I recently got phone calls about individual insurance from two  men who work for a small, family-owned construction company that is canceling its small group health insurance. With everybody in the company being over 50, a couple in their 60′s, and at least one person with serious health problems, the health insurance premiums for every employee were very high.  The problem with small business health insurance plans is that everybody’s premium goes up if just one person gets sick and uses the insurance policy a lot, or if just a couple of employees are in their 60′s and healthy.

So this small family company with eight employees has left each individual to fend for himself for health insurance.  One of the employees, “John” (not his real name), is pretty healthy, so he should have no problem being approved for insurance – though I did hear today that the insurance company to which he applied has asked for his medical records to assess a condition he mentioned on his application.  John is in his mid-fifties and will have a lower premium than the one he had with the employer group plan.

I talked on the phone with John’s co-worker, “Alonzo”.  Alonzo told me he is “pretty healthy” – though he neglected to tell me he is overweight.  Alonzo applied on-line for health insurance, and the insurance company did not ask for his medical records before they declined him.  His weight and two other conditions indicated on his application made the “decline” decision easy for the insurance company.  And he thought he was healthy!

Alonzo is 64 years old and has one year to go until he gets Medicare.  If he were healthy, he could get an individual policy with a very high deductible for around $200 per month.  But because he has pre-existing conditions he will pay about three times that in order to get coverage through the Health Insurance Portability and Accountability Act (HIPAA).  This 1999 federal law allows a person losing group insurance (even small group) to get insurance with no underwriting (no questions asked).

The HIPAA law which will allow Alonzo to get health insurance is a good thing.  The bad thing is that insurance companies only have to offer one or two plans under the HIPAA law and they can take the normal premium and triple it. (UPDATE: It turns out they take the “standard” rate, not the “preferred rate” and triple it.) So Alonzo will pay around $800 per month for a health insurance policy with a $10,000 deductible. We looked at other policies with much lower deductibles, but the premium for Alonzo would be over $1,000 per month for these plans.  So Alonzo will sign up for this policy, cross his fingers, and hope he stays healthy for the next year.   He can’t wait to turn 65 and get good, affordable health insurance with Medicare.

UPDATED INFO: Alonzo ended up with a HIPAA plan with a $3,500 deductible and $1,400 per month premium. He chose this plan because he needed treatment for prostate cancer which was diagnosed just as he was losing his group plan.

I hate individual insurance because I have met too many people like Alonzo.  He thinks he’s healthy.  He has worked all his life.  He and his wife have a lovely, well-kept, small home in Tucson. He is a responsible citizen who knows he needs health insurance to protect everything he has worked for all his life – and he’s willing to pay for it.  He can get health insurance because of the HIPAA law, but he is basically getting ripped off with such an expensive policy that won’t kick in until he has spent $10,000 on medical costs.

In 2014, someone like Alonzo will go onto an insurance exchange, compare plans being offered (with different deductibles and premiums), and sign up for a plan.  How simple! Of course, this kind of simple choice, with nobody being rejected for insurance coverage, can only happen if everybody is in the system – including young, healthy people.  If everybody is in the system, people like Alonzo won’t be left out in the cold.  And small businesses getting tax breaks for contributing to their employees’ premium costs will be more likely to have a group plan.

There are too many people in Tucson and across the country like Alonzo.  For me, it seems un-american to say, “Sorry, you are un-insurable.  Take a hike. Fend for yourself. It’s not our problem.  I don’t want health insurance so who cares if you don’t have health insurance.”  In 2014 this will change.  For now, I repeat, I hate individual health insurance.

The other day I wrote about Terry,  a woman with a health insurance policy from Pacificare that is being “converted” to a UnitedHealthcare policy because United took over Pacificare about five years ago.   The new policy is a terrible policy and I have been trying to get answers from somebody/anybody who can tell me how this can be allowed – particularly because the woman involved has no choice but to accept whatever United gives her, since she is un-insurable due to diabetes and other health conditions.

The worst part of this woman’s “conversion policy” is a lifetime limit to her  health insurance benefits:  $250,000.  That amount of money could be used up during one stay in a hospital! And I thought the Affordable Care Act put an end to this kind of limit.  I did some research about the law and found that such limits will no longer be allowed in 2014, but allowable lifetime benefit limits are supposed to be $750,000 after September 23, 2010 through September 2011; $1,250,000 in 2012; $2 million in 2013.  So it looks like insurance companies can still limit the amount of money they will pay out.  And then there is the question of whether or not Terry’s new policy is considered a “grandfathered” plan to which the Affordable Care Act does not apply.

Yesterday I was looking at Blue Cross Blue Shield of Arizona’s individual health insurance plans – and I noticed something was missing from the benefits information page for each individual policy.  There was no mention of a lifetime benefits limit.

I called up Blue Cross Blue Shield of Arizona to be sure I wasn’t misreading the information. And what did I learn?  Blue Cross Blue Shield of Arizona is no longer putting lifetime benefit limits on their health insurance policies. They are implementing elements of the Affordable Care Act now and not waiting until 2014.  Blue Cross Blue Shield of Arizona policies also cover preventive care at 100%  (and the deductible does not apply to these services).  This is another part of the Affordable Care Act which Blue Cross Blue Shield of Arizona has already implemented.

On the UnitedOne website for individual insurance policies, the plans have either a $3 million or $5 million lifetime benefit limit.  So where did United come up with the conversion policy for Terry?  Did they just make up a policy for her?

I’m still trying to get answers about Terry’s insurance.  Terry is afraid to talk to United, for fear that they might take away the lousy policy.  I told Terry they can’t do that – but then again, I wouldn’t think they could convert her to such a lousy policy.