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A Beautiful Mess

Many with mental health problems can't get private medical insurance

WEDNESDAY, May 8, 2002 (HealthDayNews) -- With the success of the film "A Beautiful Mind," which chronicles the Nobel prize-winning mathematician John Forbes Nash Jr.'s struggle with schizophrenia, it may seem that mental illness is out of the closet for good.

However, people with mental or emotional problems still face stigmas and discrimination.

If you don't believe it, just ask an insurance broker.

According to two recent reports, if you have a history of mental health treatment -- even taking an antidepressant for a brief period to recover from a traumatic event -- you may have a hard time getting individually purchased health insurance. And if you do get insured, your policy will probably limit or exclude certain benefits.

The reports were done by the Henry J. Kaiser Family Foundation and the U.S. General Accounting Office.

"Coverage for mental health care and treatment in the individual market is very limited and very restrictive," says Karen Pollitz, project director of the Institute for Health Care Research and Policy at Georgetown University and lead author of the Kaiser Foundation report.

While most Americans obtain insurance through their employer -- and others qualify for public programs like Medicaid or Medicare -- nearly 13 million Americans purchase health insurance directly themselves.

This includes people who are self-employed; retirees who are not yet eligible for Medicare; part-time workers; young people who have "aged-out" of their parents' policies; people who have divorced their insured spouses; and those who are between jobs or out of a job.

"They are, by and large, all of us," Pollitz says. "While only about 6 percent of us are in the individual market in any given year, over the course of a lifetime, many, many more of us may find ourselves in this market, at least for a brief period of time."

As part of its research, the Kaiser Foundation report created seven hypothetical applicants for an individual health insurance policy. Sixty insurers in different markets across the country were asked to underwrite each applicant for a policy that included a $500 deductible and $20 co-payment per doctor's visit.

One of the "applicants" was Emily, who was described as 5-foot-4, 125 pounds and a nonsmoker. She'd never worked outside the home. When she was 56, her husband died.

After his death, she moved back to her hometown to be close to friends. Her internist diagnosed her as "situationally depressed" due to her husband's death, and prescribed a daily dose of 20 milligrams of the antidepressant Prozac. Otherwise, Emily was in excellent health.

Emily received only nine "clean" offers, at the standard rate for a healthy person. She was rejected 14 times by individual insurers and received 37 offers that imposed restrictions on covered benefits, higher cost-sharing, or higher premiums.

States, not the federal government, are the primary regulators of individual health insurance. Currently, there are only five states -- Maine, Massachusetts, New Jersey, New York and Vermont -- where you can't be turned down or charged more for insurance because of your physical or mental health status.

According to the GAO report, in states without guaranteed coverage in the individual market, insurers "would likely deny coverage more frequently for applicants with selected mental disorders than for applicants with other selected chronic health conditions."

Some insurance officials interviewed by the GAO justified the disparity, stating that mental disorders have "greater variability and unpredictability in their associated costs." They worry, for example, that treatment can be a long-term proposition, making it difficult to contain costs.

"The private individual market can't figure out how to predict the claims. And if they can't predict the claims, they can't price the policies," says Robert Bland, chief executive officer of Quotesmith.com, an online insurance brokerage firm licensed in all 50 states.

"No individually written health underwriter is going to knowingly go on a risk with claims, any more than they are going to knowingly provide pregnancy coverage to a woman who is seven months pregnant," he adds.

However, the GAO analysis concludes it can be equally difficult to predict the course and cost of a chronic physical disorder.

Advances in genetics, neurobiology and imaging techniques over the past 20 years have provided evidence that mental disorders are "no-fault" diseases of the brain. In most cases, they are very treatable, according to a recent U.S. Surgeon General's report on mental health.

One possible consequence of discrimination in the individual insurance market is that it may discourage people with mental or emotional disorders from seeking treatment, the Surgeon General's report says.

However, government leaders are working to address the insurance hurdles facing those who've been treated for mental or emotional problems in the past.

President George Bush last week announced his support for equal coverage from the insurance industry for those with mental or emotional problems. Meanwhile, Congress continues to debate the issue.

Some states have passed their own laws extending parity to both group and individual markets.

"Even then, coverage for mental health and substance abuse is very limited, but you can still get the limited coverage and not be turned down," Pollitz says.

Both reports suggest that because medical underwriting is practiced differently by different insurers in different states, your options for getting or keeping individual coverage depend, in part, on where you live.

"If you have a mental health condition or were treated for one in the past, it's quite hard to predict what will happen," Pollitz says.

Bland agrees: "Some companies are very, very comfortable with certain risks. Other companies are extremely uncomfortable accepting certain types of risks. And I know that all of this makes it very difficult to shop around from the consumer's perspective."

What To Do

To read the General Accounting Office report, click here. To view it, you'll need the Adobe Acrobat Reader, which you can download here.

The Georgetown Institute for Health Care Research and Policy has developed state-specific guides that outline your rights to buy and keep health insurance. They are available here.

SOURCES: Karen Pollitz, project director, Institute for Health Care Research and Policy, Georgetown University, Washington, D.C.; Robert Bland, chief executive officer, Quotesmith.com; 2001 How Accessible is Individual Health Insurance for Consumers in Less-Than-Perfect Health, Henry J. Kaiser Family Foundation, Washington, D.C.; February 2002 Private Health Insurance: Access to Market Coverage May Be Restricted for Applicants with Mental Disorders, General Accounting Office Report 02-339
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