A Healthy Blog

Massachusetts health care — wonky, with a healthy dose of reality

Why an Individual Mandate Is a Bad Idea in a Lot of States (Happy new year!)

Why an Individual Mandate Is a Bad Idea in a Lot of States (Happy new year!)

January 1, 2007

A happy and healthy new year to all our faithful Healthy Blog readers. We appreciate the feedback you give us in many ways and love your suggestions. OK, enough partying ... down to business.

We admit it -- we're not convinced an individual mandate to buy health insurance will work in MA, and we're willing to give it a serious try. There are compelling reasons why it makes sense, and there are compelling reasons why it may not work. We get asked a lot -- should other states try it too? Our answer is -- some should consider it and some should not.

Here's a strong reason why some should not -- read yesterday's compelling article in the LATimes (click here for it) on folks who can't buy health insurance in California because state law permits medical underwriting -- insurers can refuse to offer coverage for virtually any health-related reason.

Insurers have wide latitude to choose among applicants for individual coverage and set premiums based on medical conditions. Insurers say medical underwriting, as the selection process is known, is key to keeping premiums under control. "Our goal is to extend affordable coverage to as many people as we can," said Cheryl Randolph, a spokeswoman for PacifiCare Health Systems Inc., a subsidiary of Minneapolis-based UnitedHealth Group Inc. "But because of the medical underwriting, we do not accept everybody." ...

Insurers declined to disclose the underwriting guidelines that lead to rejection or higher premiums. But a review of public records, as well as rejection letters sent to individuals, shows that California carriers turn people away or charge them higher premiums for conditions that range from the catastrophic to the common. Cancer, epilepsy and AIDS make the list, along with breast implants, ear infections, varicose veins and sleep apnea.

Jeffrey Miles, a vice president of the California Assn. of Health Underwriters, a trade group for independent insurance agents, said one of his clients — a 27-year-old woman "in perfect health with absolutely nothing wrong" — was rejected because she had seen a psychologist for three months after breaking up with a boyfriend. "I call it hangnail underwriting," Miles said. "If a person has taken virtually any medication, they are going to be turned down. If people have had any psychological counseling at any time in recent history, they are going to get turned down."

Any state that permits insurers to engage in blatant cherry picking has no business mandating that its residents have to buy health insurance. That's just wrong. Massachusetts is one of the minority of states with strong consumer protections in our insurance market. It's a precondition to even considering an individual mandate.