Individual insurance coverage frustrates Georgians

As more Georgians are forced to seek health insurance on their own, many are learning painful lessons about the difference between the familiar company-based group coverage and the individual policies that sometimes replace them.

Policies are suddenly canceled. Monthly premiums rival the size of mortgage payments. Huge bills go unpaid because of surprising gaps in coverage.

These lessons and more are embedded in hundreds of complaints filed with the Georgia Insurance Commissioner's office over the past five years. The complaints contain tales of misery experienced by holders of individual policies, a small but increasingly important segment of Georgia's health insurance market.

Often the only option for people with no job-based coverage, individual policies account for more than their share of complaints in Georgia, according to an Atlanta Journal-Constitution analysis of insurance records.

The AJC reviewed more than 1,800 health insurance complaints filed between 2004 and 2008. Almost half — 45 percent — involved individual health insurance, even though only 8 percent of the state's residents, about 460,000 Georgians, were enrolled in such plans.

Insurers say individual coverage meets a need, protecting people with no other options from financial disaster. They say the lopsided proportion of complaints about individual policies may partly reflect policyholders' limited options. Individual policyholders don't have their employer's human resources department to field grievances.

But the AJC analysis found several companies with multiple complaints.

They include six insurers with two to four times as many complaints as is typical for companies their size, according to a standard industry measure. The individual insurance practices of two companies — Mid-West National Life and Mega Life & Health — led to $20 million in fines nationally last year after an investigation by regulators in dozens of states.

In Georgia, complaints include but go far beyond the high cost of buying insurance without an employer's support.

Most of the complaints — 65 percent —were about what consumers weren't getting for their money. Customers reported denied claims, inadequate and delayed reimbursement, policy cancellations and costly holes in coverage. Some couldn't get coverage at all.

Many complained in vain.

Georgia law provides far fewer safeguards for those navigating the health insurance world on their own than it does for those with group policies at jobs, where employers and economies of scale work on their behalf.

Georgia Insurance Commissioner John Oxendine's office runs interference on behalf of individual policyholders. But it has little policing power over the companies that insure them.

Individual customers, Oxendine said, "tend to be more vulnerable to the whims of the insurance company."

His office has no say over the premiums charged by individual insurers, and no authority to stop them from doing things group insurers cannot.

With individual plans, carriers can legally charge higher premiums based on age, gender or health. They can refuse to cover conditions that group plans routinely include, or deny coverage outright for people with problems such as arthritis or diabetes.

"There is not enough protection for consumers in this state," said Len Sams, a Macon taxidermist who struggled with individual policies for years.

Georgia has not armed consumers with the tools to navigate the market themselves. The consumer complaint analysis done by the AJC is an example. The analysis provides a scorecard not otherwise available.

In some states, insurance regulators routinely post such scorecards online, both to inform consumers and encourage insurers to behave.

Oxendine's office added a link to a national insurer scorecard six days ago, after being asked why the information wasn't on its Web site.

A spokesman said technical issues have delayed a state-specific version.

The Georgia complaints provide a narrow window into what experts agree is a national problem in the individual health insurance market.

Nancy Metcalf, an analyst who studied the market for the independent, nonprofit Consumer Reports, puts it bluntly.

"In plain language, this is a market that's so terrible that you don't enter it unless you have no other choice," Metcalf said.

About 17 million Americans participate in the individual market now. The recession could swell the numbers.

With health care reform being pushed in Washington, the industry is already offering to fix some of the individual market's biggest problems, like discriminatory coverage and rates.

"Fundamental reform is needed," said Robert Zirkelbach, a spokesman for America's Health Insurance Plans, a national trade association for insurers.

But industry leaders say individual insurance fills a gap.

"It's a very needed product," said Michael Wardrip, of the Georgia Association of Health Underwriters. But Wardrip also called the individual market "imperfect."

Customers agree.

Steve Orston, 61, of Roswell, complained to Oxendine's office when his premium jumped 55 percent — from $630 per month to $980 per month — for a husband-and-wife policy with a $3,500 deductible. The state could not help.

Rich Mazurek, 37, of Suwannee, is among thousands of Georgians who can't get coverage at all.

Mazurek has rheumatoid arthritis and ventured into the individual market because he lost his job and couldn't afford premiums under COBRA, the law that allows ex-employees to keep their coverage for a while at their own expense: "I was totally naive. I was declined by more than 20 companies."

Sams, the taxidermist, has experienced the gamut of individual policy problems.

He lost his insurance in a dispute over whether he'd disclosed his acid reflux disease. After what he called "two years of anguish" trying to find a new policy, he ended up back with the company that canceled him.

Separate policies for him and his wife cost more than $1,000 per month, with $1,500 and $4,000 deductibles. And they don't pay for what's wrong with Sams. He pays for his acid reflux treatment out of pocket.

"Government can't fix everything," he said. "But when there are abuses, government needs to step in."

Sams' insurance company, Time Insurance, is among those with multiple complaints on record with the state.

In evaluating complaints, the AJC ranked companies with a measure, called the complaint ratio, used by the National Association of Insurance Commissioners.

The ratio allows the companies to be weighed against others with similarly-sized business here.

The ranking is for all complaints, not just individual ones. The state insurance office couldn't break down each insurer's share of the individual market alone.

Because of that, two companies with relatively poor rankings —Pacificare and Compbenefits — earned their rankings through complaints about other forms of health insurance.

Insurers with the highest complaint rates included affiliates of some of the biggest names in the business.

The company with the worst complaint ratio was American General Life & Accident, part of insurance giant AIG.

American General had 19 complaints, all from individual policyholders. But its complaint ratio was 4.19, meaning it had more than four times as many complaints as the median for com panies doing a similar volume of business in the state.

A score of 1 or less is considered good.

In a statement, company vice president Shayna Schulz said American General "recognizes the critical importance of exceptional customer service."She said the company added controls and, "Over the last several months, our customer service stats have been steadily improving."

A spokeswoman for the company that handles claims for Continental General, with a 2.54 complaint ratio, said that company also "strives to provide quality service and takes customer inquiries seriously."

The two companies whose parent paid $20 million in fines nationally were also subjects of repeated complaints in Georgia.

Mid-West National Life and Mega Life & Health each had more than twice as many complaints as the median for their size. Most involved individual policies.

Both are part of Texas-based HealthMarkets, which became the target of a 35-state probe beginning in 2005, based on repeated problems with its sales practices and consumer behavior.

Georgia did not participate in that probe. Oxendine said Georgia was investigating the companies but suspended that when the national probe began. The state received $516,000 in fines after the settlement was reached.