Refused Service: One in Five Rejected

Thousands of Oregonians denied coverage have little if any recourse other than paying more

April 6, 2009 -- A growing number of Oregonians are discovering the cold hard facts about individual health insurance. For starters, it’s not guaranteed. Consistent with years past, one in five Oregonians who applied for coverage in 2008 were rejected for pre-existing conditions.

Anyone denied can join the Oregon Medical Insurance Pool, but prices are higher (15 percent above market rate). Although more than 20,000 people were rejected by insurers last year, Oregon’s high risk pool actually lost members, and has fewer than 15,000 enrollees.

“The problem is affordability,” said Rocky King, administrator of the Office of Private Health Partnerships, which oversees OMIP. Premium rates for an individual range from $160 to $700 per month. “A lot of people who don’t have access to coverage are the same people who lose their jobs."

Oregon insurers can automatically reject people who have any of 83 ailments listed on the high risk pool's application, but state law does not restrict them from rejecting more.

Anecdotal reports show that insurers continue turning down people for conditions not listed on that application. People with asthma, those managing high blood pressure, even someone experiencing severe heartburn, a chronic case of acne or a mix-up at the lab have been rejected.

Now, despite the legislature mulling over an attempt at universal coverage through House Bill 2009, there’s no expected change for at least two years regarding individual rejection rates.

The Oregon Insurance Division doesn’t have authority to require insurers to accept people, said Theresa Miller, acting administrator. “The state has decided to allow insurers to underwrite in the individual market."

Based on enrollment reports filed with the division, health insurers received 24,301 applications for individual coverage in the fourth quarter of 2008. Out of those, 5,518 people – roughly 22 percent – were turned down because of health reasons other than pregnancy. Insurers rejected 21,648 people in 2008.

Clear Choice Health Plans had the highest fourth quarter rejection rate, having denied 89 out of 213 applicants (42 percent). LifeWise turned down 680 out of 2,372 applicants (34 percent). Kaiser rejected 420 out of 1,433 (29 percent), and Regence rejected 1,652 out of 6,621 people who applied (22 percent).

Meanwhile, rates for individual health plans continue to skyrocket. (See  related story about proposed rate reforms and a Regence proposed 19 percent increase on top of a 26 percent increase last year.)

What to expect from the Oregon Legislature

Lawmakers are eager to expand subsidies for those who can get accepted for coverage. But that’ s contingent on a provider or claims tax.

House Bill 2009 would establish a so-called “Health Insurance Exchange” similar to Massachusetts. Everyone could buy coverage regardless of pre-existing conditions, administrative costs would be streamlined and a basic benefits package established.

However, it's unlikely to happen during this legislative session, admits Tom Burns, aide to Rep. Mitch Greenlick (D-Portland), who wrote the legislation. Instead, the Oregon Health Authority will be created and make recommendations to the 2011 legislature. 

That means people will still have to rely on the high risk pool, which has the support of the insurance industry, which pays roughly $90 million per year to cover the shortfall between what the program collects in premiums, the medical costs and administration. The average cost per OMIP member per month reached $940 in 2008 while premiums averaged $450 per member per month.

“Oregon has one of the most vibrant and sustainable high risk pools in the country,” said Mike Becker, director of public policy and community affairs for Regence Blue Cross Blue Shield of Oregon. “We keep membership open. It’s not closed as most high-risk pools. We have guaranteed issue or access for any individual. Insurers obviously have a concern about the increasing cost.”

Given the economic climate, it's unlikely anything will change soon. Insurers will continue fighting guaranteed issue unless lawmakers enact an individual mandate requiring everyone to have coverage. Ultimately that decision rests in the hands of our president, Barack Obama.

Take Action

Contact your representative at the state legislature by visiting the Oregon legislature Web site here.

Follow what’s happening with bills in committee here.

Visit the Web site for the Oregon Medical Insurance Pool here.

Check out consumer action groups at our Consumer Tools section here.

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I suspect the denial ratio is worse than 1 in 5. Example: If you take industry aggregate figures for the 1st Quarter, 2008, the number of accepted applications was slightly over 17,000, followed by almost 6,000 denials for health reasons. So I suggest the more relevant denial rate is 1 in 3. It appears this is representative for all quarters. I see no reason to dillute the denial ratio with the great number of applications that were not completed or accepted for any number of reasons unrelated to health condition. Rand Dawson Siltcoos Lake

Rand -- I accidentally deleted your last comment about confirming your thoughts with the insurance division. I still don't think dividing denials by accepted is accurate, because that doesn't include the total "received." What we could do is add up denials for health reasons and accepted applications. Then divide denials for health reasons by this total. That would exclude the applications that weren't "completed." In some cases this number is the same, in other cases it's greater than the number of applications received, suggesting there may be errors in the data or some insurers report the numbers differently.