Archive for the ‘Insurance Law’ Category
Blacklisted from Health Insurance
posted by Daniel Solove
For the millions of people losing their jobs and having to obtain health insurance on their own, they are in for quite some difficulty if they have a pre-existing condition. According to the Miami Herald:
[M]aterial available on the Web shows that people who have specific illnesses or use certain drugs can’t buy coverage.
”This is absolutely the standard way of doing business,” said Santiago Leon, a health insurance broker in Miami. Being denied for preexisting conditions is well known, but when a person sees the usually confidential list of automatic denials for himself, “that’s a eureka moment. That shows you how harsh the system is.” . . . .
Searching the Web, The Miami Herald found underwriting guidelines for Coventry Health Care, which owns Vista; Wellpoint; Assurant Health; and Blue Cross Blue Shield of Nebraska.
Among the health problems that the guides say should be rejected: diabetes, hepatitis C, multiple sclerosis, schizophrenia, quadriplegia, Parkinson’s disease and AIDS/HIV.
For cancer, the key is how patients have been doing in remission. Wellpoint, a national insurer, rejects applicants who have had breast or prostate cancer within the past five years. With other types of cancer, 10 years must have passed. Assurant Health, based in Milwaukee, rejects most patients whose cancer has not been in remission for at least eight years.
Other reasons for automatic denial by various companies: alcohol-related problems of people who have not been abstinent for at least six years, chronic bronchitis, severe migraines, and a cardiac pacemaker installed within the last two years.
Some insurers will automatically reject applicants who are using certain prescription drugs. Wellpoint denies anyone who within the past year has taken Abilify and Zyprexa for mental disorders as well as Neupogen, which is used to treat the side effects of chemotherapy. Vista lists the anticoagulant Warfarin and the pain medication Oxycontin. Both companies list insulin.
The article also discusses how the insurers use database companies to gather data about people’s medical conditions and prescription drug use:
To make sure that applicants are not lying, insurers hire a data-gathering service — Medical Information Bureau, Milliman’s Intelliscript or Ingenix Medpoint.
Intelliscript and Medpoint do computerized searches of a person’s drug use, gleaned from pharmacy benefits managers and other databases.
The difficulty is that if a person has a disease, then it may be nearly impossible for that person to obtain health insurance. My advice: (1) stay employed; (2) don’t get ill. Otherwise, you’re basically out of luck.
March 30, 2009 at 12:52 am
Posted in: Health Law, Insurance Law, Privacy, Privacy (Medical)
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Eighteenth-Century Lessons for Credit Default Swaps
posted by Nate Oman
Of late I’ve been reading Niall Ferguson’s The Ascent of Money: A Financial History of the World, and I’ve been struck again at how similar the rise of the modern CDS market is with the rise of maritime insurance at Lloyd’s Coffee House in the early 18th century.
Originally, of course, there weren’t insurance companies. Rather, individual merchants and speculators would meet informally at Lloyd’s Coffee House in London. Suppose that there was a merchant with a ship that was about to make a voyage to America that he wished to insure against loss due to the perils of the sea. He would arrive at Lloyd’s with a written contract promising to pay him so much in the event that his ship went down. He would also arrive with money — or at least the willingness to pay it. He would then circulate through the coffee house, looking for those who were willing to sign the contract. Suppose that the contract promised to pay out 5,000 pounds in the event that the ship went down. Some people would sign for one pound of liability, some for 100 pounds, some for 1,000 pounds. Each underwriter would, of course, be paid by the merchant for their signature in proportion to the amount of liability that the underwriter took on. In the end, the merchant would have an insurance contract on his ship signed by a pool of investors who in aggregate were paid less than the insured value of the ship. Of course, while he was at Lloyd’s the merchant might pick up a bit of money by signing on as an underwriter on another merchant’s insurance contract. Before too long there were people who made their living (or at least tried to) entirely with in Lloyd’s Coffee House.
