CALPIRG Blog

An article this week in the San Francisco Chronicle puts a human face on one of the most important pieces of the health care reforms currently in the final stages of negotiation in Sacramento (you can read the article here).

The Chronicle's reporter talked to several Californians over fifty about their difficulties obtaining health insurance. Older people who work for businesses that offer health coverage benefit from access to group insurance, and upon reaching 65, all Americans become eligible for Medicaid. But some people are left out, like self-employed and early retirees 64 and younger. Their only option is to buy coverage on their own, on the individual market.

But the current lack of regulation on the individual market means that insurers have unlimited license to deny coverage or jack up rates. People older than fifty are likely to actually need some of the health benefits their premium dollars theoretically go to purchase, and insurers don't like that -- it's much more profitable for them if their customers never get anything for the money they pay in, after all.

So attempting to buy a plan as an individual means filling out long health questionaire forms aimed at sussing out any health problems you might have, and then dealing with hugely inflated rates (a recent study found that a health insurance plan bought on the individual market can cost more than four times as much as the same plan bought as part of a group). And that's the best-case scenario -- some Californians just can't find an insurer willing to cover them.

The Chronicle report looks at two Californians: Kent Odell, a 56-year-old self-employed man in good health who's been denied coverage because he used to smoke, before quitting 16 years ago, and Margo Hart, a 62-year-old woman, also in good health but with a drug-treatable family history of high blood pressure. Both were denied coverage because of their less-than-perfect health, then finally were offered insurance at sky-high rates.

Commendably, the Chronicle offers some advice to those aged fifty and older looking for insurance on their own. But the suggestions won't do too much to help -- shopping around and knowing about consumer protections are important, but the truth is that individuals have almost no bargaining power in this market, and the consumer protections currently mandated by law are very weak. The article also mentions the state's "high risk pool," which offers insurance to people who are so sick they can't get coverage from any private insurer, but because it includes only sick people, the premiums are prohibitively high for those in comparative good health.

There is good news, though. The reforms currently under discussion in the capitol would fix this broken segment of the health insurance market. First, they would require insurers to accept all comers, preventing them from refusing to cover the sick. They would also eliminate the ability of insurers to tailor their rates based on an individual's health, and require them to offer the same price to everyone in the same age bracket.

These reforms would help the Californians who need coverage the most get it -- and also spread out the costs of health care more evenly and equally. There's been a lot of attention paid to all the dealmaking required to get to an agreement on health care reform, but it's important not to lose sight of how high the stakes are for Californians like Kent Odall and Margo Hart.