Millions of Americans don’t have health insurance, and medical bills are a leading cause of bankruptcy. Now that Congress has passed legislation tightening bankruptcy laws, how do you assure you not only have health insurance, but that it is adequate to prevent financial ruin should you face a major illness?
Mississippi Insurance Commissioner George Dale said it is currently up in the air what impact the new bankruptcy laws will have.
“I can see both sides of it,” Dale said. “It has been too easy to file bankruptcy. But, at the same time, the number of people who don’t have quality health insurance or who can’t afford private insurance is getting larger. The number of people who can’t qualify to get health insurance is also increasing.”
Robert, (name changed to protect privacy), 55, is a Coast professional who owns his own business. When his health insurance coverage with a major carrier ran out, he wasn’t too concerned about it because he didn’t think getting other coverage would be a problem since he had always been healthy. But his application for health insurance was denied because of “an unacceptable level of something in my blood.”
The only alternative he had was to go into the Mississippi High Risk Pool, which is expensive and pays limited benefits. Robert had a $2,000 deductible and then had to pay 20% of the remaining bill.
Robert was diagnosed with prostate cancer, and his portion of the bills for surgery amounted to $12,000. What he found particularly shocking was the fact that the operating room alone cost $22,000. The insurance company would agree to pay only 80% of $9,000 of that bill. If Robert hadn’t had insurance, he would have been liable for the entire $22,000. The hospital wouldn’t have accepted the $9,000 payment for him.
Robert doesn’t think it is fair that non-insured people have to pay such inflated bills.
“Basically poor people are charged more than people with insurance,” Robert said. “It is the same with doctors. The insurance company isn’t going to pay what they charge. But the uninsured person doesn’t have an option.”
Robert’s case didn’t end with him heading to bankruptcy court. Instead, he arranged a payment plan. Those payments have to be made in addition to a monthly insurance premium cost of $450.
Jim Wilson, an attorney in Biloxi who has a specialty in estate planning and elder law, describes the current healthcare situation in America as “a national nightmare.”
“Healthcare in America is Third World,” Wilson said. “It is the only industrialized in the world that doesn’t have universal healthcare. In order to get health insurance unless you are in a group, you have to be well. If you are sick, you are dead. You can’t get health insurance, and then you end up paying more for healthcare services than you would if you had insurance.
“You must have insurance, but some people flat cannot afford it. If you only make $1,000 a month, how can you afford a policy that might cost $650 a month? If you have group insurance, you are much better off. If you leave your job and lose health insurance, it is tough. Most people can’t afford Cobra. As for the uninsured, if they didn’t have financial problems before medical problems, they are going to have them big time after they have medical problems.”
Wilson points out that if you retire at 55, you have a gap of 10 years before you can go on Medicare. The older you are, the greater the chance of having medical problems. And if you have medical problems, you can’t get insurance at all.
As people age, premiums and deductibles become higher. Wilson said a single person 60 years old may be paying $5,000 a year in premiums for a policy with a $3,000 deductible.
“That person pays $8,000 per year before the first nickel gets paid by the insurance company,” Wilson said. “Basically, you have several choices: Work for a big company with great health insurance. If you’re not working for a big company, you have to be healthy enough to get coverage and make enough to pay the premiums. The third option is to roll the dice and hope you don’t get sick.”
For advice about health insurance, “A Consumer’s Guide to Getting and Keeping Health Insurance in Mississippi” can be found at http://www.healthinsuranceinfo. net/ms.pdf. The report has been produced by the Health Policy Institute at Georgetown University. Georgetown health policy researcher Kevin Lucia says the individual market for health insurance in Mississippi is underwritten.
Lucia said if your employer doesn’t offer health benefits and you have a chronic illness, it is going to be hard to get private health insurance in Mississippi.
“If you are rejected in the private market, then you can try the high-risk pool,” Lucas said. “But the premiums are pretty expensive, cost sharing is high and there are significant coverage limits. Considering all these issues, an individual with a chronic illness might not find the coverage to be adequate to meet their medical needs.”
Lucia said that it would cost $635 per month for a 55-year-old man to get insurance with a $1,000 deductible from the high-risk pool.
“If you are not financially secure or low-income, how are you going to pay this?” Lucia asks. “For someone who has lost his job or is financially vulnerable, to be required to pay a lot of out-of-pocket expenses, you aren’t just walking them down the road to financial bankruptcy. You are running them down the road.”
Lucia said that in addition to the 44 million Americans who are uninsured, million others are underinsured, that is, their insurance just doesn’t cover their medical needs without significant out-of-pocket expenses.
“With advent of new high deductible plans, that becomes a bigger issue,” Lucia said. “We just finished a project with the American Diabetes Association to study health insurance problems that people face. A lot of people said their insurance just doesn’t work for them because it has co-pays and deductibles. Co-pays and deductibles are hiked to hold down premiums, but we talked to people with diabetes who were paying hundreds of dollars per month for care that was covered, but not very well, by their health insurance.
“Their stories underscore what studies have shown: not only are medical bills the leading cause of bankruptcy, most who file for bankruptcy due to medical bills are insured. The truth is, if you’re financially strapped, like most Americans, high out-of-pocket expenses from medical care are sooner or later going to catch up with you and push you into financial distress.”
One national survey found 41% of adults in the U.S. have had problems paying medical bills, meaning they had been contacted by a collection agency about outstanding medical bills, they had significantly changed their lives in order to meet their medical bill obligations, or they were currently paying off medical debt that they had incurred in the last three years.
Walter Howell, associate state director AARP for Mississippi, said AARP recommendations for a sound retirement program include “four pillars.”
“One of those pillars is an adequate health insurance program that can meet the healthcare needs of individuals,” Howell said. “We feel that is absolutely essential in today’s world. The other three pillars are a strong Social Security System, a pension or retirement program and investments and savings for retirement. That’s why we like the idea of private investments on top of Social Security, but not in place of Social Security.”
Howell said while Americans are automatically covered by Medicare at age 65, and Medicare will “pretty much take care of long-term healthcare expenses,” people who retire earlier may find health insurance coverage difficult to afford. And even the bluest of blue chip companies like General Motors are reconsidering providing health coverage to retirees.
“Even a company like ‘Generous Motors,’ as they have called it, is in trouble,” Howell said.
Contact MBJ contributing writer Becky Gillette at firstname.lastname@example.org.