HIAA Distances Itself from Reunderwriting Practice

The Health Insurance Association of America is distancing itself from American Medical Security Group Inc.'s practice of annually reunderwriting individual health insurance policies, CongressDaily reports. The Wall Street Journal on Tuesday profiled the Wisconsin-based insurance company, an HIAA member, which "routinely" raises health insurance premiums by more than 30% per year for policyholders diagnosed with chronic diseases (Rovner, CongressDaily, 4/11). Most companies that sell health insurance to individuals only evaluate patients' medical histories when they sell the policies, but American Medical reviews the health of policyholders at each annual renewal and reunderwrites their insurance policies based on disease diagnoses and the number of claims filed in the past year (California Healthline, 4/9). HIAA President Donald Young said, "We oppose the use of individuals' personal health condition or diagnosis to substantially raise rates after a policy is written." He added, "After a person has purchased coverage in the individual market, they should have peace of mind that premiums will not jump substantially based on their personal health condition or diagnosis." Although the Journal reported that other companies have moved to adopt reunderwriting policies, Young said HIAA officials found that American Medical "was the only firm using the technique to such a degree." Young said that HIAA has not decided whether to take action against American Medical and added that the company has begun "re-examining its policy on its own." Young said, however, that HIAA does "want to preserve the right to raise or lower rates by single-digit amounts based on whether people are healthier or sicker," CongressDaily reports.

Democrats said that the Journal report supports their argument against broadening the role of private insurers in government health care programs. Rep. John Dingell (D-Mich.) said that the practice of reunderwriting "goes hand-in-hand" with the large number of HMOs that have withdrawn from Medicare+Choice. Their withdrawal left "hundreds of thousands of seniors without coverage, not because (the HMOs) weren't making money, but because they weren't making enough money," he said. Rep. Sherrod Brown (D-Ohio) said, "It's one more example of cream-skimming, of segmenting the market, of how the private health insurance industry doesn't serve public needs" (CongressDaily, 4/11).