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Report reveals extent of health insurance application rejections

health insurance rejectionsIf you’re among the millions of Americans who can't get health insurance coverage through an employer and have to buy individual health insurance coverage, a recent investigation by the House Committee on Energy and Commerce was enough to, well, give you a heart attack.

Committee investigators found that the nation's four largest for-profit health insurance companies have been denying health insurance coverage to an increasing number of applicants in recent years. From 2007 to 2009, Aetna, Humana, UnitedHealth Group and WellPoint refused to issue health insurance plans to more than 600,000 people because of the applicants’ prior medical history.

The number of denials increased nearly 50 percent during that time span, leaving one in seven applicants denied health insurance coverage in 2009. In addition, many of those who were able to buy individual health insurance ended up with riders on their policies that disqualified them from getting reimbursed for treatment for any illness they may have had before the health insurance coverage was issued.

Cracking down on pre-existing conditions

The House report says that one company maintained a list of 425 conditions -- including such common situations as pregnancy, angina and diabetes -- that would prevent an applicant from buying affordable health insurance.

A study by Families USA found that if those disqualifying conditions were applied to everybody in the country, nearly 60 million people under the age of 65 would be denied individual health insurance coverage as a new subscriber, the committee said.

What's more, the denial rate of 15 percent in 2009 doesn't count the people who were discouraged from even applying for health insurance coverage by insurance agents who told them that their pre-existing conditions would likely result in rejection.

It doesn't appear the mushrooming denial rate was a result of more people looking for health insurance: The number of applications rose only 16 percent during the time period. Instead, the committee reported, health insurance companies were trying to "enhance the profit profile" for the individual health insurance portion of their business.

How health insurance will change

The spate of denials has many people counting the days till Jan. 1, 2014, which is when key provisions of the Affordable Care Act go into effect. That law will require everyone in the United States to carry health insurance coverage, and it also bars health insurance companies from rejecting applicants because of a pre-existing health condition that could be expensive to treat.

Cheryl Fish-Parcham, the deputy director of Health Policy at Families USA, a national nonprofit organization pushing for high-quality, affordable health care, predicted that health insurance companies will look more favorably on the individual market in the coming years.

"A few things happen in 2014 that will likely make individual policies attractive to insurance companies," Fish-Parcham says. "Many people will qualify for premium assistance that will help them afford the policies, so the market for individual insurance will increase. And because people who can afford coverage would face tax penalties if they don't maintain coverage, people won't wait until they are sick to buy coverage. These changes should keep individual insurers in the market."

What to do if you’re rejected for health insurance coverage

In the meantime, if you're turned down for the health insurance due to a pre-existing condition, you still have a few options, including:

·     Shop around. According to Fish-Parcham, only a few states require all insurance companies to "play by the same rules," so it could be that different health insurance companies in your area have different underwriting procedures. One company may deny you coverage while another might sell you a policy.

·     Check state laws. Fish-Parcham says your state insurance department can tell you whether any health insurance policies must be made available to you under your state's laws.

·     Pre-existing Condition Insurance Plans. People who have been uninsured for six months or more and have problems buying insurance due to pre-existing conditions can get a Pre-existing Condition Insurance Plan (PCIP). These were created under the Affordable Care Act. These plans were funded with $5 billion from the act and are available to U.S. residents. They cover primary and specialty care, hospital stays and prescriptions, and you pay a premium as well as deductibles.

·     High-risk health insurance pools. If you have been uninsured less than six months, you might be able to buy health insurance through a state "high-risk pool," Fish-Parcham says. Some states have designated open enrollment periods where anyone can buy insurance, and some states already require all insurers to take adults regardless of pre-existing conditions, she says.

·     You may be eligible for Medicaid if you meet low-income requirements, or Medicare, particularly if you are permanently disabled.

And finally, utilize what Fish-Parcham calls "safety net" programs, which include clinics and community health centers that provide health care on a sliding payment scale. These vary from town to town, but Healthcare.gov provides some details.

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