Junk health insurance bill would put big burden on families

May 11, 2006|By JAMIE COURT AND JUDY DUGAN

Sometimes owning a health insurance policy is not the same thing as being covered. Many more American workers may be about to learn this hard lesson, and employees in Maryland have more to lose than most.

A measure that is nearing a final vote in Congress would greatly expand the reach of insurers offering bare-bones plans that saddle policyholders with no cap on their payments once their paltry coverage limits are reached. Maryland, like New York and a few other states with strong consumer insurance protections, has so far been spared the misery inflicted by such junk insurance.

Maryland Attorney General J. Joseph Curran Jr. has opposed the bill because it would encourage insurers not to pay for preventive care, and the state's insurance commissioner, R. Steven Orr, has rejected it for similar reasons, calling for broader federal reforms instead.

Sherry Orestuk of Ashburn, Va., and her husband fell for a great sales pitch three years ago and bought health insurance aimed at the self-employed. It left them nearly $20,000 in debt after her breast cancer.

They had to abandon their small business and start over in New York in order to buy any health insurance afterward.

Dana Christensen of Los Angeles and her husband, Doug, bought a similar plan. For them, the ending was far worse: Mr. Christensen died of cancer, helplessly bedridden as astronomical medical debt became his bequest to his wife. The final total was nearly half a million dollars.

In these cases and hundreds like them, individuals who couldn't get group insurance bought what are called association health plans, pitched as affordable health coverage for entrepreneurs.

Consumers can pay hundreds of dollars a month for policies with no coverage for preventive care and no maximum on their out-of-pocket costs.

The Senate is debating a bill by Republican Sen. Michael B. Enzi of Wyoming and a vote could take place as early as today that would expand the reach of such plans nationwide, and also pre-empt state health insurance regulation. Consumers denied treatment or forced into bankruptcy by medical debt would have no recourse to state regulators, legislatures or courts.

In Maryland, that could mean prohibitive rates for people who have had a serious illness, and policies that cover much less than even the state's relaxed rules for small business.

If the measure becomes law, it will foist such policies not only on individual buyers and the self-employed but also on workers who now may have better coverage through their jobs. Small and medium-size employers will be drawn by plans that cost them a little less, while shifting unlimited liability to their employees.

Medical debt, already the chief single cause of personal bankruptcy, would become a much larger problem. Yet the bill is cynically cloaked as a way to help individuals and small businesses get health insurance.

The Christensens' story is shocking because of the size of their debt after Mr. Christensen's terminal bone cancer and repeated hospitalizations. But the Orestuks' tale is more typical.

The Orestuks, who are still paying off their debt, now live in Endicott, N.Y., where state regulations allowed them (unlike in Virginia) to buy credible insurance even after a major illness. Dana Christensen, facing bankruptcy, sued and received a $1.7 million settlement last year.

Under the proposed measure, the New York protections that guaranteed insurance to the Orestuks could be bypassed and the next Dana Christensen would be bankrupt, with no right to sue. The Senate should dump this bill and do a real favor to the uninsured by getting to work on universal health insurance.

Jamie Court is president of the nonprofit Foundation for Taxpayer and Consumer Rights in Santa Monica, Calif. Judy Dugan is its research director. They can be reached at judy@consumerwatchdog.org.

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