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Back to the Future
Jump to the 21st Century, where the law changes back to the insured’s favor, and discriminatory practices remain and are even enhanced… in 2002 the health insurers were in crisis in Colorado and other states. So as a result of unrelenting pressure on state lawmakers, coupled with the fact that many carriers were actually packing their bags and leaving the state, in 2003 the health insurance laws were changed yet again. This time they re-allowed underwriting small groups by individual health status and claims history.
Small employers were enabled to gather health information from a questionnaire given to all new employees as they became eligible for their company’s health plan, and also to existing workers when the group plan was renewed or transferred to another carrier.
These opportunities gave the insurers a chance to select-out high risk individuals. The carriers had several ways to do this…
Note that existing health plans are and were the net result of underwriting only the employers the insurers wanted to insure. A small business that wanted to apply for coverage for its employees had to first clear the type of business cut:
Enrollment of high risk firms is limited through a practice known as redlining in which specific types of industries are considered ineligible for enrollment, at any premium. Redlined industries include those characterized by an older workforce (over age 55), or high employee turnover, those engaged in seasonal work or exposed to hazardous working conditions, those lacking an employer/employee relationship, and those “known to present frequent claims submissions.”
…as examples of industries excluded by their company or plan for small business health insurance…the two most frequently mentioned were lawyers (too litigious) and physicians (high utilization). [3]
If a firm interested in obtaining health insurance for its employees survives redlining, it will get a plan in place at some price. Then the insurers use their most tried and true method of keeping out the high risks: the infamous pre-existing condition provision. This applies where any current or recent illness or disability could predict future claims costs for a given individual. These poor folks are eliminated from the group as early on as possible.
A history of cancer is one of the most common pre-existing conditions that an insurer will not cover, even for those survivors who may be years beyond their last treatment.
Fortunately, about half of the states prohibit this provision from applying when the employee group is either renewing or transferring to a new carrier. But this has certain implications for cancer survivors in Colorado: if he or she has a cancer history that was covered by an employee health plan, upon renewal or change that carrier would have to retain the medical risk of that person as long as there was no gap in their coverage. If there was a gap; for example the employee was fired and could not afford continuing group coverage under COBRA insurance continuation, that employee upon finding a new job would have to disclose his or her cancer history to their new employer’s insurer via the health questionnaire. That insurer would most certainly then exclude their cancer condition from future coverage.
In short, the insurance companies using the regulations currently in force have ample opportunity to exclude cancer survivors from their insured’s, while at the same time employers have an incentive to avoid hiring these people from the start. A cancer history can be a substantial barrier to employment regardless of the applicant’s present medical condition.
Underwriting practices may discourage small employers from shopping for a better insurance value or employees from shopping for a better job. In addition, hiring practices of small employers may be influenced by whether or not the health status of a job applicant could threaten the premium rate for or the insurability of all the people in the firm, leaving some perceived “uninsurables” also unemployable. [4] PAGE 5
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