Payment Due — Healthcare Headaches in America;

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Transcript of Show on Junk Health Insurance Plans Bill (S. 1955 – Enzi-R-WY)

PBS-TV: NOW Program

DAVID BRANCACCIO (HOST): Welcome to NOW. You may want to designate this “get your wallet cleaned out at the gas station” week. We’ll have more on that later. But first health insurance or the lack there of.

The numbers are staggering — 45 million Americans have no coverage. Most of those folks are working but their employers either don’t offer health insurance or what they offer is too expensive.

So some families grasp at straws — cheaper policies that appear to offer the coverage they need, but don’t. You’re about to meet some people who learned in hardest possible way what can go wrong when an insurance policy and an illness don’t line up. This at a time when there’s new legislation in Congress that, if passed, would be the biggest reorganization of health insurance in decades. Consumer groups are worried it could make things worse.

Peter Meryash produced our report.

BRANCACCIO: The grim news from the doctor came five years ago. Dana Christensen and her husband Doug got the word that the bone cancer he had once beaten, had returned.

Devastating. But if battling cancer wasn’t bad enough, the couple also found themselves in a fight they had never expected, a fight against their own insurance company.

CHRISTENSEN: I thought it was an outstanding policy. But it wasn’t until we went to use it, that we found out it did not cover what we were promised it covered.

BRANCACCIO: The health coverage the Christensens had might serve as a warning for what could come across the country, as Congress considers legislation to bring health insurance to more Americans.

Critics say, in the process, many could find themselves insured, but not truly covered… just like the Christensens.

CHRISTENSEN: Well, of course there was an emotional rollercoaster of, you know — we think he’s going to beat it, it doesn’t look good. His tumor would grow and it would — and then it would shrink. But then we’d find out it metastasized somewhere else.

BRANCACCIO: Doug Christensen’s cancer was aggressive… and he found himself in and out of hospitals.

By all accounts, his medical care was top-notch. First, it was chemotherapy treatment at Cedars-Sinai hospital in Los Angeles. Then it was radiation and surgeries at UCLA.

That is when the couple started to notice a problem with their insurance.

CHRISTENSEN: My husband needed a couple of surgeries and one surgery, his lung surgery, when we went to be admitted into the hospital, surgery was scheduled, the admittance office told us it was the worst policy they’d ever seen, that that policy was so poor, we had to come up with $8,000 just to be admitted into the hospital.

BRANCACCIO: They paid that eight thousand dollars themselves, but other bills started piling up.

It turns out, their insurance was not covering a major portion of Doug’s medical costs: $13,000 here, $27,000 there… almost $70,000 on this one.

CHRISTENSEN: And then one day my husband was in excruciating pain and the morphine we had at home, nothing I could do would relieve his pain, so I called Cedar Sinai to say I’m bringing him in, he needs — he needs something. He needs to be relieved of this pain. And they said I’m sorry Mrs. Christensen you guys are not allowed through these doors anymore, your insurance has capped out, they’re not paying us anymore and your bills are high. And we can’t allow you to come through these doors anymore.

So I had to take my husband to an emergency room where he sat for about eight hours, you know, which is the worst place for a cancer patient to be.

BRANCACCIO: When the Christensens bought their policy, they thought they were being very careful. They even decided to pay extra for $100,000 in chemotherapy coverage. According to court papers, Dana says their agent told them quote: “that should be more than you’ll ever need.”

For chemotherapy, their insurance paid up to $1,000 a day. That might sound adequate, until you learn, for example, the actual cost on this one day alone was more than $14,000 leaving the couple financially responsible for the difference.

Now most insurance policies protect the patient from exorbitant “out-of-pocket” expenses, a cap on what someone will have to pay in any year for treatment.

But the Christensens didn’t realize until it was too late that their insurance had no cap’ no limit on what they’d be responsible for.

Eventually, the couple found themselves facing — listen to this — almost a half million dollars in unpaid medical bills.

It was a shock that forced them to consider a terrible choice.

CHRISTENSEN: He asked me to divorce him. He said, Dana, you know, we’re up to a half a million dollars in medical bills. You know, you have to think about the finances here. And I said I’m not — I’m not gonna divorce my husband because he’s ill. You know, I’ll have to deal with that. But let’s not think about this now, we’ve got other things to worry about.

BRANCACCIO: Only a year and a half after his cancer returned, Doug Christensen lost his battle.

“Ma’am, you’re — you’re responsible now. You know you need to pay these bills.” And I’m saying, “I know. I know. I know.” I dealt with it daily. That’s all I — I could do.

BRANCACCIO: There was one other thing Dana could do under state law: sue for fraud and damages. And so, she took the insurance company… Mega Life and Health… to court.

