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June 26, 2007

A Letter to Blue Cross

This is a real letter written by a reader to Blue Cross of California, after they rejected his application for insurance. Because -- I shit you not -- of heartburn. Read the whole thing. It's far more powerful, and illuminating, than anything I write. And if any of you have similar stories, e-mail me.

To Whom It May Concern:

I'm not sure if this letter is going to be read, or even cared about in the
least, but as a taxpaying American I would hope that a responsible
corporation would acknowledge opinions or complaints originating from the
public they aim to serve. Let your corporate conscience be your guide as I
will let my faith in the overall good of people serve me as a motivator to
continue with my opinion.

That being said, I have a serious problem in regards to your eligibility
requirements for individual health care plans. A bit about myself: I am a
very active 28 year old male, who exercises regularly (4-6 days a week),
does not use any tobacco products, eats organic foods whenever possible,
takes vitamins, gets enough sleep, rarely even catches a cold and has
absolutely no history of disease. I recently applied for one of your
"Tonik" health plans because it was finally affordable to me. I have been
without health care for over 5 years and felt that the time had come for me
to make a financial commitment to my health. However, as a young, perfectly
healthy average male, I am appalled that you would deny my claim for health
insurance. After speaking with a representative over the phone, I was told
in a very polite tone and with no hint of sarcasm that I was ineligible due
to the fact that I had had Heartburn in the last 6 months; and furthermore
that I could reapply in 6 months (again with no hint of sarcasm or
acknowledgment of the fact that I clearly wouldn't state I'd ever had
Heartburn if it meant no health care).

Needless to say, I find it insulting and ludicrous that such a benign
symptom as Heartburn can deem me uninsurable by even just one of your plans
Not to mention that I received an email stating that I should apply to the
California Major Risk Program. Major risk of what I ask you? (rhetorically)
Not only are you compelling applicants to lie about seemingly innocuous
symptoms that nearly everyone experiences from time to time (I challenge you
to find any member of society who doesn't experience Heartburn occasionally
from spicy foods or even minor food allergies), but you are standing
hypocritically against the very reason that we are forced have health
insurance in this country. If I can't get health care without insurance
(alas I am not a millionaire), and I can't get insurance to obtain health
care if I need it, then to whom and for what does said insurance serve it's
purpose?

Despite the fact that I am sure this letter is falling on deaf ears, I urge
you to rethink your ethical stance of denying health insurance applicants
the very care that they may need but are financial inept at attaining.

Is your company not in existence for the very nature of helping people
obtain medical care for an affordable cost? If you deny people with a
possible condition the right to affordable health care are you not going
against the mission of your company in the first place? Or is profit all
you care about? And please don't mistake me from the above questions, I
hardly consider Heartburn a costly or even dangerous "condition" in an
average 28 year old male and I'm sure you'd be hard pressed to find a health
care professional who would disagree with me. That aside, had I even a
slightly more serious symptom that would point towards a great need of
health care, than I am certain my claim would have been denied even
faster...if it were humanly possible. Sure, for the right price, any sort
of insurance is possible, but why not try to actually serve the real public?
People who can't afford health care and therefore turn to you as their only
hope.

You have a great responsibility bestowed upon you by our present health care
system. You have the opportunity to bring health to many underprivileged
people (and do not mistake my use of the word 'underprivileged' to adhere to
solely those who are not as fortunate to utilize the market forces for their
personal financial gain…I am only referring to the underprivileged slice of
the societal pie that is without health care regardless of class and such).
And thus, I too am given the golden key of choice. By this you can be sure
I will not be choosing your company's services, and though I am not thrilled
with my other choices, I will seek out a company with a seemingly better
understanding of the massive responsibilities entrusted to it by our
country's present health care system...if it even exists.

Let me close in saying that I don't expect to receive any sort of response
from your corporation. If by some stroke of conscience you are compelled to
respond to my letter, than please refrain from sending me some lawyer jargon
about how you are always right, that it was in the fine print, and that
Heartburn may in fact be a sign of a serious problem. Furthermore do not
respond with statistics or righteous finger pointing, or worse: trying to
sell me a more expensive plan. If you are not writing a heartfelt, sincere
response, then don't bother.

