The Insurance Intelligencer
11/5/08
Lifetime Maximum
People often ask me, "What is the most pressing issue about health insurance?"
Snarky answer? All of them.
Two-word answer? Cost shifting.
In case you haven't noticed, your health insurer is constantly finding new ways to shift healthcare costs to you:
- Higher deductibles
- Multiple deductibles (office visits, drugs, out-of-netword, hospitalization)
- Higher co-pays
- Higher out-of-pocket limits
- Higher costs for going out-of-network
- Out-of-network maximums
- Shorter list of covered prescription drugs
- Yearly maximums for prescriptions
- Varying percentages paid for different lists of drugs
Once these cost-shifters are in place, you will be surprised how fast the expenses add up. You have "good insurance." You are diagnosed with breast cancer, or colon cancer. Within a year, you could easily rack up $50,000 in medical expenses that are not covered. Happens every day.
So ... you mortgage the farm, sell the horse, and get through your first year of cancer survival. At least you still HAVE insurance. Or do you?
Insurers have two ways of cutting you loose, when you become too expensive (i.e., sick): Recission, and the lifetime maximum.
Recission
Recission is the lesser problem. However, it does happen, and you need to be aware of it.
The word "recission" means "the cancellation of a contract." This is how it works. You are diagnosed with cancer. You ring up many dollars in medical expenses. When you reach a certain dollar amount, bells and whistles go off over at Acme Insurance. "Beeep! This member is getting too expensive!"
The bean-counters at Acme then pull up your original application, and pore over it to see if there are any irregularities that they can seize upon, in order to cancel your policy entirely. These "irregularities" are often made to fit into the category of "pre-existing conditions." Insurers have gone so far as to assert that you had an ache or pain ten years ago, you should have known that you were going to get cancer, we're cancelling your policy.
Recission is not practiced by all insurers, because it borders on the illegal. Anthem Blue Cross recently settled a lawsuit for $11.8 million dollars ... for "unlawful and deceptive business practices" -- claim denials and unjustified recissions.
Recission is easily overturned with a powerful appeal, so I am not overly alarmed about it. There is, however, a looming danger to all insured people. They can get rid of you, and there is nothing that you or the Insurance Warrior can do about it.
The Lifetime Maximum
The majority of us have a lifetime maximum. The most common figure is $2 million. Sound like a lot of money? I have seen people with cancer run through $2 million in eight months. Eight months is not a lifetime.
When you have maxed out your health insurance, you are done. Cut off. It's cash out of pocket from that point on.
The current lifetime maximums were set back in the early 1970s -- by insurance companies. They have not been raised since. I do believe that, in 1970, the insurers made a good faith effort to figure out how much it would take to cover the average person for a lifetime.
In 1970, my grocery budget was $15 a week. The medical care that cost $2 million in 1970 would cost approximately $36 million today.
Why have these lifetime maximums never been raised? Because it is not to the economic benefit of insurance companies to do so, and there is no law requiring them to do so.
More people are maxing out their insurance every day.
What to do when you max out your insurance? Some states have a risk pool of "uninsurables," which is what you now are. Sounds a little bit like "undesirables," doesn't it? The coverage is expensive, and limited to the basics. You get to be on their waiting list after you run out your insurance, then get turned down by two insurance companies.
http://www.healthinsurance.org/riskpoolinfo.lasso
Keep an eye on your lifetime max. This is the fixed amount that your insurer will ever spend on you. It is your "medical checking account," and it dwindles with every treatment you receive. Use it wisely.
Plus -- when we have new elected officials -- implore them to reign in the wild horses of health insurance, and make them raise these lifetime maximums that are forty years out of date.
Happy and peaceful Insurance Warrior-ing,
Laurie Todd
www.theinsurancewarrior.com