STUART: It’s fraud in the sale of health insurance. It’s as simple as that.

BRANCACCIO: Tony Stuart is Dana’s attorney.

STUART: The conclusion I’ve come to is, is that basically in order for them to be able to sell this policy they have to misrepresent, because if people — if — if the policy were to be honestly presented to people nobody would ever buy it.

BRANCACCIO: HealthMarkets, Mega’s parent company, declined our offer of an on-camera interview, but sent us this statement:

“The company firmly believes our sales agent — who herself is a cancer survivor — properly disclosed what our policy covered, what it did not cover, and how much coverage it offered. There’s simply no evidence to the contrary.”

What’s more, they claim they provide “… the best insurance value [to those] who might otherwise lack access to affordable health care coverage.”

Nevertheless, and “with no admission of wrongdoing,” the company paid Dana $1.7 million to settle the matter.

After taxes and attorney fees, she was left with less than $400,000. Dana and Cedars-Sinai are in dispute over how much she still owes them.

Mega offered to pay that hospital claim as well, but in exchange, the company wanted her to sign away her right to speak openly about her case. She was so angry, she refused, and walked away from the additional money.

CHRISTENSEN: This is exactly what — why I’m here, I don’t want people to go through this. It’s ridiculous.

BRANCACCIO: Dana and Doug Christensen are not the only ones whose policies covered far less than expected.

ORESTUK: It was such a nightmare. It was so horrible. I didn’t know what to do.

BRANCACCIO: In 2003, across the country in Virginia, Sherry and Dan Orestuk also bought their medical insurance from Mega Life and Health.

And not long after, Sherry was diagnosed with invasive breast cancer.

She went for six and a half weeks of radiation treatment, and just like the Christensens, the Orestuks found out how little their policy covered.

ORESTUK: The bills were probably up to here when I said, “you know, at some point I’m gonna have to dig into those bills.” It was overwhelming to me. I mean it — it — it was truly overwhelming. Because I was tired. That — that grind of going for radiation.

BRANCACCIO: Exhausted from her treatment, Sherry turned to a friend who worked in a doctor’s office to help sort out all the bills.

ORESTUK: She called me up a few nights later and she said, “are you sitting down? You need to sit down.” She said, “I have never — in 25 years of working for a medical doctor, I have never seen insurance like this.”

BRANCACCIO: Along with a high deductible which could be charged several times a year, and even though the Orestuks had paid extra to cover radiation treatments, their policy paid only $15,000 of her $40,000 bill, according to the Orestuks.

So while she was recovering, Sherry had to start dealing with the creditors.

ORESTUK: I was so humiliated — I would call up and I would try to make a — a payment — reschedule with them. And they would say, “oh, come on. You could only send me $25 a month?”

BRANCACCIO: Sherry even missed important doctor visits to help keep her costs down. She tried to switch insurance policies, but the fact she had a pre-existing condition made finding coverage in Virginia almost impossible.

ORESTUK: One guy in particular I remember. He laughed. He said, “Sure. We can — you can get insurance. But, could you afford it?” And quoted me $3,000 a month for health care.

BRANCACCIO: That’s when the Orestuks made the tough decision to move to New York.

They chose New York because it has very strict rules requiring insurers, in most cases, to cover pre-existing conditions, at more affordable rates.

ORESTUK: It seemed like that was the thing to do because — you can’t put dollar amounts on Sherry not getting care.

BRANCACCIO: So they ended up closing Dan’s carpet-cleaning business which had been thriving in Virginia.

ORESTUK: We’ve had to start over. Completely start over. It’s unbelievable.

BRANCACCIO: What you need to know about the Mega policies purchased by the Orestuks and the Christensens, is that they were both marketed through an organization, in this case, something called the N.A.S.E. — the National Association for the Self-Employed.

STUART: The idea that’s communicated is that you’ve got group buying power working for you. You’ve got this big, powerful association that’s able to demand the best coverage, the best benefit levels from an insurance company.

BRANCACCIO: There are plenty of these associations that offer good health plans, and they’ve become increasingly attractive options, especially for small businesses, where 27 million workers and their families currently have no health insurance at all.

President Bush has been traveling the country, praising association health plans as part of the solution to the health care crisis.

BUSH (April 13, 2006): It’s a good idea for small businesses. I mean, if people want the small-business sector to flourish, then they ought to help small businesses be able to afford health care.

BRANCACCIO: Case in point — Associated Builders and Contractors. They represent thousands of big and small construction companies in the U.S.

Members benefit, says vice president Joe Rossmann, when the association can use its size and clout to secure good health insurance.

ROSSMANN: Bare bones policies are out there. People can be — could purchase that today. The fact that you’re having a small business health plan in place, through the association, provides an extra level of security for those small employers that somebody’s gonna bring you a product that’s comprehensive, cost effective, and it’s the right thing for them.

