Some Californians are refused individual health insurance policies even if they are in good health and can afford coverage because of their jobs and use of certain medications, according to a published report.
Such considerations by health insurers are legal, according to the report in the Los Angeles Times Monday, but consumer advocates say the policies are too restrictive.
The restrictions are outlined in confidential underwriting guidelines that health plans provide to insurance brokers but not to the public. The newspaper obtained the guidelines for four health plans in the state: Blue Cross of California, Blue Shield of California, PacifiCare Health Systems Inc. and Health Net Inc.
All four health plans look at prescription drug use to decide whom they will sell individual policies, the documents said. Eight of the 20 top-selling prescription drugs in the U.S., including No. 1 Lipitor, which fights cholesterol, make the lists of two health plans.
Blue Cross of California, the state’s top seller of individual policies, is the only one of the four plans that does not exclude applicants based on occupation. The other three consider entire categories of workers, including roofers, pro athletes, migrant workers and firefighters, who may pose too big a risk.
“This is something that has been actuarially determined to keep insurance affordable for a very broad range of people,” said David Olson, a spokesman for Woodland Hills-based Health Net.
Individual policies are purchased by people who do not have job-based group health benefits. They are granted case-by-case, meaning in effect that health plans are free to choose whom to cover and what to charge them.
Studies show “guaranteed issue can price people out of the market, and, as public policy, it achieves the opposite goal of getting more people insured,” said Shannon Troughton, a spokeswoman for WellPoint Inc., the Indianapolis-based parent company of Blue Cross of California.
The problem with adding even one high-risk member to an insurance plan is that the costs go up for everybody, said Tyler Mason, a spokesman for PacifiCare, a division of Minneapolis-based UnitedHealth Group Inc.
“It’s the whole risk-pool thing, and one affecting the hundreds.”
David Seldin, a spokesman for Blue Shield of California, a nonprofit health plan that favors universal coverage but nonetheless currently underwrites based on medical condition, prescription use and occupation, said the company would like to see the system changed.
“We think it’s a bad system,” he said. “We operate the same way as everybody else in the marketplace does, using the same actuarial data that everyone else in the marketplace does, because it’s the only way to remain economically viable.”
The health plans’ actuarial determinations are not always the same. In the case of firefighters, PacifiCare lists them as ineligible, but HealthNet recently agreed to sell them coverage through the state firefighters association.
“This is one of the features of our polyglot system of health insurance,” Health Net’s Olson said. Health plans have “different approaches. Our view would be that’s a good thing.”
But consumer advocates say such policies are too restrictive.
“This isn’t cherry picking; this is ignoring whole orchards of people,” said Jamie Court, president of the Foundation for Consumer and Taxpayer Rights.
The issue comes as Gov. Arnold Schwarzenegger and state lawmakers are seeking ways to expand coverage to many of the 6.6 million uninsured Californians. The governor was set to announce his plan Monday.
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