Sincerely,

[Name Deleted]

June 26, 2007 in Insurance | Permalink

Comments

If I read correctly, he was denied because of heartburn, not allergies.

Posted by: Cardinal Fang | Jun 26, 2007 3:32:13 PM

Yikes, was thinking of allergies while writing. Thanks.

Posted by: Ezra | Jun 26, 2007 3:38:46 PM

I've stated previously that we don't have the right regulations in place today, and patients shouldn't be denied coverage for previous conditions.

At the same time-- this is a truly bizarre example. From a pure business standpoint, in today's industry, this patient is the exact patient every insurance company is seeking, not denying. He's pretty much pure profit (risk-adjusted) given the description above.

There's something not right, either his description or a colossal mistake on the other side...

Posted by: wisewon | Jun 26, 2007 3:40:20 PM

All hail the glorious and infallible Free Market, producer of all that is good and just, omniscient in judgement and fair in all things.

Posted by: Joshua | Jun 26, 2007 3:49:51 PM

Hard to take this at face value. I wonder if the writer of the letter isn't shading things, perhaps describing his answer to a question about chest pains in terms of heartburn or something.

The part about inducing applicants to lie is off. Insurance companies know people lie on their applications, but they don't rely only on applications to determine pre-existing conditions. If the applicant lies about a condition and then files a claim in that relates to it (say a heart attack or esophageal cancer), the insurer will make its own determination whether it was a pre-existing condition. If you lie, you might get away with it or you might end up paying the premiums and not getting coverage anyway.

Posted by: Sanpete | Jun 26, 2007 3:54:23 PM

They're probably afraid the heartburn is chronic and he'll apply for a prescription to Nexium or something. I'm not trying to defend them, as that's pretty ludicrous especially now that Prilosec is OTC and since they're question, apparently, is if you've had heartburn in the last six months, not if you have it nearly every day. But nexium and other prescription PPIs are quite expensive and covering a permanent prescription for it may eat up a lot of the premium this guy was expected to pay. Given that insurance companies are profit-based and they can exclude for pre-existing conditions, stuff like this will happen. (Which is an argument for change, of course.)

Posted by: Elm | Jun 26, 2007 3:54:47 PM

Amen.

Posted by: akaison | Jun 26, 2007 3:55:07 PM

Should I be surprised? Companies don't exist to serve the public. They exist to provide a return on capital investment, i.e., Cheney yourself, pay me.

Ezra, you and your readers and I know that there are better systems than we have here in the US, ones where more of the money goes to doctors, equipment, and supplies, and where less goes to advertising, administrative fees and capital gains.

The simple problem is that money qua power has inertia. Those who have the most money have the most power, and they use that power to keep and make more money. It won't change quickly, and people like this one who writes well and is in great health will continue to be ground up simply because they are not on the side of money and money is not on their side.

Posted by: Scott from Baltimore | Jun 26, 2007 4:06:57 PM

I find it absolutely striking that posters who would instantly assume malfeasance, incompetence, and downright crookedness in a government official, low level secretary, hollywood actor, union employee etc...etc...etc... jump to the totally unjustified conclusion that "there must be something wrong" with the letter writer because no ordinary/sane/money grubbing insurance company would ever turn down a patient for a patently silly reason like that they might need health care in the future and cost more than their premiums would bring in.

What is it about insurance that you don't get? Yes, absolutely, in theory a young healthy active male "is exactly the kind of insurance risk insurers ought to like" but they don't need any individual guy to make money out of the system. In fact they have to pretty rigorously screen out lots of people who aren't actually, in real time, going to cost them money because they are playing the percentages and trying to guess who is going to cost them money long term. I'm sure they have some statistic to back up the question "heartburn present or absent in the last six months" that is sufficient for them to feel that they'd rather not risk insuring this guy. That's precisely why the system is so invidious. Its.called.cherry.picking. and it happens to people it "ought not to happen to" as well as people it "ought" to where "ought" is determined by how much their future medical bills are likely to be.

