More than one-third of the people in the United States under the age of 65 had no health insurance for some or all of 2006 and 2007, according to Families USA, an advocacy group representing the uninsured. The most recent census data pegs the number of people in the U.S. without insurance in 2006 at 47 million people, but this is an annual snapshot that does not count those who had no health coverage for only part of the year. 

Of the 89.6 million people who reported that they lacked health insurance for one or more months in 2006 and 2007 more than 70 percent worked full time.   

“This is a story of working people, working families. This is not a story of people looking for a handout,” Ron Pollack, executive director of Families USA tells the Los Angeles Times. “These are people who simply can’t afford to pay for health coverage with their modest paychecks.”

Families USA research shows that the number of episodically uninsured people in the U.S. has gone up by 17 million since 1999 and 2000, with the rising cost of health insurance the biggest factor driving the trend. 

Not only health insurance premiums have been rising faster than inflation and wages, but underwriters use every trick in the book to classify reasonably healthy people as high-risk to charge the highest premiums possible for self-insurance, because private medial insurance policies are exempt from HIPPA regulations that forbid assessing premiums based on health status, medical history, genetic information or disability.

So if you’re self employed or work for a small business that does not offer coverage, health insurance companies will try to offset the financial hit they are taking from HIPPA by charging you as much as they can based on your health status (rather, the underwriter’s determination of your health status) medical history, genetic information (meaning a parent, sibling or child who has any condition attributable to a genetic defect, even if you, yourself, are healthy) or disability.

Health insurers have another nasty trick they like to pull to ensure that they’re not paying out more in coverage than they make in premiums: post-claims underwriting.

Since the 1980s, attorney William Shernoff has been filing lawsuits on behalf of plaintiffs who discovered that their health insurance policies had been revoked just when they needed coverage the most – roughly 70 of them last year alone. Typically, policies are cancelled on the pretext that the application omitted or falsified important details about health history. Most of Shernoff’s suits are either dismissed or quietly settled.

But The Recorder reports that more such cases may go to trial if the plaintiff in Hailey v. California Physicians’ Service succeeds in convincing the 4th District Court of Appeal that under the state’s Health and Safety Code §1389.3, “health care plans are responsible for resolving all reasonable questions about an application before entering into a contract.”

Plaintiff Steven Hailey was involved in a serious car accident shortly after he and his wife enrolled in a health plan with Blue Shield, which rescinded his policy on the grounds that he “lied on his application about his weight and concealed information about a recent hospital visit and a host of medical conditions.” Because his Blue Shield coverage was cancelled, Hailey was forced to sign up with a new insurer and wait six months for surgery with a torn urethra and other injuries.

Blue Shield contends that coverage is subject to being revoked when someone has misrepresented facts that are material to the company’s decision to insure him. Attorneys representing plaintiffs in cases like Hailey’s counter that an insurer should show willful misrepresentation before pulling the plug on coverage.

Blue Shield has an uphill battle, considering that Blue Cross of California recently agreed to the willful misrepresentation standard in a proposed class action settlement. However, it will be business as usual for Blue Cross should Hailey lose in court.

For his part, Shernoff filed an amicus curiae brief in the Hailey case, claiming that the MO at Blue Shield was to rescinded coverage without investigating whether there was an intent to deceive the company. He tells The Recorder that if these decisions were made in bad faith, there are grounds for punitive damages.

The Stiletto opposes swapping employer-provided health insurance with taxpayer-provided health insurance (second item). But the number of middle class Americans who can’t afford to buy health insurance for themselves and their families is a clear indication that the current system is broken.

Writing in the Los Angeles Times, Jamie Court, president of the Foundation for Taxpayer and Consumer Rights, takes on Gov. Arnold Schwarzenegger (R-CA) and Sen. Hillary Clinton (D-NY) for proposing mandatory purchase of private health insurance policies for all Americans, asking: “Is it the right of the government to impose an obligation to buy a private product that costs $12,000 a year for a family of four?”  His answer:

Gov. Arnold Schwarzenegger and Assembly Speaker Fabian Nuñez claim they are close to a deal on healthcare reform that will require every Californian to prove they have a private health insurance policy - but does not cap how much insurers can charge for it. Hillary Clinton’s health plan, released last week, would require all Americans to have health insurance, also with no cap on premiums.

The goal of universal healthcare plans, including the one Clinton designed while first lady, has been to rein in waste and profiteering, then redistribute the savings to the public in the form of guaranteed healthcare. But these new “post-partisan” plans have been stripped of all effective cost containment. They simply force businesses, individuals and taxpayers to pick up the tab. Apparently, if you can’t beat the medical-insurance complex, join it. If it passes, the new system could be in place next year.

Under the proposed California compromise, employers will have to pay a share, but the ultimate responsibility lies with the individual. Policies for the poor would be subsidized, but taxpayers surely would be overcharged to boost corporate profits: Insurance premiums have increased 78% since 2001, compared with a 17% increase in inflation.

Health insurance is so unaffordable today precisely because no one is watching costs. With regulation of all medical charges, insurance would be cheaper and people might want to buy it. But Sacramento politicians already refused to standardize what doctors, hospitals, drug companies and insurers charge.

Rather than sweeping “reforms,” The Stiletto suggests more modest steps, such as requiring insurance providers to comply with HIPPA-style regulations for all policies, forbidding post-claims underwriting and providing a tax credit that would give middle class taxpayers a meaningful offset for the cost self-insurance.

Once an appreciable dent has been made in the number of working Americans who cannot afford to purchase health insurance, it would be nice if healthcare providers did not charge $50 for every Tylenol dispensed in the hospital to push the costs of providing medical care to the undocumented and the uninsured onto everyone else.

Note: The Stiletto writes about politics and other stuff at The Stiletto Blog.

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