[…] Starting in 2014, health insurance will be guaranteed issue and all of us will be required to have coverage. But until then, individual health insurance is priced based on medical underwriting and (in most cases) slightly less comprehensive benefits than group policies. That’s why it’s less expensive to have an individual policy than a group policy or a guaranteed issue policy like CoverColorado. If health insurance carriers (both individual and group) don’t go over their claims closely and utilize preauthorizations, they run the risk of being defrauded – which will only drive premiums higher than they already are. If they don’t use the specific legal-eze required by state regulations, they will run afoul of the Division of Insurance.
There are plenty of examples of health insurance carriers using unfair or deceptive practices. We’re lucky in Colorado to have a strong Division of Insurance that works hard to protect consumers. Regulations that protect patients and insureds from unfair business practices are largely beneficial (and tend to weed out the shady insurance carriers). But Jaan’s article highlights the fact that health insurance carriers also have to protect themselves. If they don’t, they will end up with premiums that are far higher than the rest of their competition – and that isn’t sustainable.