CBS Reporting on Individual Health Insurance Blasted

David Hogberg publishes a letter from the Council on Affordable Health Insurance to CBS, regarding CBS’ loose attachment to the facts of individual health insurance. Quite educational.

FOR IMMEDIATE RELEASE
May 25, 2007

An Open Letter to CBS News

Alexandria, VA –Today, the Council for Affordable Health Insurance released the following statement from Dr. Merrill Matthews in response to CBS’s report on the individual health insurance market.

An Open Letter to CBS News:

The recent two-part CBS investigative series on the individual health insurance market is so biased that it almost appears intended to mislead.

The series clearly tries to convey two messages: that it is very hard for people to buy a health insurance policy in the individual (i.e., non-group) market, and that if they are fortunate to be given a policy, that policy won’t pay for needed care.

Currently, there are nearly 18 million Americans who have policies in the individual market (the vast majority of people get their coverage either through their employer or the government). Couldn’t CBS find at least one who is satisfied with his coverage?

If nothing else, CBS could have asked me. My family had an individual policy for several years and was quite satisfied with it, and it had to cover a few relatively expensive therapies.

Or take the assertion, based on a Commonwealth Fund study, that 89 percent of those seeking coverage in the individual market were denied coverage or couldn’t afford it. How do those numbers correspond to reality? If nearly 90 percent can’t find or afford coverage in the individual market, and there are 18 million Americans currently with individual-market coverage, that must mean there’s some 160 million Americans — more than half the population — who tried to get individual coverage, but failed. However, there are 45 million uninsured Americans, and, as health policy people know, many of them are young and healthy.

I know your “investigative reporters” aren’t necessarily economists or math majors, but you really do need to pay a little more attention to the numbers.

A few years ago the Council for Affordable Health Insurance asked its member companies selling in the individual market to compile their rates of acceptance and rejection, and give those findings to a national accounting firm to protect anonymity. Here’s what we found:

* Nearly 70 percent of the applicants were issued a health insurance policy at standard rates;

* Only 7 percent were declined for medical reasons;

* Another 11.7 percent were declined for non-medical reasons, such as failing to fill out the application form completely or failing to send in a check with the application;

* And 12 percent were issued a policy either with some restrictions and/or a higher premium.

These are real people who received real coverage.

Of course, one of your primary messages is that health insurers deny coverage to uninsured applicants who have a medical condition. Can we expect you to do a follow-up story on life insurers who reject applications from people diagnosed with a terminal illness, or an insurer selling homeowners policies who deny coverage to someone whose house is burning down?

In any individual insurance market — whether health, life, auto, or property and casualty — insurers assess the status of the applicant; and they typically don’t issue coverage for some incident that has already occurred. And for a very good reason: If people could buy a homeowners policy after their house burned down, no one would buy it earlier. The insurance pool would be very small and very expensive.

Seven states have laws that require health insurers in the individual market to accept anyone who applies. The result? The policies are the most expensive in the country because the health insurance pool is very small since only sick people with expensive medical conditions choose to buy the coverage.

And you say nothing about people who might remain uninsured, wanting to save the money, and then try to game the system in order to get coverage. While that may be a small percentage of the applicants, it does happen.

Of course, the “uninsurables” do need access to health insurance, and 34 states have established high risk pools, which are primarily funded by assessing health insurers, to provide that coverage. Because these are state-created entities, some work better than others. But most state high risk pools provide the uninsurables with a choice of policies at premiums that, while higher than a standard policy, are much cheaper than if these individuals paid an “actuarially fair” premium.

By failing to include any of this material in your report, you convey a biased and negative impression of the individual health insurance market and the insurers that provide that coverage. Given the millions of people in the market, mistakes are surely made both
by insurers and applicants. But your report made no effort at being balanced.

It would be like an investigative reporter focusing on, say, the incidents surrounding Dan Rather and CBS’s reporting on the president’s military service. That development did not go well for CBS. Shouldn’t that error be weighed against the countless good stories to emerge from CBS News?

Unfortunately, the type of even-handedness you would want for yourself, you failed to provide the individual health insurance market. If CBS News is wondering why it is trailing in the polls, or why the public is increasingly going other places for their news, you might start with the way you approach your stories.

Merrill Matthews, Ph.D.
Council for Affordable Health Insurance