Only in America

Insurance for the insured who become uninsured

During the campaign, as the candidates sparred over health care, it became clear that the reform they had in mind would deliver millions of new customers to the nation’s insurers. Golden Rule Insurance has jumped right into this potential market with its “solution” to the problem faced by more and more Americans these days—the prospect of losing their health coverage if they get laid off. Thousands have already found themselves in this pickle, with the option of continuing coverage through COBRA and paying the entire premium themselves, which averages about $12,000. Not many families, especially those without jobs, can swing that.

However, if you’re not yet unemployed, Golden Rule, now part of insurance giant UnitedHealthcare, will sell you a cheaper insurance policy that kicks in after the pink slip arrives. It’s called Continuity, and according to company CEO, Richard Collins, it can “provide more stability” with peoples’ health care coverage, allowing them to take action today so they can be covered tomorrow. Continuity, a rider which will be attached to one of the company’s standard policies, “makes individual health insurance truly portable for the first time,” Collins says.

Here’s how the rider works: Customers buy policies when they’re still working, but the coverage doesn’t start until they lose their job and their group insurance. They pay all the premiums during this “dormant” period, and when job loss occurs, the policyholder automatically gets coverage. The company says customers can choose from among Golden Rule’s standard offerings, which most likely include health savings accounts and other high-deductible policies, requiring policyholders to pay the first $2,500 or so of medical expenses before coverage begins. After all, Golden Rule is the father of the high deductible plans that are contributing to the problem of underinsurance among American families. Still, they are increasingly considered part of the solution for the uninsured.

Golden Rule is also the industry’s king of cherry-picking, well-known for selecting only the healthiest people for its policies. Have the slightest medical problem and you’re out of luck. As the daughter of the company’s founder once told me, “We don’t want to insure a burning house.” Golden Rule says that candidates for the Continuity rider must go through medical underwriting—if they pass, they get the policy; if they don’t, it’s back to COBRA or the ranks of the uninsured. This business about cherry-picking is key, and demands press scrutiny.

A story in the Indianapolis Star this week took a cursory look at Golden Rule’s newest innovation, but glossed over this crucial point, saying only that “customers would have to pass a medical review before they could qualify for the plan.” Readers need to know how tough that can be. And they need to know whether this is really a solution, or simply another money-making scheme from the insurers.

President-elect Barack Obama has said he wants to prohibit insurance companies from rejecting people who have pre-existing health conditions. The insurance industry has countered that it will cover even the sick as long as everyone is required to have coverage. That may be a hollow pledge, since none of the plans discussed will cover everyone. A recent report on NPR focused on a central question: Does Golden Rule know something the rest of the world doesn’t? In her story, Julie Rovner quoted blogger Robert Laszewski, who knows the industry well. He says the Continuity rider assumes that reform efforts, including Obama’s promise to ban the use of pre-existing conditions clauses, will not come to pass. “It’s a bet against Obama being successful,” he said.

We’d like to see political writers explore this as time goes on, and we also have some suggestions for personal finance writers. Why not ask whether buying a policy to insure you in the future—when needs might be different—is a wise use of money? I called Golden Rule’s customer service number and asked if someone could change policies later on and still medically qualify for coverage. At first the customer service rep said, “I’m pretty sure you can customize the plan in the future.” But when he checked further, the answer came back “no.” His suggestion: Buy a comprehensive plan now, because “it’s better to be safe than sorry.” There are good consumer advice stories in all this for reporters who want to look beyond the Golden Rule press release.

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman.