Sunday, March 16, 2008

An inexpensive health insurance option?

[Welcome Industry Radar readers!]

An article in Thursday's Wall Street Journal reports on a few inexpensive health insurance plans that are now being marketed as a solution to the serious problem of the uninsured.

Although this insurance is quite affordable, the article properly acknowledges that the cost is sensitive to the rising cost of health care – specifically that more services are now available and more people are willing to take advantage of those services – as examples, the article cites hip replacement and cataract surgery.

The coverage sounds OK, if unremarkable – deductibles are available between $50 and $125 and the coinsurance is 80% to 90% depending on the options you choose. To keep costs down, very strict medical underwriting applies, and there seem to be three different levels.

First, the insurance company will not issue a policy if certain health problems already exist. (Oddly enough, having a bladder stone problem is one of the reasons reported that can result in refusal to issue a policy.) Other specific pre-existing conditions that “manifest” within a 30-day look back period following policy issue are automatically excluded – and, if the insurer rescinds the policy at that point, the first month’s premium is refunded. Still other pre-existing conditions are insurable subject to limitations. Message here is - watch out.

Wellness assistance benefits are available as add-on coverage, but the coverage is not all that generous - the insurance pays as little as 40% and some wellness regimens such as special diets are not covered.

The premiums run anywhere from about $350 to $480 per year. Oh, and I forgot to mention. This is pet insurance.

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