Big Insurers Increase Denials for Preexisting Conditions, MedPage Today, October 12, 2010

By Emily P. Walker, Washington Correspondent, MedPage Today

Published: October 12, 2010

WASHINGTON — The number of people denied health insurance from four major insurers because of preexisting medical conditions rose by nearly half in the past several years, according to a memo released Tuesday by a congressional committee.

The House Energy and Commerce Committee investigated coverage denials due to preexisting medical conditions by the four largest for-profit insurance companies — Aetna, Humana, United Health, and WellPoint. The investigation revealed that the four companies have denied more than 600,000 people coverage because of preexisting conditions during the three years before passage of the Affordable Care Act (ACA).

In addition, the companies refused to pay 212,800 claims for medical treatment related to preexisting conditions.

The denials affected people seeking to buy their own insurance on the individual market.

“Internal company documents show that this increasing use of preexisting conditions to deny or limit coverage would have continued unabated if Congress had not passed health reform legislation,” committee chairman Henry Waxman (D-Calif.) and Rep. Bart Stupak (D-Mich.), who chairs the committee’s Subcommittee on Oversight and Investigations, wrote in the memo.

The ACA already makes it illegal for insurance companies to deny coverage for children based on preexisting medical conditions, and beginning in 2014, insurers will be barred from denying coverage to adults with preexisting conditions or charging them higher premiums.

Insurance companies will, however, still be able to charge more based on geographic location, age, and tobacco use.

In 2007, 172,400 individuals seeking insurance were denied coverage; by 2009, that number rose nearly 50%, to 257,100 denials, according to the memo.

Overall, insurers refused to offer a policy to more than 651,000 individuals, or one out of every seven people who applied for plans on the individual market.

During the same period, the four companies refused to pay 212,800 claims for medical treatment related to preexisting conditions.

For its investigation, the committee wrote the four insurers and requested copies of all documents relating to preexisting conditions, including internal e-mails, and also requested information on the total number of denials based on medical conditions. In total, the companies voluntarily provided over 68,000 pages of documents.

The investigation also revealed that insurance companies kept a list of 425 medical diagnoses that triggered a permanent denial of health insurance coverage to applicants, including angina, diabetes, and heart disease.

In another case, nearly 15% of one company’s individual market customers in 2010 had policies with riders that limited coverage or raised deductibles for certain medical conditions.

Additionally, the memo said the four insurers all classified pregnancy as a preexisting condition that triggers automatic denial.

Internal documents showed that the denials were part of companies’ business plans and were recognized as a way to save money by limiting the amount spent paying medical claims, Stupak and Waxman wrote.

One company recently introduced a plan to not pay for prescription drugs for patients who are using the medication to treat a preexisting medical condition, the lawmakers said.

Robert Zirkelbach, spokesman for America’s Health Insurance Plans, said insurance companies in the individual market use an “underwriting process to discourage people from purchasing coverage only after they need medical services, which drives up costs for all policyholders.”

He said health insurance companies know that people with medical conditions have difficulty obtaining coverage, and that for insurance reforms to work, everyone needs to have coverage.