HEALTH INSURANCE PROBLEMS
May 6, 2009 -- Many people who believe they have adequate health insurance actually have coverage so riddled with loopholes, limits, exclusions and gotchas that it won't come close to covering their expenses if they fall seriously ill, a Consumer Reports investigation found.
At issue are so-called individual plans that consumers get on their own when, say, they've been laid off from a job but are too young for Medicare or too "affluent" for Medicaid. An estimated 14,000 Americans a day lose their job-based coverage, and many might be considering individual insurance for the first time in their lives.
But increasingly, individual insurance is a nightmare for consumers: more costly than the equivalent job-based coverage, and for those in less-than-perfect health, unaffordable at best and unavailable at worst. Moreover, the lack of effective consumer protections in most states allows insurers to sell plans with "affordable" premiums whose skimpy coverage can leave people who get very sick with the added burden of ruinous medical debt.
For its investigation, CR hired a national expert to help evaluate a range of health plan policies from many states and interviewed consumers who bought those policies. CR also talked to insurance experts and regulators to learn more. Among their findings:
> Health insurance policies with gaping holes are offered by insurers ranging from small companies to brand-name carriers such as Aetna and United Healthcare. And in most states, regulators are not tasked with evaluating overall coverage.
> Disclosure requirements about coverage gaps are weak or nonexistent. So it's difficult for consumers to figure out in advance what a policy does or doesn't cover, compare plans or estimate their out-of-pocket liability for a medical catastrophe. It doesn't help that many people who have never been seriously ill might have no idea how expensive medical care can be.
> People of modest means in many states might have no good options for individual coverage. Plans with affordable premiums can leave them with crushing medical debt if they fall seriously ill, and plans with adequate coverage may have huge premiums.
> Even as policy makers debate a major overhaul of the health-care system, government officials can take steps now to improve the current market.
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