Monday, June 25, 2012

Ill-advised Citizen Tricks

FoIB Patrick P sent us this item:

"I canceled my very expensive individual health insurance coverage through California's state-run high-risk plan and became insurance-free ... no one will insure me on the individual market ... I have made do with the state's high-risk insurance plan. California ... The federal high-risk plan would cost me just $265 a month"

It's hard not to feel some compassion for Randy Dotinga (Mr D): his health issues don't seem to be self-inflicted. But I have a number of issues with what he proposes. Of course, I completely respect his right to make this choice, even if ill-advised.

University of Chicago professor Harold Pollack nails it:

"[Randy's] responding in an understandable way ... Any program that requires people to be actively uninsured creates a very paradoxical and painful set of incentives and encourages people to do what you're doing."

As we've noted before, PCIP requirements are not only counter-intuitive, they actually punish folks who've played by the rules (as Mr D appears to have done). In this case, he's taking a calculated risk that he'll make it through that half-year wait without a major setback (ie "claim"). Given that he's already acknowledged his precarious (if not imminently threatened) heart health, this is either really gutsy, or really stupid.

And to be frank, I'm not sure which way I lean here.

I do respect that he at least touched base with the government agency overseeing the program. They were less than enthused that he might encourage others to follow his example, which I suppose is justified, but I think unfair. After all, it was the rocket surgeons who dreamed up the train-wreck ObamneyCare© that insisted on making folks "go bare" for six months. What did they suppose was going to happen?

I have two particular problems with this strategy, both of which Mr D acknowledges: first, there's no guarantee that there'll be space for him once he's eligible; and second, the program has limited funding (and a sunset provision) that could leave him in the middle of a claim with no coverage.

 Mr D's claim that he was uninsurable through the individual market gave me pause, so I reached out to California health insurance gurus David Fluker and our own Bill Halper. Turns out, this claim is likely valid; as Bill notes "any cardiac condition that requires ongoing treatment is pretty much death in the individual market." David expanded on this, explaining that "California individual health plans do not provide for any waivers, exclusions or riders. It’s all or nothing whatever the plan covers.  As such our decline rates are much higher here and any condition of the heart is too risky for an insurer to cover."

Which is good to know.

The real problem, though, is the timing. As noted in the article, one must be uninsured for (at least) six months to be eligible. But (at least in California), one can't even apply for coverage prior to that six month "waiting period." David went above and beyond, and caught a disturbing flaw on Mr D's part:

"With the enrollment process for PCIP, a person would likely be uninsured 7-8 months by the time they were enrolled in PCIP, which is very risky for those with serious health conditions.  PCIP enrolls 10th of the month for 1st of the following month and since you have to be uninsured 6 or more months before you apply, the 10th of month 7 is the earliest one can apply.   If a person submits the application prior to the 6 months having elapsed, the app is deemed ineligible for PCIP and sent over to MRMIP.

It can be done but it’s a bit complicated

Talk about understatement.

I've had more than one client (or potential client) in the same boat as Mr Dotinga, and I must admit that I am torn about what to advise. I am not comfortable telling folks they should "roll the dice," but the alternatives are difficult, as well.

On the other hand, there are any number of programs available to folks in his position to access health care for nominal or no cost. In fact, we've linked to some of these in the sidebar for many years. Of course, one must take the initiative and at least contact these folks, but help is available.

For now, anyway.
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