Health insurance is supposed to offer protection — both medically and financially. But as it turns out, an estimated three-quarters of people who are pushed into personal bankruptcy by medical problems actually had insurance when they got sick or were injured.
And so, even as Washington tries to cover the tens of millions of Americans without medical insurance, many health policy experts say simply giving everyone an insurance card will not be enough to fix what is wrong with the system.
Too many other people already have coverage so meager that a medical crisis means financial calamity.
One of them is Lawrence Yurdin, a 64-year-old computer security specialist. Although the brochure on his Aetna policy seemed to indicate it covered up to $150,000 a year in hospital care, the fine print excluded nearly all of the treatment he received at an Austin, Tex., hospital.
He and his wife, Claire, filed for bankruptcy last December, as his unpaid medical bills approached $200,000.
In the House and Senate, lawmakers are grappling with the details of legislation that would set minimum standards for insurance coverage and place caps on out-of-pocket expenses. And fear of the high price tag could prompt lawmakers to settle for less than comprehensive coverage for some Americans.
But patient advocates argue it is crucial for the final legislation to guarantee a base level of coverage, if people like Mr. Yurdin are to be protected from financial ruin. They also call for a new layer of federal rules to correct the current state-by-state regulatory patchwork that allows some insurance companies to sell relatively worthless policies.
“Underinsurance is the great hidden risk of the American health care system,” said Elizabeth Warren, a Harvard law professor who has analyzed medical bankruptcies. “People do not realize they are one diagnosis away from financial collapse.”
Last week, a former Cigna executive warned at a Senate hearing on health insurance that lawmakers should be careful about the role they gave private insurers in any new system, saying the companies were too prone to “confuse their customers and dump the sick.”
“The number of uninsured people has increased as more have fallen victim to deceptive marketing practices and bought what essentially is fake insurance,” Wendell Potter, the former Cigna executive, testified.
Mr. Yurdin learned the hard way.
At St. David’s Medical Center in Austin, where he went for two separate heart procedures last year, the hospital’s admitting office looked at Mr. Yurdin’s coverage and talked to Aetna. St. David’s estimated that his share of the payments would be only a few thousand dollars per procedure.
He and the hospital say they were surprised to eventually learn that the $150,000 hospital coverage in the Aetna policy was mainly for room and board. Coverage was capped at $10,000 for “other hospital services,” which turned out to include nearly all routine hospital care — the expenses incurred in the operating room, for example, and the cost of any medication he received.
In other words, Aetna would have paid for Mr. Yurdin to stay in the hospital for more than five months — as long as he did not need an operation or any lab tests or drugs while he was there.
Aetna contends that it repeatedly informed Mr. Yurdin and the hospital of the restrictions in policy, which is known in the industry as a limited-benefit plan.
The company says such policies offer value by covering some hospital expenses, like surgeons’ fees or a stay in the intensive care unit. Aetna also says all of its policyholders receive significant discounts on the overall cost of hospital care. But Aetna also acknowledges that a limited-benefit plan was inappropriate in Mr. Yurdin’s case because his age and condition — an irregular heartbeat — made him likely to require more comprehensive coverage.
“Limited benefits aren’t right for everyone, and it clearly wasn’t right for Mr. Yurdin,” said Cynthia B. Michener, an Aetna spokeswoman.
Charles E. Grassley, the ranking Republican on the Senate Finance Committee, which is taking a lead on health legislation, says Congress needs to make “meaningful” insurance coverage more affordable and accessible. But “until that happens,” he said, “any presentation of limited-benefit plans ought to be completely straightforward, and not misleading in any way.”
Insurers like Aetna generally defend limited-benefit policies as a byproduct of the nation’s flawed health care system, which they say makes it too expensive to adequately insure someone like Mr. Yurdin.
If everyone in the country were required to have insurance, the industry says — a mandate that Congress is contemplating — the costs and risks of insurance would be spread over a large enough pool of people to let insurers provide full, affordable coverage even to people with pre-existing medical conditions.
Mr. Yurdin worked at TEKsystems, which employs people for short periods as contractors for other companies. TEKsystems says it does not pay for the contract workers’ health benefits, but it does enable them to purchase individual policies with limited benefits so they have at least some coverage.
“There’s no way we make this sound like regular coverage,” said Neil Mann, an executive vice president at Allegis Group, which owns TEKsystems.
Although Mr. Mann acknowledged that the plan Mr. Yurdin purchased excluded routine hospital care, he said he thought it still provided value to employees who wanted “peace of mind.”
True peace of mind, however, comes with a much higher price tag. When Mr. Yurdin no longer qualified for the Aetna coverage after he left TEKsystems and his eligibility eventually ended, his only option was a special state plan in Texas for people who are at high risk for expensive medical care. He has been paying more than $1,000 a month for comprehensive coverage, compared with the roughly $250 a month he was paying for the Aetna plan.
But as of Wednesday, his future insurance problems are largely solved: he qualifies for Medicare because he turns 65.
Many insurers, as part of the Congressional overhaul of their business, say they expect the demand for limited-benefit policies to fall. “Until the nation achieves the universal coverage that we strongly support, some individuals will want to be able to choose limited indemnity products, but with comprehensive health reform we think that need should diminish,” said Simon Stevens, an executive at UnitedHealth.
UnitedHealth drew criticism last year for selling policies with sharply limited coverage through AARP, the advocacy group for older people. One of the plans capped reimbursement for an operation at $5,000, for example, although many procedures cost at least several times that amount. After Senator Grassley began investigating its sales practices, UnitedHealth agreed to stop offering the limited AARP plans.
Mr. Yurdin and his wife say it was not clear that he was liable for tens of thousands of dollars in hospital bills until after he had the first two of what would eventually be four operations. St. David’s says it tried to persuade them to apply for charity care, under which the hospital would absorb much, or all, of the unpaid bills.
But the couple says a lawyer advised them to turn to bankruptcy as the way to be certain they would not be left with too much debt. “I knew we were getting way, way over our heads,” Mrs. Yurdin said.
While Aetna disputes the Yurdins’ and the hospital’s version of events, it also says it has tried to clarify the language it uses to describe the coverage. In its most recent brochure, the fine print describing the limits to “other” hospital services now defines what they are in a footnote on the same page and warns that the excluded expenses could be “significant.”
Senator John D. Rockefeller IV, Democrat of West Virginia, who is also on the Finance Committee, has introduced legislation that would require insurers to be more clear about what they do — and do not — cover. He says he advocates such a change, even if Congress cannot agree to a more sweeping overhaul of the health insurance industry.
But advocates for broad changes to the health care system say Congress can succeed only by making sure health reform goes beyond giving every American a buyer-beware insurance card. One such person is Len Nichols, a health economist for the New America Foundation.
“Conceptually,” he said, “insurance means normal people should not go bankrupt from serious medical conditions.”