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Updated August 15, 2006

Tips for Buying Health Insurance

by Gerald L. Mummey, C.L.U.

No insurance company is eager to insure the health of people with diabetes. In fact, they do so only when forced by competition or political dictate. Whenever possible, insurance companies attach restrictive diabetes riders, exclusions, and waiting periods to limit or eliminate their financial exposure.

Who can blame them? People with diabetes have more frequent and extensive medical claims than the general population. It's not the costs of insulin, syringes, or blood tests that alarm insurance carriers. Rather, it's a person's long-term risk for serious diabetic complications—such as blindness, cuts that won't heal, or circulatory problems—that can be hazardous to an insurance company's financial health. While a person with diabetes in his 20's or 30's may be as claim-free as any other healthy person that age, the prospect of future medical problems is more than just a possibility; it's a probability. And since insurance companies deal in probability, people with diabetes represent potentially devastating financial losses.

Even under the best of circumstances, it's not easy for an insurance company to earn a profit from medical insurance. Hospital beds that not so long ago rented for $50 a night now cost thousands, miracle drugs priced at $100 a pill are commonplace, a simple appendectomy costs several thousand dollars, and there's no end to this trend in sight. Insuring people with diabetes only adds to a company's problems.

Along with the escalation of medical costs, adverse federal and state mandates have caused hundreds of commercial insurance carriers to leave the marketplace altogether. What remains is a sellers' market in which the consumer has very little room to negotiate. The few companies that continue to underwrite medical coverage are very selective as to whom they will insure and for what types of medical benefits.

Until a cure for diabetes is found, obtaining decent medical insurance coverage will continue to represent a hardship for those who have it. Nevertheless, there is health insurance available—if people take the time and trouble to learn a few ground rules of insurance law and company underwriting practice.

Who decides what's available
As odd as it may seem, insurance companies don't have the final say in what is offered for sale. Except where there is overriding federal legislation, each state determines what is and is not marketed to its citizens, and there is very little uniformity between states. Insurance plans sold in Idaho may not be available in Illinois or Indiana. What is considered a routine medical procedure in one jurisdiction might not be covered at all in another. A person with diabetes may have to fight like the dickens to get an insulin pump in one state but not in another.

Barring any conflict with state or federal statute, the person who decides what an insurance company may or may not sell within a particular state is usually an individual known as the insurance commissioner. In some states, the commissioner is elected; in others, the job is a political appointment. Unless challenged in court, the insurance commissioner's authority is absolute when deciding what may or may not be marketed within his jurisdiction. He determines what may be sold, by whom, at what price, and under what circumstances.

The commissioner is often regarded as a pain in the neck by insurance companies, but he is possibly the best friend a person with diabetes can have when a medical insurance claim is denied. Learn his telephone number; he is the first and best advocate a person with a chronic medical condition can have when dealing with a recalcitrant insurance company claims department. (The commissioner may be listed in the blue, government pages in the phone book. If not, call your state's insurance department for his number, or go to the Web site of America's Health Insurance Plans, formerly known as the Health Insurance Association of America, at www.ahip.org.)

Individual vs. group plans
A person with diabetes is generally better off covered under a group plan issued through an employer or union than under an individual plan. Because of the large number of premium dollars involved (the amount you or your employer pays, usually monthly, for health insurance coverage) and the increased competition for group accounts, insurance companies tend to relax underwriting standards and offer higher benefit limits for groups. Health questions are rarely asked for groups with 10 or more eligible participants.

Also in this article:
Health Insurance Resources

Gerald Mummey has been a Chartered Life Underwriter since 1972 and is past president of both the Baltimore Health Underwriters Association and the Maryland Association of Health Underwriters.

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