December 9, 2008 at 12:56 pm
Posted in: Contract Law & Beyond, Insurance Law
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Why Should the Government Subsidize Terrorism Insurance?
posted by Rick Swedloff
Just before Christmas President Bush signed into law a second extension of the Terrorism Risk Insurance Act of 2002 (TRIA). This Act hasn’t gotten a lot of press, but it provides a pretty substantial subsidy for the insurance industry. In non-technical terms (because the technical terms are so complicated that one needs a slide rule, a pocket protector, and several actuarial tables to understand the terms completely), under this Act the government requires all commercial (not residential) property/casualty insurers to offer insurance for terrorism risks. In exchange, the government agrees to pay 90% of all losses over a certain amount (determined by a complex formula) that result from certified acts of terrorism. In short, the government provides reinsurance for commercial insurers in the case of a terrorist attack. But unlike normal reinsurance agreements, commercial insurers pay nothing up front for the reinsurance. They get to distribute their risk free of charge. Rather, if an act of terrorism occurs, and the insurance industry pays out over their limit, and the government is forced to pony up some cash, then the government has the right to recover its costs from future premiums received by the insurance companies.
Two things puzzle me about this Act: why we need the government to provide this service and why the government is providing this service for free.
The common justification for this act is as follows: Without insurance for terrorism, there would be significant disruptions in certain sectors of the economy and this would have an adverse macroeconomic impact. Insurance companies won’t provide terrorism coverage because terrorist acts are not probabilistic and are thus uninsurable. That is, insurance companies claim that they cannot provide terrorism insurance because they cannot predict how often terrorist attacks are going to occur or how large the impact will be. Thus, the government has to step in to force insurers into the market.
But this doesn’t make sense to me. Certainly we have enough data to make some guess about the costs and frequency of terrorism, and insurance companies can price their products based on that information. Moreover, although it is certainly a possibility that an attack will be so large as to make insurance and reinsurance impossible (e.g., the entire country is leveled in fell swoop), most insurance and reinsurance companies should be able to create a portfolio large enough to eliminate most of the concerns about the size of the attack. Please take a look at this article by Dwight Jaffe and Thomas Russell for a more thorough explanation.
Even if one believes that government should step in to this market, it is unclear why the government is providing this service for free. In any other insurance context, the insured has to pay a premium to receive the security that someone else will step in to pay some of the insured’s losses. Here, the insurance companies are paying nothing up front. The government is taking the entire risk. This is quite a subsidy for insurance companies. I assume that this is being factored into the price of the insurance products being offered, but that just seems like another subsidy for business and industry. Remember, there is no requirement under TRIA for insurance companies to provide residential terrorism insurance.
Yet this bill has created a bit of a topsy turvy world in D.C.: The Dems are on the side of the insurance industry and big business and the Republicans are against. What am I missing here?
December 28, 2007 at 11:16 pm
Posted in: Economic Analysis of Law, Insurance Law
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Welcome to the Disciplinary Corporation
posted by Frank Pasquale
The market has done a characteristically fantastic job of “trimming the fat” at nursing homes–i.e., squeezing out more profit by providing less care. One may wonder, how do the residents of such homes get taken care of when staff are fired and other corners are cut? The WSJ reports on one solution: drug them.
Nearly 30% of the total nursing-home population is receiving antipsychotic drugs. . . . In a practice known as “off label” use of prescription drugs, patients can get these powerful medicines whether they are psychotic or not.
Federal and some state regulators are pushing back, questioning the use of antipsychotic drugs and citing nursing homes for using them in ways that violate federal rules. New York has increased its focus on antipsychotics in nursing homes, training inspectors to spot signs of medication abuse.
Meanwhile, some employees are finding their health increasingly managed by their employers. “Employers Tell Workers To Get Healthy or Pay Up” is the headline, and here are some of the pressures:
Employees at some companies who are overweight, smoke, or have high cholesterol, for instance, and who don’t participate in supplementary wellness programs, will pay more for health insurance. In extreme cases, employees’ insurance deductibles could rise by $2,000.
What I wonder is: will the same people who are so distressed by the possibility of government-mandated purchase of health insurance also rise up against the corporate imposition of health standards? Or is paternalism perfectly fine when it’s a product of the market?
December 4, 2007 at 6:34 pm
Posted in: Health Law, Insurance Law, Law and Inequality, Privacy
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