The fact of the matter is everyone in this society who doesn't die early and fast in a car crash is only "temporarily" in a category in which their insurance payments exceed or equal their medical costs. Because everyone is only temporarily healthy just as they are only temporarily young. An health care system predicated on a model of insurance risk spreading that separates out healthy from unhealthy and young from old by definition is cherry picking and creating very high costs for some, refusing to insure others, and all in the name of profit. It just doesn't leave much over for the actual provision of health care.

aimai

Posted by: aimai | Jun 26, 2007 4:24:01 PM

you should tell him to write consumerist. they'll post that and the company will get back to him with a better response, guaranteed...

Posted by: jasmine | Jun 26, 2007 4:43:11 PM

Wellpoint's (Blue Cross of CA) Tonik product is priced at around $100 per month or slightly more and is aimed at young, healthy males in their twenties. The industry calls this group the "Young Invincibles" and many choose to go without health insurance because they think they won't need it and would rather not pay for it. It is not appropriate for females because it does not include maternity benefits, and, if it did, the price would be at least 100% higher.

A look at the Drugstore.com website shows that a 90 day prescription for Nexium would cost between $410 and $471 depending on whether it was purchased from Drugstore.com, Walgreens or CVS. That's approximately $135 - $155 per month or more than the premium by itself. Under the circumstances, the rejection does not strike me as unreasonable.

If the letter writer lived in NJ, where we have community rating, he would find that a health insurance policy for a young, healthy male with no health issues whatsoever would cost about $350 per month, perhaps a bit more. He will probably be unpleasantly surprised to find out how much health insurance would cost him under a single payer, taxpayer funded voucher, or enhanced employer based system with community rating.

Posted by: BC | Jun 26, 2007 4:44:19 PM

My wife and I, on the other hand, are eligible for Medicare, who must take everyone regardless of medical history. No physicians or
hospitals refuse Medicare, no reasonable test is refused, there are no waits for operations, there is no paperwork, referrals, or phone calls for denied payments.

The fix for this bullshit is staring us right in the face.

Posted by: bob h | Jun 26, 2007 4:46:21 PM

Agree with BC. Essentially, this sounds like either an actuarial mishap, or a smart business decision. There are certainly moral issues in health insurance, but this guy isn't illuminating one of them.

Posted by: Garrett | Jun 26, 2007 4:52:19 PM

I give it another 15 years, and there will be UHC in the US, one way or another. The system is collapsing around our ears.

I'm glad to live in MA. I'm not sure how the new initiative will work out, and I do have access to employer based insurance, but I'm damn lucky to live in a "guaranteed issue" state. Because I got me some moles. No cancer, but some of them are a bit funny and have been removed. Blue Cross in CA would probably burn my letter in the furnace and have an exorcism if I applied for their individual coverage. LOL!

Posted by: Ms. Clear | Jun 26, 2007 4:56:36 PM

Garret and BC,

The problem with your argument is that, if the letter writer is accurate, the question he answered was, "Have you had heartburn in the last 6 months"" That's a dumb question to gauge whether he was planning to get a prescription for Nexium. If he had answered yes to "Do you get heartburn two or more times a week?", then it probably would have been a good business decision to deny him coverage, but that's not the question he claimed to answer.

Of course, plenty of people in this thread, I'm sure, would say it shouldn't be a business decision at all.

Posted by: Elm | Jun 26, 2007 4:58:52 PM

If the letter writer lived in NJ, where we have community rating, he would find that a health insurance policy for a young, healthy male with no health issues whatsoever would cost about $350 per month, perhaps a bit more. He will probably be unpleasantly surprised to find out how much health insurance would cost him under a single payer, taxpayer funded voucher, or enhanced employer based system with community rating.

$350 a month is $4200 a year. Just about every major single-payer system costs less on a per-capita basis. (Just to clarify for those reading, et cetera...)

Posted by: mightygodking | Jun 26, 2007 5:13:38 PM

Oh please to any of you commenters who think decisions in the individual health care market make any damn sense at all. It's next to impossible to buy insurance as an individual anywhere, for any price, let alone if you have anything at all wrong with you. As a healthy man in my twenties I too was turned down several times in several states when trying to buy individual coverage; now in my thirties, I only have insurance at all because of the Freelancer's Union. Every one of my young friends who has tried to buy individual insurance has had the same experience. I don't know why companies even bother claiming to offer it.

