Should a health insurance agent enroll individuals who only need high cost health care and plan to cancel coverage as soon as they are healthy?
Health insurance agents face a moral dilemma when approached by a prospective client with no current health insurance and who wants to enroll in a health plan for coverage for immediate health care expenses, with the intention of dropping the insurance once they are healthy. The health insurance enrollment may cost the health plan over $100,000 in claims while the individual will pay maybe $2,000 in health insurance premiums. Do health insurance agents have a responsibility to protect the integrity of dysfunctional health insurance industry?
The Moral Dilemma And Health Insurance
This is a moral dilemma because it involves what the agent considers to be right or wrong. The numerous rules regarding enrollment in health insurance virtually precludes an ethical dilemma. The rules are specific about who can in enroll during the open enrollment period or the special enrollment period with a qualifying life event. However, there are conditions that allow a person with no health insurance to enroll in a health plan outside of open enrollment. This is where the dilemma is created.
For example, I have been approached by several individuals who have never had health insurance and generally don’t want it. Suddenly they have a medical condition that requires expensive medical treatment. These people are not destitute and generally want to see the best doctors and hospitals, but don’t want to pay out of pocket for the health care. Their aim is to get enrolled in health insurance, get their medical conditions taken care of and then drop the health plan.
Private health insurance, regardless of the type, only works when you have a large enough pool of people not making claims and paying premiums to cover the costs of the claims for those who do need the insurance. This is true for virtually any type of insurance. You need more people paying premiums on a regular, consistent, and long term basis, in order to keep the pool of money large enough to pay for small number of really expensive medical and prescription drug cost claims.
Generally the people who suddenly want health insurance find themselves outside of the open enrollment period either for employer based insurance or individual and family plans. During open enrollment anyone can enroll in health insurance even if they did not have health insurance prior to the start of the health plan. There are also no exceptions for pre-existing conditions.
Outside of open enrollment you need a qualifying life event in order to trigger a special enrollment period. People in desperate want of health insurance carefully review the list of qualifying life events to see if they can get a special enrollment period.
Adverse Selection
The Open Enrollment and Special Enrollment rules were put in place under the ACA to reduce adverse selection. Adverse selection occurs when someone applies for health insurance only when they become ill and need help paying for health care. Adverse selection does happen at Open Enrollment when even if the person who did not have health insurance in the previous year can still enroll and receive health insurance coverage at the beginning of the new year. The hope is that those people will continue with their health insurance even after their medical treatment.
Adverse selection drives up the rates for all the other people who stay in the insurance pool.
Manufactured Qualifying Life Event For Special Enrollment
Several of the people who have approached me for health insurance outside of open enrollment and have been diagnosed with an illness can create a bona fide qualifying life event for a special enrollment period. They can do this by either marrying someone who has health insurance or they can create a small employer group. Both are valid conditions for enrolling in health insurance. Some people claim to have moved to California for the qualifying event. It is hard to verify they are not just sleeping on their aunt’s couch.
Even if someone has a valid qualifying life event, and the health insurance agent knows the circumstances and has been told the individual will terminate the health plan after treatment should the agent assist with the enrollment knowing it will only hurt the health insurance industry?
There is the probability that the treatment will save the life of the individual and they will continue to stay enrolled in a health plan. There is also the probability that the individual will pay a very modest amount for very expensive care and then terminate the plan.
I have no problem with people not carrying health insurance. They are assuming the risk for the cost of any potential health care expenses. I do have an issue with people who have no health insurance, become ill, rack up large medical expenses, and then declare bankruptcy.
Health insurance really sucks in the United States for individuals and families. But even small groups and large employer groups are being smacked with increasing rates and dwindling benefits. Unfortunately, opting out of the system until you need health care is not a good option or strategy.
For my part, I have quietly retreated from assisting the people who are trying to game the system. Some have asked me to misrepresent their qualifying life event, a clear ethical violation. For those who can manufacture a qualifying life event I suggested they look to another agent. I’m just not interested in adding to the woes of the private health insurance industry.
By contrast, I have enrolled numerous people who had immediate health challenges in Medi-Cal. Most people are very grateful for Medi-Cal. On the other hand, some people only want to see the highly touted specialist promoted by medical groups. There is nothing wrong with wanting to see the best and brightest doctors. There are many excellent doctors and providers in the Medi-Cal HMO networks, many operated by Blue Cross, Health Net, and United Healthcare. But to have access to the more popular hospitals and medical groups requires you enroll in private health insurance.
These requests for questionable special enrollments come amidst a client base of some of the most ethical and honest people I have ever met. The individuals, families, and small groups I work with are very conscientious about maintaining health insurance and if they are receiving a tax credit subsidy from Covered California, accurately reporting their income. There are never any questions about trying to game the system for their own benefit. They understand how insurance works, including how stupid our current system is, and have accepted the costs. Most of these people also know how expensive medical care is in our country.
So when an intelligent person calls me and wants my assistance with an insurance transaction that will benefit them greatly at the expense of all my other clients who faithfully make their premium payments every month, with no claims for years, I get an uneasy twinge in my gut. I am not a cheerleader for the health insurance companies. But at the same time I see no reason for me to facilitate an enrollment that will only add additional costs to the system when that client jumps out of the pool.