How can I arrange for bulletproof independent health insurance?

June 22, 2009 7:47 PM

How can I arrange for bulletproof independent health insurance?

It may be the case that very soon I will need an health insurance policy, not company specified, for me and my wife. In light of stories like this one, I am very concerned that even if I answer about my health history and my wife's history even to the extent possible, I will forget something and get hosed if I ever come down with anything.

Since the health insurance isn't likely to change in the US in the nearterm, I want to somehow insulate myself from this. Given that, is there any way to have the HI company pre-vet the policy in some way so that this isn't a risk later on? Or some other way to do this -- service or whatever?

I've lived with extremely active jobs for the last 15 years, so to be honest a lot of "I went to the doctor because I had a cough" kind of stuff doesn't readily come to mind even when I think about it. I would much prefer an active investigation.

posted by rr to health & fitness (7 comments total)

As an individual, you really aren't in a position to negotiate terms or rate structures with insurance carriers. You're going to buy an off the shelf product; the only question is "From whom?"

Basically, you're going to shop around and go with the plan that offers what you want. Just be sure to read the fine print, cause the devil is most certainly in these details.

But without knowing what state you're in or what you're willing to spend on a monthly basis, it's hard to give more specific advice.
posted by valkyryn at 8:02 PM on June 22

California. Price is not a primary factor.
posted by rr at 8:17 PM on June 22

From the NPR article you linked to:

It happens with individual health insurance policies, where people apply for insurance on their own, not through their employers.

The opposite of the individual policy is the group policy (what employers offer). Group policies have a variety of special protections under HIPAA which aren't present for individual policies. For example, if you directly transition from one group policy to another you can't be denied coverage due to pre-existing conditions.

When I got into the position that I was going to need my own insurance I did research and found out about "small group policies" which are the ones offered to small businesses, usually ones with less than 20 employees. On top of the federal HIPAA protections there are state laws in every state that require insurers to offer small group policies for companies down to a certain size. In almost every state this minimum size is either companies with two employees or companies with one employee.

I found that I lived in a state with the 1-employee limit and that furthermore in my nicely libertarian state it's very easy to form an LLC. So I did that and now I've got my own personal small group policy along with all of the HIPAA protections.

Just out of curiosity, a few months after I'd set everything up I called up the sales line of my HI provider and inquired about individual policies. The first thing the sales guy did was ask my height and weight. Based on my height and weight alone, with no other information, he immediately said that they couldn't offer me a policy - slammed the door in my face, pretty much. So I definitely feel like I've dodged a bullet working out the small group policy situation.
posted by XMLicious at 8:26 PM on June 22 [5 favorites has favorites]

FWIW BlueShield has been good to me so far. They didn't drop me after I incurred an ER visit costing them $5000 6 months into my first year with them, and my renewal is only up 10% or so which they blame on general claims not me per se.
posted by @troy at 9:33 PM on June 22

You are never going to get to "bullet proof." The best way to get close is two-fold: what you buy, and from whom.

You should buy through a reputable and recommended-to-you agent from a well-regarded and well-rated company without a long complaint file from other private issue patients.

In terms of what you should buy, remember that private issue insurance is real insurance, where the premium must be substantially higher than the benefits you are likely to incur. Group health isn't really insurance at all, except for small companies, it's simply a sandwich of health care bulk puchase and health care administration cost/control services.

Given that you are buying real insurance, you need to avoid any deal that looks too good. Good low deductible plans are going to be brutally expensive in premium. Good moderately priced plans are going to carry high deductibles. (If you're healthy, by the way, high deductible is definitely the way to go.) Anything that seems to let you have your cake and eat it too simply won't do that in reality.

@Troy's experience is a great sign: a smart insurance company doesn't spike rates just because your claims went above average one year, because (depending on the claim) that's no evidence that next year you'll also claim a lot.
posted by MattD at 12:06 AM on June 23

MattD is mostly correct, but his assertion that because this is "real" insurance that premiums must be higher than expected claims is not entirely accurate.

Insurers know that not every policy is going to be profitable. How close to the line they choose to run on the ones that are is a matter of underwriting judgment--and state regulation--but it is known and accepted that certain policies are just going to be losers.

Second, group health is "real" insurance too. I really don't know what he means by suggesting it isn't. The main difference between individual and group health is that with individual policies, the insured pays the entire cost after taxes rather than have the employer pay part, with the employee's participation using pre-tax dollars. Groups do negotiate so that everyone in the group pays the same premium (or has a choice from one of several options), but there are plenty of off-the-shelf health insurance products with uniform premium levels. I've participated in one myself since 2005. Furthermore, individual and group policies from the same carrier receive exactly the same administration cost/control services. It wouldn't make sense for them to use their negotiating clout for only some of their insureds but eat the higher bills for the rest of them.

Again, the only reason group health looks too good to be true is that someone else, i.e. your employer, is fronting a lot of the cost behind the scenes. This does provide something like another layer of "insurance," in that costs can thus be spread over a large group before you go to the insurance company, but this really isn't all that much different from what happens in family policies.
posted by valkyryn at 3:26 AM on June 23

eHealthinsurance makes comparing policies really easy and the purchasing is totally straightforward. If nothing else, it will arm you with a basic understanding of products available to you before you go to an independent agent, carrier, or group manager.

The difficulty with "bullet proofing" yourself is the typical denseness of information in any given policy. Only by reading all the fine print can you know exactly what you're paying for. Often, no one does this. Even when they do, the language and coverage schemes can be complicated.
posted by GPF at 10:15 AM on June 23