, the company is known as HealthMarkets.
Connections between the NASE, Mega, and UICI were revealed in a Wall Street Journal article in 2002, two years after I had bought the policy and one year after my wife and I were overwhelmed with $200,000 in medical bills. The article said UICI was founded in 1984 by a Texan named Ronald Jensen, and the person who started one of the associations in 1992 was Mr. Jensen’s son, Jeffrey. By 2002, the article said UICI had policyholders in 38 states.
The Wall Street Journal also quoted a transcript in which a training executive said, “The whole temperature of a (sales) presentation is different … if we’re in there as a NASE enroller as opposed to an insurance agent.” That example of deception, used in a Kansas City lawsuit, led to a $1 million settlement by UICI.
After learning my wife and I hadn’t been hospitalized in decades, the NASE salesman proposed a Mega plan with $1 million in lifetime coverage that included $300 a day of basic hospital room and board. The literature said benefits were based on “usual and customary charges.”
In reality, hospital and surgical fees are at least five times higher than the plan allowed. But how does one find out? Hospitals don’t publish their rates like hotels or cruise ships.
The California HealthCare Foundation recently published a three-month pricing study of 64 hospitals. Only a third of inquiries got prices on the first try. Another third needed three or more calls or visits; one required 17 contacts; and about one-fourth got zilch.
My wife and I had six surgeries (three each) within one nine-month period in two hospitals. Those ordeals produced 47 separate medical accounts with more than a thousand pages of summarized bills. The itemizations, when they came, were beyond comprehension.
Because I had never heard of Mega Life and Health, I was curious why the NASE had chosen it. So the salesmen produced A.M. Best ratings, and there was Mega among the familiar companies.
Experts may know that A.M. Best provides no measurements of honesty, fairness, or customer service. They only rate an insurance company’s solvency. Heck, a crime syndicate can be solvent.
You may think it takes a major medical event to play havoc with your finances. Younger people, in good health, might choose insurance based on that assumption. Watch out.
In 2004, Sierra Nevada Memorial Hospital charged me $5,000 for a one-night visit, plus $500 extra for a chat with the house doctor. The bill included things like $115.50 for an IV bag of sodium chloride (salt water) that is listed on the Internet at $2.99. Such mysterious pricing makes it unlikely that laymen can calculate the amount of insurance protection they really need.
California legislators tried to serve the public by banning the practice of excluding certain ailments from individual policies. The lawmakers said, in effect, “Insure your clients for all their conditions or none of them.” The insurers said fine, and chose none of them. Now if you have just one disqualifying condition, even a minor one, an insurance company may turn you down flat. This is one reason why 20 percent of non-elderly Californians are uninsured, including employees of large firms. (California HealthCare Foundation)
That’s one example of how insurance companies circumvent the best intentions of our public officials. There are many more.
Just as magicians fool audiences with misdirection, the NASE spotlights everything except what it doesn’t provide ” a cap on out-of-pocket costs. Without a cap, you have no insurance against financial disaster.
But Mega says it provides $1 million in coverage. Some literature raises the figure to $2 million for no obvious reason except enticement. How you get there, past the caps, is a riddle to me.
On this issue, the Foundation for Taxpayer and Consumer Rights in Santa Monica invited me to Assembly committee hearings on AB 2281, a bill that would require caps on patient costs. The committee approved the bill 8-4 on April 25, despite opposition from insurance representatives who claimed it would reduce consumer choice and flexibility and drive up the cost of health care. Yeah, sure.
Also attending was Dana Christensen of Playa del Rey. Her husband, Doug, had bone cancer. With his unpaid medical bills topping $450,000, Doug urged Dana to divorce him, hoping to free her from his debt. She refused and stayed with him until death did them part.
Represented by Tony Stuart, Mrs. Christensen won a $1.7 million settlement in Los Angeles County. That’s less than it seems after deducting her legal costs, medical bills, and taxes, not to mention her anguish. Now Cedars-Sinai Medical Center, the largest nonprofit hospital in the United States, is suing her for the interest that accrued on her husband’s account during the years her case against Mega was pending.
The notion that nonprofit hospitals will be charitable toward under- or uninsured patients is not true. Sutter Health and Catholic Healthcare West have been under attack publicly for charging higher rates for uninsured patients and using aggressive collection tactics. Both hospitals employ collection agencies and put liens on patients’ homes. They did that to us.
I don’t want to disparage any dedicated and compassionate people at Sierra Nevada or Sutter, but I must warn you that their billing departments can send you into financial ruin, regardless of impacts on your health.
You’ve heard “justice delayed is justice denied” and “legal loopholes” set free many scoundrels. Those notions aren’t just theatrical. You can have the most powerful legal case in history and still have it disappear in courtroom fog.
We battled at least 10 lawyers who churned out mountains of paper details to obscure the simple truths of our case. In a pretrial conference, Judge Robert Tamietti asked if I would walk away from a six-figure settlement. I said the amount seemed too miniscule to discourage the defendants from continuing their plunder, and he said my goals were not attainable in the real world. “It only happens in the movies.”
At the bottom of our despair, it was obvious others didn’t want to know about it. It’s like the title of the 1980s rock hit ” “Everybody’s Working for the Weekend.” No one wants to feel your misfortune because it disturbs them too much. It’s human nature.
So my best advice ” don’t follow in my footsteps. Or you could end up in my shoes.
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