November 13, 2012
It's understandable that car insurance rates can change when you move. One neighborhood might have more accidents or burglaries than another.
But health insurance?
Joan Swope, 62, moved recently from Cathedral City, just down the road from Palm Springs, to nearby Palm Desert.
She informed her insurer, Anthem Blue Cross, of the change of address. A few weeks later, Anthem responded with a notice stating that, because of the move, Swope's monthly premium on her individual policy will increase to $524 from $418.
That's a more than 25% rate hike. For a move of less than 10 miles.
"It's ridiculous," Swope told me. "I'm going to the same doctor. I'm going to the same facilities and the same drugstore. Nothing has changed."
Nothing except her ZIP Code. And in the actuarial world of insurance, that's a sufficiently life-altering event to justify an extra $1,272 in annual payments — on top of a $5,000 deductible.
And here's the real kick in the teeth: It's perfectly legal.
"Health insurers are permitted under the law to charge a different price when someone relocates to a different rating region," said Janice Rocco, California's deputy insurance commissioner for health policy.
What that means is that insurers have carved the state into various zones based on the average cost of local doctors and hospitals. Cross from one zone into another, and your rates can skyrocket.
But what about a situation like Swope's? She may now live in a new rating zone, but her interaction with the healthcare system is the same as it was before — same doctor, same hospitals, same druggist.
I asked Rocco if that was fair.
All she'd say was that the federal healthcare reform law empowers the state to redraw insurers' rating regions by 2014. She said it will be up to the Legislature to do a good job of it.
Anthem acknowledged that Swope informed that company of a new billing address when she moved last year to Cathedral City from Camarillo. And the insurer said it sent her bills to a post office box in Cathedral City.
But Anthem says Swope never explicitly said that her billing address and home address were one and the same. As far as the insurer was concerned, she still lived in Camarillo, even though her bills were being sent nearly 200 miles away.
Burton Swope, Joan's husband, said they had no such problems with any other company they do business with. All of them, including their car insurer, figured out on their own that the couple had moved.
"Any idiot could look at my wife's medical bills and see that she was now in the Coachella Valley," he said. "Everyone got it except Anthem."
Kristin Binns, an Anthem spokeswoman, suggested that Swope should consider herself lucky. Her monthly rate should have increased by about 19% when she moved from Camarillo to Cathedral City, before rising again with the move to Palm Desert.
Binns indicated that Anthem won't try to shake down Swope for any under-payments resulting from the insurer not quite understanding where she resided.
That's nice of them. But what this really shows — as if more proof were needed — is the utter lunacy of our healthcare system.
Step over an imaginary line drawn by some insurance bean counter, and your rate can soar 25%. In what parallel universe is this considered an acceptable way to provide healthcare?
Swope's case also highlights another outrage: Because of a disorder involving her esophagus, she won't be able to obtain insurance from any other company until Obamacare provides that right in 2014. In the meantime, she has no choice but to accept any rate hike Anthem throws her way.
With cars, your insurance rate is based in part on your driving record, but there are also external factors beyond your control. If you live in an area that's more prone to accidents or vehicular damage, you may pay a higher premium to reflect the higher risk.
Healthcare is healthcare. Or at least it should be. Treating a broken arm at one facility shouldn't cost more than elsewhere. Chemotherapy at one hospital shouldn't cost more than using the same chemicals at another.
Of course, if you move from Pacoima to Pakistan, your potential for harm is perhaps greater, and a health insurer would be justified in setting rates at a commensurate level.
But if you move from one community in Southern California to another — whether it's 200 miles or just a few minutes away — you probably haven't exposed yourself to any meaningful environmental change, unless you're now living on a toxic-waste dump.
In any case, Swope's health and her commitment to staying well are no different today than they were before either move.
"It's highway robbery," said her husband, who, at 66, enjoys the peace of mind afforded by government-run Medicare. "What's my wife going to do until the reform law kicks in? Where else can she go?"
The answer is nowhere.
Swope has been insured by Anthem since 2000. In 2002, she was diagnosed with Barrett's esophagus, a complication of acid reflux. According to WebMD, the disorder increases one's risk of esophageal adenocarcinoma, "a serious, potentially fatal cancer of the esophagus."
"When I was diagnosed, my doctor told me not to even think about changing insurers," Swope said. "They won't take me."
The healthcare reform law will fix that. Beginning in 2014, people who don't have coverage from an employer will be able to shop for insurance on so-called exchanges. Insurers will be barred from denying coverage to anyone with a preexisting condition.
But that's still more than a year away. Does Swope have any recourse until then?
She and her husband have filed a grievance with Anthem. They said the insurer has yet to respond.
Rocco, the deputy insurance commissioner, said there isn't much her office can do. Regional rates are permitted under state and federal law, she said, making it difficult for consumers to challenge such rate hikes.
And even though Swope is a hostage to Anthem because of her preexisting condition, regulators have no authority to tell the insurer to operate differently, Rocco said.
The fault, it seems, is Swope's. She had the temerity to cross from one arbitrary insurance zone into another. That will cost her an extra $106 a month.
David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send tips or feedback to email@example.com.
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