March 4, 2011 > HealthCare...Who Cares?
By J. Dennis Wolfe
In the late 1970's, I will never forget being in a small group meeting with one of the top executives at Executive Life. He was showing us their great new product - a new Universal Life insurance policy. Coming from a strong math background, I quietly sat there while he got all the salespeople excited about commissions. They failed to notice the product's financial flaws. As he finished, he asked for questions and comments. I raised my hand and said that if Executive Life persisted in marketing this product that they were going to fail and someone could go to jail. You could have heard a pin drop in that room. Needless to say...
I also do not sell health insurance policies that use Claims Underwriting for the same reason; their products are not financially stable. These insurers are quick to issue policies despite potential pre-existing conditions that would normally preclude coverage if applications were thoroughly reviewed at submission. The big print gives and the small print takes. They perform the due diligence of underwriting at the worst possible time - when you file a claim. This has all the makings of a financial disaster.
When a large medical claim arises and you think you are protected against financial loss, these carriers, often out-of-state, begin underwriting by writing to every doctor you ever visited, or even thought about visiting. Their purpose is to determine if claims submitted were a result of a pre-existing condition. This process can take weeks even months while you are stressed because your providers are calling for payment and threatening. Still, claims remain unpaid and it appears that they never intended to pay the claims. If you give up, the carrier wins.
The only way to buy an individual health insurance policy is to apply with a reputable carrier who thoroughly underwrites your policy when you submit the application - Application Underwriting. All major, well-known, creditable carriers use this process. It ensures that you are actually insured and protected when the policy is issued!
When you submit an application through this type of underwriting, the carrier asks about your doctors and the reasons for visiting them. They want to know when these visits took place and the result of care received. Once they have this information, the burden is fully on their shoulders to thoroughly review the information and write for medical records during this process. This does takes time and can be frustrating. Being patient is critical
Given Claims versus Application Underwriting, I will take the latter process every day of the week and so should you. I share all of this for two significant reasons. One - you deserve to be well-informed. A low premium means nothing if the policy is not worth the paper on which it is printed. Two - in order to sustain itself in the marketplace, even the reputable carriers must work to increase market share.
If it is true that the rich get richer, then the opposite is also true - the poor get poorer. As the larger, creditable carriers continue to expand, the pressure on smaller, but still creditable carriers is increased. Years ago in Santa Clara Valley, a local HMO - Health Alliance - suddenly closed its doors. Prudential and Kaiser stepped in and insured everyone who suddenly found themselves without insurance. Prudential later divested its health insurance portfolio in 1998. In these times, you need to be especially observant of your health insurance carrier's financial health, even in the group market.
Stay healthy. Stay tuned. Get involved. Learn what is being done. Your life now does indeed depend upon it.