Insurer accused of manipulating policies, blocking access to care
A Santa Monica-based consumer advocacy organization filed a lawsuit
Monday on behalf of enrollees of Anthem Blue Cross of California in
Ventura County Superior Court, accusing the insurer of violating state
law.
Consumer Watchdog accuses Anthem, a subsidiary of WellPoint, of
manipulating policies and forcing patients into higher deductibles with
fewer benefits.
Anthem spokeswoman Peggy Hinz said the insurer hasn’t yet reviewed the lawsuit and declined further comment.
Nobel Prize-winning economist Paul Krugman recently wrote in his New
York Times column about the “death spiral” issue raised by the suit,
and WellPoint’s claims that healthy people are giving up their
insurance in challenging economic times, forcing the company to raise
premiums.
Krugman writes: “If too many healthy people decide that they’d
rather take their chances and remain uninsured, the risk pool
deteriorates, forcing insurers to raise premiums. This, in turn, leads
more healthy people to drop coverage, worsening the risk pool even
further, and so on.
“Now, what WellPoint claims is that it has been forced to raise
premiums because of ‘challenging economic times’: cash-strapped
Californians have been dropping their policies or shifting into
less-comprehensive plans. Those retaining coverage tend to be people
with high current medical expenses. And the result, says the company,
is a drastically worsening risk pool: in effect, a death spiral.”
Consumer Watchdog Research Director Judy Dugan said when Anthem
closes a policy, healthier customers are allowed to accept cheaper
alternatives with high deductibles and co-pays and weaker benefits.
“That leaves people with pre-existing conditions, and older people,
in the closed policy, facing ever-steeper premium increases,” she said.
“Eventually they either have to drop their insurance (since they can’t
shop around once they’re sick or old) or pay almost as much for a
high-deductible policy that busts the family budget every time they
visit a doctor.”
Goleta resident Donna Freed is one of the plaintiffs in the case.
Her husband is an independent contractor and purchases the family’s
health insurance on his own. They are both 55 and have had their
insurance since about 1995.
“We started out a younger family and didn’t have a lot of health
problems,” Donna Freed said. “We got comprehensive coverage because we
wanted to be covered well, but as the pool got older and older, they
raised the prices more and more, and now they’re saying they closed the
pool.”
The bulk of the enrollees have left the pool, she said. Freed said
the new fees are a hardship, but the family has medical issues and
can’t afford to give up the policy.
The Freeds had paid $1,249 a month but received a letter in September saying the rate would go up March 1 to $1,662 a month.
“I feel trapped by the whole thing,” Freed said. “I feel like we
don’t have an alternative. I feel like way more than necessary of our
income is going toward healthcare.”
Link to the complaint: http://www.consumerwatchdog.org/resources/DeathSpiralLawsuit.pdf.
— The Associated Press contributed to this report.