BRANCACCIO: Rossmann’s group offered members a choice of 14 good health plans, he says. But then, came a problem.

ROESSMANN: The insurance company that we were doing business with basically came to us and said they wanted to get out of the business, because of the inconsistency and complexity of state health insurance reform.

BRANCACCIO: Too many burdensome and costly state regulations, he says, standing in the way of lower premiums.

But state regulators say their rules are designed to protect patients and consumers.

So in Congress, it’s turned into a pretty partisan battle.

While the reliably Republican house has passed association health plan legislation eight times already, it has always stalled in the more divided Senate.

But this time around, businesses hope they have a good shot to get this into law.

ENZI: I’m so pleased that we have a bill that is moving forward and that there is such dramatic support…

BRANCACCIO: Republican Michael Enzi is the chairman of the Senate’s health committee.

ENZI: “… people need insurance, they want to have reasonable insurance. Insurance rates have gone up dramatically. And as insurances rates have gone up dramatically, the number of people insured comes down dramatically.

BRANCACCIO: Proponents say by getting rid of many state regulations and streamlining others, it will make it easier for insurers to compete across the country and allow them to offer less expensive, if less comprehensive, insurance options.

NELSON: When I found that — of our 30,000 small businesses in Nebraska that 20,000 were unable to provide health insurance for their employees. I knew we had a problem.

BRANCACCIO: Ben Nelson, Nebraska’s former insurance director, is the only Democrat in the Senate so far who has signed onto the bill.

NELSON: We think this is gonna work for an awful lotta people. It will reduce the costs, we believe, by as much as 12 percent. And maybe more. And it will add about a million people to the — to the roles. So the people who are being critical — they oughta go and talk to those million people who are gonna get the benefits. And say, “no, this isn’t good for you.”

BRANCACCIO: And there are critics, especially groups that have fought at the state level for health care coverage they believe is adequate and fair.

Consumer advocate Jerry Flanagan says this could be one of the biggest attacks on patient protections… ever.

FLANAGAN: The states will be forced to rubberstamp insurance companies — and insurance policies that offer no real protections. And, frankly, insurance isn’t insurance if it doesn’t protect you when you get sick.

BRANCACCIO: Forty-one state attorneys general have come out in opposition to the legislation, as well as many other state officials.

So what about the legislation has them so worried?

For one thing, it would force victims of insurance fraud or mismanagement into federal, instead of state court, say consumer and legal experts. That means someone like Dana Christensen would have no chance to win monetary damages or penalties.

FLANAGAN: If you remove that legal threat, then insurers can deny coverage, deny treatments with impunity because there’s no threat whatsoever if they do.

BRANCACCIO: What’s more, this legislation would allow insurers to effectively ignore a whole range of minimum benefit requirements in every state, rules that say, for example, insurance must cover:

All cancer screenings — that’s in 14 states;
Diabetic supplies — that’s in 46;
Or mental health treatment — 44 states.

Many states have been very fierce on this issue of regulating health insurance. They have won in many cases rights for patients to certain levels of care. Do you worry that this legislation erodes the power of the state regulators to watch over this stuff?

NELSON: What I worry about is the fact that — that there are people who are unable to get that health insurance that has all this consumer protection associated with it. When you’re sitting with nothing you can look at what the Cadillac of the product might be, and ask how do I get that? Or how do I afford that? But if I’m sitting there with nothing, what do I do in that case? That’s what this is about.

BRANCACCIO: But will the legislation actually lower health care costs?

An independent analysis by the American Academy of Actuaries confirmed this week that some businesses would see insurance rates go down…

But at the same time, others will find “… significant rate increases.”

The concern is that healthier, younger people will be drawn to cheaper plans with less coverage, more bare-bones. That will leave older, sicker people in plans that could cost them a lot more.

Some states have rules designed to tightly control what people can be charged. In fact, that’s why Sherry Orestuk and her husband Dan moved to New York.

But this legislation would effectively prevent New York, or any other state, from setting its own rules’ rules about such things as affordable premiums for people with pre-existing conditions.

FLANAGAN: You do not have to roll back a decade’s worth of patient protection rules to get affordable insurance. The — basic issue here is that states have considered what’s necessary for patients. Patients have fought for reforms in states. States have acted. Why are we even considering legislation that would remove those patient protections? And remove affordability protections under a bill that’s supposed to increase affordability of health insurance?

BRANCACCIO: The Senate could vote on the bill as early as next week, and Dana Christensen plans to be on Capitol Hill to remind members of Congress what can happen to real people if they don’t get this right.

You can find out more about the folks we met in that story and all the proposed health insurance legislation on our website:

Consumer Watchdog
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