Tuesday, September 22, 2009

Iron Man and Health Insurance Costs

Invincible Iron Man #18 by Matt Fraction and Salvador Larroca (2009)

It's true--many former employees who were fired from S.H.I.E.L.D. after Norman Osborn took over and renamed the organization H.A.M.M.E.R. are now without health care coverage. Recall that Pepper Potts was similarly complaining of her lack of insurance. The latest victim is Maria Hill.

As mentioned in another post, we already have COBRA coverage, which allows an employee who is eligible through certain qualifying events (including voluntary or involuntary termination of employment for reasons other than gross misconduct) to maintain continued coverage for a period of up to 18 months.

Alternatively, Hill could just purchase non-group health insurance. As far as I am aware, she does not have any preexisting condition that would disqualify her for coverage (and even if she did, I believe California does have a high-risk pool for medically needy individuals, and guaranteed issue for certain individuals and certain base benefits).

Why wouldn't Hill do either of these things? Well, the obvious reason is that both forms of coverage are just damn expensive. For example, here is a news item from the Commonwealth Fund I remember reading a while back, which reported the results of a Families USA study showing that family COBRA premiums present an extreme cost burden to the unemployed:

While unemployment insurance benefits vary according to state, the report found that the national average unemployment insurance benefit is $1,278, but the average COBRA premium for family coverage absorbs about 84 percent of those funds, or $1,069. [...] In nine states, the cost of COBRA premiums equaled or exceeded the unemployment insurance payment. In Alaska, the state with the largest disparity, the average COBRA premiums for family coverage consume 132 percent of unemployment income.

Ouch. This is why President Obama had proposed that the government subsidize 65% of individuals' COBRA costs for up to nine months. It sounds like a good thing for someone like Maria Hill, but remember that during a recession there is widespread unemployment and many people remain without jobs for longer than nine months.

If COBRA insurance is not affordable for many unemployed, then individual insurance is definitely not an option. There is no great national survey or database like the MEPS from which I can pluck an accurate average non-group premium as well as I could an average employer insurance premium. However looking at New York State's Insurance Department website, you can get an idea of just how expensive this coverage is. Take a look at this report of HMO rates for individual health plans by county as of September 2009. Even in counties that are not New York County, the premiums seem to be at least $800 per month, or $9,600 per year.

To be fair, New York State employer a pure community rating policy, which means that insurers are required to issue the same premium to all individuals regardless of age and health status, i.e. without medical underwriting. The effect is that the average cost of individual insurance in NYS goes way up. The average cost in California might be something closer to $3,000 or $4,000 a year. AHIP's survey of insurance affordability says even less, but this seems conservative to me.

One might wonder why Maria is fretting at all about not having health insurance. I mean, she does not have a preexisting condition and she's young, right? She can take a few months without insurance. Well, this might be the logic that some people use, but even unemployed, Hill has some pretty considerable occupational hazards. Her current activities in between jobs include smuggling sensitive data out of Tony Stark's secure warehouses, having her mind invaded and nearly wiped by The Controller, and getting into brutal fights with H.A.M.M.E.R. forces. A little insurance might do her some good.

Of course, Hill also differs from your average Joe in that she probably has lots of money saved up. You don't exactly work for S.H.I.E.L.D. for petty scraps of cash. I'm sure she is fully capable of dipping into her savings to sustain her until she finds new employment. That is, unless Osborn froze her assets or something like he did with Stark. In that case, she's screwed.

Indeed, having gaps in coverage is a big problem. There are arguments over it. Big national debates. Town hall meetings and protesters even.

Is there anything that the United States government can do to help out people like Hill and those who did not previously work for a big regulatory agency? Some claim that one way of reducing the temporarily uninsured in America is by allowing for cheap, high-deductible short-term coverage. Many states actually have such short-term insurance plans (New York doesn't though), where an individual can buy insurance for a period of three months to a year. It's watered down coverage, but it's coverage nonetheless. Others champion a more public solution. More subsidies for COBRA coverage, expansion of Medicaid (or other public program) eligibility to include these transitional individuals, etc.

Whatever the solution, it is clear that something must be done. With Osborn in charge, you never know what business will be pumpkin bombed next.

29 comments:

Larry Marder said...

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Andrew TSKS said...

One problem with short-term insurance: if you get diagnosed with some chronic condition while on one of those short-term plans, the second it expires that diagnosed ailment becomes a pre-existing condition that will prevent you from getting coverage, short-term or otherwise. Or, alternately, even if you can get coverage, your insurance company won't cover costs related to said ailment.

Once you're in that situation, you might be better off with no insurance. You'll get the same amount of coverage (i.e. none) for less money.

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broker Lorne said...

Well, it is quite funny that nowadays, when you can insure stuff like weather, birthday party - basically anything, some people(and there is quite a few of them) have no basic insure. Seriously, that is a shame.

Lorne

Michael T said...

I gotta figure that even without a pre-existing condition anybody in the super-hero or super-spy game is uninsurable as a high risk. Just as parachutists, military types, and air traffic controllers have to find alternative health and life insurance (usually through their jobs), super-types undoubtedly have to as well.

There is another option though. HIPPA requires every state to have at least one employer group plan available, and most states have several. This includes at least one small business option, which is defined to include one-person Schedule C businesses. If Ms. Hill is now free-lancing, she's a consultant. She may or may not have income, but can certainly set up a d/b/a and file Schedule C on her tax return. That and residency is pretty much all she needs to qualify for her state group plan. The group plan MAY NOT turn someone down for a pre-existing condition (it may impose up to 12 months of non-coverage for that condition, and that condition only, but even that is not permitted if the insured has an unbroken history of coverage, including COBRA). Although not necessarily as cheap as individual insurance, rates are substantially below COBRA in most states (sorry, don't have a cite available for that).

ShadowBanker said...

Larry - Thanks so much!!

Andrew - There are lots of other problems with short-term insurance too that I won't go into here, but good point!

American Auto Insurance - Thanks...

Lorne - Cool name. Any relation to the Angel character?

Michael - I wouldn't call a Maria Hill a super type. Just because she works for an agency that deals with superheroes doesn't make her Iron Man. I can't imagine that people who work for an agency like SHIELD wouldn't have insurance.

Also, I wouldn't exactly call her a freelancer either. She's technically unemployed.

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