Is It Time for Uniform Disclosure Legislation in Health Insurance?
The Health Insurance Industry
Ethics in business is a prevailing issue in today's society. All categories of business contain many ethical and honest companies and personnel, however there is always a segment of those who are either less ethical or simply fail to disclose all the facts of a transaction. The health insurance industry is a business category where lack of disclosure could lead to significant monetary cost for today's consumer.
Aside from the issue of ethics, there is the issue of how information is presented to the public by health insurance carriers. Today, there is no disclosure legislation in place to assure that everyone is presenting features of plans in a uniform manner. In this writer's opinion, there are five critical elements to any health insurance plan:
- Major medical deductible
- Coinsurance percentage
- Coinsurance or out of pocket maximum
- Doctor visit co-pay
- Rx benefits
An example of lack of uniform disclosure is the manner in which the coinsurance maximum is presented to a prospective buyer. This is an important term in that it signifies when a health plan member has paid out the limit of his liability, usually based on a calendar year, thus reaching a point where the insurance carrier pays all remaining covered expenses at 100%. Certain carriers include the deductible amount in the coinsurance maximum, while others do not, thus leading to consumer confusion.
Another example is that a few health carriers sell plans that contain deductibles by incident rather than by calendar year, which means that if an insured member is hospitalized more than once in a calendar year for different issues, he or she has to satisfy the deductible on each occurrence. This feature is hardly ever communicated to the consumer and leads to confusion and consternation when claims are not paid.
Many ethical insurance brokers' major frustration with the industry is related to cases in which brokers or carrier representatives "misrepresent" coverage benefits by omission. If a uniform disclosure act was passed and simply covered the basics, the consumer would be able to make a more intelligent purchasing decision, and those companies and brokers who are only interested in the sale would have to exert much more caution in how they present health plans. Uniform disclosure puts everyone on a more level playing field and actually would greatly assist the many conscientious agents whose primary objective is helping clients obtain the best health insurance coverage for their personal needs and budget.