17 November 2004

Health insurers reject 'near elderly'

Larry Langston takes drugs to lower his blood pressure and cholesterol, and the Missouri resident has an enlarged prostate. From Mr. Langston's point of view, at 64-years-old, he is in good health.

He hasn't had much luck convincing insurers of that. Both United HealthCare Insurance Co. and Blue Cross Blue Shield of Missouri rejected his applications for an individual health-insurance policy. He hasn't had insurance since he lost his textile manufacturing job in 2002. (Both insurers declined to comment on Mr. Langston's experience, citing federal patient-privacy rules.)

Though health insurance is an issue that affects young and old alike, it is a particularly tough problem for people aged 50 to 64 who are too young for Medicare, the government's health program that covers those aged 65 and over. As a group, they are often vulnerable to layoffs or pushed into early retirement at a point in their careers when it is difficult to get another job with benefits. Those who retire early thinking they are covered may see their benefits scaled back, as employers have tried to cut these costs in recent years. Still others lose coverage when an older spouse switches to Medicare from a plan that had formerly covered both members of the couple.

Whatever the reason, many in this pre-Medicare age group find themselves in the individual insurance market at the very time they are developing health problems that scare insurers.

A recent study by the Urban Institute found an 18 percent uninsured rate for "near elderly" (aged 55 to 64) middle-income consumers who reported being in "good" health. That is double the uninsured rate for those who said they were in "excellent" or "very good" health. The contrast suggests that the near elderly with some health issues may have difficulty getting affordable insurance at a time in life when -- unlike healthy young people who can risk going without -- they need it, says John Holahan, the study's author.

Unlike employer-based insurance, where large groups of healthy workers tend to offset the costs of sick ones, the individual insurance market generally requires insurers to weigh, for each customer, whether the premiums the customer pays will offset the risk the company would be accepting. At the heart of the problem for this group of consumers is a gap between their outlooks and insurers' outlooks on the same medical conditions. Mr. Langston's high blood pressure and high cholesterol, for example, could be seen as a "dangerous combination," says Richard Harlow, an insurance broker in Reston, Va., and former president of the Association of Health Insurance Advisers, speaking generally and not about Mr. Langston in particular. "Both of them increase your risk of heart attack, and when you combine the two, it's not adding two and two together. Two and two becomes seven," he says.

If a person develops a health problem after his policy has been written, he will be unlikely to get insurance elsewhere later on. So from an insurer's perspective, "if you get somebody and they get sick, they're not going to leave," says Kathy Thomas, a risk-management consultant for individual insurers and vice chairwoman of the Health Underwriting Study Group of LOMA, an association of insurance and financial-services companies.

For their part, consumers can be startled by insurers' concerns. Andrew C. Roth, a 50-year-old from North Hills, Calif., says Blue Cross of California estimated over the phone that the company's initial projection of $350 to $400 for an individual policy for him would be increased 20 percent -- twice -- because he had been getting allergy shots every six weeks or so and had gotten marital counseling three times a month during the two-year period before his 2002 divorce.

He was flabbergasted by the price. "Advil is my most serious drug," Mr. Roth says. He eventually got coverage through the Kaiser Permanente health-maintenance organization.

While declining to discuss Mr. Roth's experience, Blue Cross of California spokesman Michael Chee said: "There are predictors associated with certain conditions, and the taking of medications, that the underwriting guidelines reference and refer to. It all depends on the individual's background, and it all depends on the underwriter's view of the background."

United HealthCare, working with AARP, the advocacy organization for Americans aged 50 and above, now is expanding a year-old pilot program for people aged 50 to 64 that loosens some of that insurer's standards for accepting people into its individual plans. The program started in Colorado, Illinois, Missouri, Nebraska and Ohio, and it added Texas and Oklahoma this year. About 3,500 AARP members have enrolled so far.

In the program, United HealthCare still rejects some consumers, Mr. Langston among them (he is now holding out for Medicare). But the program doesn't look back more than five years into potential enrollees' health histories, and it has created more lenient standards, for example, for accepting patients with a history of early-stage breast cancer, says Jim Pogue, president of Ovations Insurance Solutions, the United unit that is running the pilot program.

The company also is trying to reduce the plans' costs. If consumers have health problems and aren't rejected outright, the company might increase their policy prices to cover the cost of their drugs, Mr. Pogue says. But it wouldn't also increase their prices to cover the additional risk that is created by health problems that could escalate, as insurers typically do.

For a 54-year-old Missouri resident with some medical conditions, one comprehensive policy in the pilot program costs on average $290 a month, with a $2,500 deductible, according to the company. For a 54-year old Missouri resident with no medical conditions, $2,500-deductible policies from insurers listed on eHealthInsurance.com ranged from $109 a month to $415 a month.

Mr. Pogue says the program is profitable so far, helped by the fact that AARP endorses United's product. United HealthCare is getting involved in managing the care of consumers in the program. Consumers are asked to fill out "health-risk assessment" questionnaires, and the company provides them with educational materials and, for more serious cases, a nurse or clinician who works with consumers' doctors to coordinate their care.

The idea is to prevent minor problems from turning into major, more-expensive ones, Mr. Pogue says.

Search Our Canadian Drug Prices

close window