Posted by: Antid Oto | Jun 26, 2007 5:13:39 PM

elm,
Sure it should be a business decision if the business is * health insurance* and the model is *for profit.*
But from the point of view of the consumer, and the tax payer, what I want to see is everyone get *health coverage* and *health care.* If every healthy guy was forced to pay 1000 dollars a month to a health insurer I'm no better off. But if every adult tax payer were paying into a massive health system I'd be a lot better off. Ultimately whether one guy gets denied insurance or not is neither surprising nor important. What is important is that all of us are at risk for being denied health insurance, and through insurance coverage of any kind for the real health issues we all face and will face over our lifetimes.

Plus, I love the notion that this guy (this "young inviincible") will "be shocked to discover how much insurance is going to cost him." Yeah, he's "shocked now." So what? The fact that young people don't know how bad the insurance/health care scam is until they are old enough to be kicked off their parents insurance and too poor to buy new stuff isn't really a very meaningful insight. And its not even accurate. Its pretty clear that he actually has a pretty good idea, as anyone who has ever had a job with insurance and lost it, divorced women, people with jobs that dont cover it etc... already know. Insurance costs too much. Choosing coverage for yourself among competing plans" is a mugs game. What you are choosing is how miuch you will be gouged by "the house" which is better at figuring out the odds of your recouping your investment than you are.

aimai

Posted by: aimai | Jun 26, 2007 5:14:51 PM

I don't think Nexium would even be covered under Tonik- it covers only generic prescriptions, not name brand (ie, still under patent) drugs.
The part about lying is pertinent- if this guy did reapply to blue cross and had any incident remotely related to heartburn (ulcer, cancer, heart condition) they'd immediately deny his claim because they have proof he'd consider lying about previous heartburn incidents.
The ideal customer for an insurance company is one who can be proven to have lied about preexisting conditions- that way they get to take the premiums but never have to pay if something happens. If they can make the initial application and screening process so onerous that applicants must lie and/or inadvertently omit information that can later be used against them, the applicant is pure profit.

Posted by: SP | Jun 26, 2007 5:17:59 PM

posters who would instantly assume malfeasance, incompetence, and downright crookedness in a government official, low level secretary, hollywood actor, union employee etc...etc...etc...

You impute the oddest things, aimai, and this time you follow up with, "jump to the totally unjustified conclusion ...." Indeed. No one said "there must be something wrong with the letter." Wisewon happens to be an MD, and his judgment was that occasional heartburn isn't likely to drain away money from an insurer, that this makes no sense given their profit motive. The letter is suspicious for that reason, no more.

BC, the Tonik plan, if I read it right, only covers generic prescription drugs. Nexium wouldn't qualify.

Posted by: Sanpete | Jun 26, 2007 5:20:04 PM

Hard to take this at face value.

Actually, it's fairly easy to take this at face value. This is typical of California's insurance plans, which routinely denies coverage to any applicants who report any health issues whatsoever.

Posted by: Tyro | Jun 26, 2007 5:30:43 PM

Why Tyro? As explained above, that doesn't appear to make good business sense.

Posted by: Sanpete | Jun 26, 2007 5:32:58 PM

Look, wisewon's point is that the insurer's profit motive is adversely impacted by turning down a client. That's a serious misunderstanding of the totality of the things that go into reckoning where the profit comes from in insuring any potential patient. The ideal client from the point of view of an insurer, as SP points out above, is someone who either lies on their policy (or can be accused of doing so) or who never gets sick and never makes any claims against the insurer. When they accept any customers payment they are guessing whether or not you will fall under these various headings and if they deny you insurance they are guessing that in the long run you would have cost them more than they would have made. And that's probably true for most clients. In the long run, unless the insurance company can bump you before life takes over, you are going to cost htem more than 100 dollars a month.

Wisewon isn't wrong that there is a market issue here but its not the one he thinks.

You could argue that
1) the insurance company either righteously and sucessfully pursued the profit motive with respect to this potential patient and used "heartburn" as an indicator that he really didn't fit into the profile of the "young invincible" healthy dude they wanted to attract into this particular risk pool.

or
You could argue that
2) the insurance company wrongfully and evilly or foolishly eliminated this guy from coverage because they mistakenly argued that heartburn was a potential liability they didnt' want to take on *but they were wrong, it was no biggie, and so they could have taken the guys money in premiums and never had to worry about him claiming anything on the policy.

