New Jersey bankruptcy Article
Insured, but Bankrupted by Health Crises
By REED ABELSON
New York Times Article
Health insurance is supposed to
offer protection — both medically and financially. But as it turns out, an
estimated three-quarters of people who are pushed into
personal bankruptcy by medical problems actually had
insurance when they got sick or were injured.
And so, even as Washington tries
to cover the tens of millions of Americans without medical
insurance, many health policy experts say simply giving everyone
an insurance card will not be enough to fix what is wrong with
the system.
Too many other people already
have coverage so meager that a medical crisis means financial
calamity.
One of them is Lawrence Yurdin, a
64-year-old computer security specialist. Although the brochure
on his
Aetna policy seemed to indicate it covered up to $150,000 a
year in hospital care, the fine print excluded nearly all of the
treatment he received at an Austin, Tex., hospital.
He and his wife, Claire, filed
for bankruptcy last December, as his unpaid medical bills
approached $200,000.
In the House and Senate,
lawmakers are grappling with the details of legislation that
would set minimum standards for insurance coverage and place
caps on out-of-pocket expenses. And fear of the high price tag
could prompt lawmakers to settle for less than comprehensive
coverage for some Americans.
But patient advocates argue it is
crucial for the final legislation to guarantee a base level of
coverage, if people like Mr. Yurdin are to be protected from
financial ruin. They also call for a new layer of federal rules
to correct the current state-by-state regulatory patchwork that
allows some insurance companies to sell relatively worthless
policies.
“Underinsurance is the great
hidden risk of the American health care system,” said Elizabeth
Warren, a
Harvard law professor who has
analyzed medical bankruptcies. “People do not realize they
are one diagnosis away from financial collapse.”
Last week, a former
Cigna executive warned at a Senate hearing on health
insurance that lawmakers should be careful about the role they
gave private insurers in any new system, saying the companies
were too prone to “confuse their customers and dump the sick.”
“The number of uninsured people
has increased as more have fallen victim to deceptive marketing
practices and bought what essentially is fake insurance,”
Wendell Potter, the former Cigna executive, testified.
Mr. Yurdin learned the hard way.
At St. David’s Medical Center in
Austin, where he went for two separate heart procedures last
year, the hospital’s admitting office looked at Mr. Yurdin’s
coverage and talked to Aetna. St. David’s estimated that his
share of the payments would be only a few thousand dollars per
procedure.
He and the hospital say they were
surprised to eventually learn that the $150,000 hospital
coverage in the Aetna policy was mainly for room and board.
Coverage was capped at $10,000 for “other hospital services,”
which turned out to include nearly all routine hospital care —
the expenses incurred in the operating room, for example, and
the cost of any medication he received.
In other words, Aetna would have
paid for Mr. Yurdin to stay in the hospital for more than five
months — as long as he did not need an operation or any lab
tests or drugs while he was there.
Aetna contends that it repeatedly
informed Mr. Yurdin and the hospital of the restrictions in
policy, which is known in the industry as a limited-benefit
plan.
The company says such policies
offer value by covering some hospital expenses, like surgeons’
fees or a stay in the intensive care unit. Aetna also says all
of its policyholders receive significant discounts on the
overall cost of hospital care. But Aetna also acknowledges that
a limited-benefit plan was inappropriate in Mr. Yurdin’s case
because his age and condition — an irregular heartbeat — made
him likely to require more comprehensive coverage.
“Limited benefits aren’t right
for everyone, and it clearly wasn’t right for Mr. Yurdin,” said
Cynthia B. Michener, an Aetna spokeswoman.
Charles E. Grassley, the ranking Republican on the Senate
Finance Committee, which is taking a lead on health legislation,
says Congress needs to make “meaningful” insurance coverage more
affordable and accessible. But “until that happens,” he said,
“any presentation of limited-benefit plans ought to be
completely straightforward, and not misleading in any way.”
Insurers like Aetna generally defend
limited-benefit policies as a byproduct of the nation’s flawed
health care system, which they say makes it too expensive to
adequately insure someone like Mr. Yurdin.
If everyone in the country were
required to have insurance, the industry says — a mandate that
Congress is contemplating — the costs and risks of insurance would
be spread over a large enough pool of people to let insurers provide
full, affordable coverage even to people with pre-existing medical
conditions.
Mr. Yurdin worked at TEKsystems,
which employs people for short periods as contractors for other
companies. TEKsystems says it does not pay for the contract workers’
health benefits, but it does enable them to purchase individual
policies with limited benefits so they have at least some coverage.
“There’s no way we make this sound
like regular coverage,” said Neil Mann, an executive vice president
at Allegis Group, which owns TEKsystems.
Although Mr. Mann acknowledged that
the plan Mr. Yurdin purchased excluded routine hospital care, he
said he thought it still provided value to employees who wanted
“peace of mind.”
True peace of mind, however, comes
with a much higher price tag. When Mr. Yurdin no longer qualified
for the Aetna coverage after he left TEKsystems and his eligibility
eventually ended, his only option was a special state plan in Texas
for people who are at high risk for expensive medical care. He has
been paying more than $1,000 a month for comprehensive coverage,
compared with the roughly $250 a month he was paying for the Aetna
plan.
But as of Wednesday, his future
insurance problems are largely solved: he qualifies for
Medicare because he turns 65.
Many insurers, as part of the
Congressional overhaul of their business, say they expect the demand
for limited-benefit policies to fall. “Until the nation achieves the
universal coverage that we strongly support, some individuals will
want to be able to choose limited indemnity products, but with
comprehensive health reform we think that need should diminish,”
said Simon Stevens, an executive at UnitedHealth.
UnitedHealth drew criticism last year
for selling policies with sharply limited coverage through
AARP, the advocacy group for older people. One of the plans
capped reimbursement for an operation at $5,000, for example,
although many procedures cost at least several times that amount.
After Senator Grassley began investigating its sales practices,
UnitedHealth agreed to stop offering the limited AARP plans.
Mr. Yurdin and his wife say it was
not clear that he was liable for tens of thousands of dollars in
hospital bills until after he had the first two of what would
eventually be four operations. St. David’s says it tried to persuade
them to apply for charity care, under which the hospital would
absorb much, or all, of the unpaid bills.
But the couple says a lawyer advised
them to turn to bankruptcy as the way to be certain they would not
be left with too much debt. “I knew we were getting way, way over
our heads,” Mrs. Yurdin said.
While Aetna disputes the Yurdins’ and
the hospital’s version of events, it also says it has tried to
clarify the language it uses to describe the coverage. In its most
recent brochure, the fine print describing the limits to “other”
hospital services now defines what they are in a footnote on the
same page and warns that the excluded expenses could be
“significant.”
Senator
John D. Rockefeller IV, Democrat of West Virginia, who is also
on the Finance Committee, has introduced
legislation that would require insurers to be more clear about
what they do — and do not — cover. He says he advocates such a
change, even if Congress cannot agree to a more sweeping overhaul of
the health insurance industry.
But advocates for broad changes to
the health care system say Congress can succeed only by making sure
health reform goes beyond giving every American a buyer-beware
insurance card. One such person is Len Nichols, a health economist
for the New America Foundation.
“Conceptually,” he said, “insurance
means normal people should not go bankrupt from serious medical
conditions.”
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