My point is that both are really childishly stupid misreadings of how health insurance companies make money. They make money coming and going and they don't need to be correct when they turn down one guy for coverage. They do it becauese they can, and they will make up the money somewhere else. I really am just taking issue with the wide eyed naieve "but...there must be something really wrong with this guy because its such a trivial reason to deny coverage and you couldn't really do business if you denied people coverage." Of course you could, The trick is to deny some people coverage (with the downside risk that you deny someone you could have reaped a profit on) and cover other people who pay off more than you lost on denying coverage to Guy X. Its all business.

Also: Just because they offer a policy doesn't mean that they really want people to buy it--insurance companies have to do lots of things to placate an angry public and increasingly they have to pretend to sell policies they have no intention of living up to. California BC/BS has demonstrated an astonishing ability to throw people off after years of premium payments. And that all makes perfectly good financial sense.

My point is that its a bizarre tenet of the free market romantics on this board that the profit motive is never wrong and never produces truly awful outcomes. under that interpretive scheme the guy denied insurance really deserved to be denied the insurance on business grounds or you have the impossible situation in which a business (yay!) failed to understand its own profit motive and so should ideally go out of business or some other business should scoop this guy up. But that isn't really the way the profit motive, health insurance, or big business really works. It can all tolerate a very large does of bad faith and bad reasoning before it collapses. This guy was offered a cheap health care policy that was either so cheap it couldn't reasonably be expected to be profitable if he ever had any kind of health care claim or he was offered a policy that no ordinary human could actually, legally, accept. Either way I think you'll find the insurance company does just fine financially on the deal while the country as a whole suffers.

aimai

Posted by: aimai | Jun 26, 2007 5:43:02 PM

Sanpete, the insurance companies seem to be betting that, overall, it is most profitable to simply deny coverage to anyone reporting a history of having used health care in the past, for whatever reason. The risk that a client with a past health problem may have a future health problem outweighs the benefit gained from income of $100-$150/month in premiums.

Ezra, I believe, touched on this issue (particularly in California) before. There's a long list of minor issues that, if you ever consulted a doctor for them, will result in your being unable to get individual coverage at any price.

Posted by: Tyro | Jun 26, 2007 5:47:05 PM

$350 a month is $4200 a year. Just about every major single-payer system costs less on a per-capita basis.

For single payer advocates:

I saw a recent reference in Health Affairs to a study sponsored by the AARP which determined that approximately 50% of total healthcare costs in the U.S. are attributable to the 65 and older population. This includes payments by Medicare, Medicaid (mainly long term care costs), Medicare Supplemental insurers, long term care insurers, beneficiary premiums and out-of-pocket payments. This sounds about right as the elderly account for roughly 15%-16% of the population and consume approximately three times more healthcare per capita as the rest of the population. Since Medicare is already, in effect, a single payer system (complete with dictated prices and low administrative costs) for this population, the question is: how does this level of per capita spending on our 65 and over population compare to per capita spending on the elderly in other countries. If it turns out that our per capita spending on the elderly is 50% - 100% higher than other countries per capita spending on their elderly populations, it implies that Medicare for All is NOT the answer for the U.S. While there are undoubtedly some administrative inefficiencies in our fragmented system, the more important cost drivers probably relate to such factors as differences in provider compensation, approach to end of life care, fear of litigation driven defensive medicine, lack of electronic medical records, higher prices here for brand name drugs, and inadequate to non-existent price and quality transparency.

While I've seen plenty of comparisons among countries related to overall healthcare spending, I have never seen any that focus on the 65 and older population only where a single payer system has been in place in the U.S. since 1965!

Finally, with respect to an individual mandate, the first question that policymakers need to answer, I think, is what percentage of income can we reasonably expect people to spend for health insurance, especially if their family income is 400% of the federal poverty level (FPL) or less? The second question is how much more in taxes can we ask the population at large to pay in order to subsidize health insurance premiums for those who cannot afford the full cost on their own?

Posted by: BC | Jun 26, 2007 5:53:39 PM

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