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When healthcare coverage is insurance in name only

Los Angeles TImes, 2/8/10

By David Lazarus
Los Angeles Times
February 8, 2010

The L'Esperances are your typical American family. They work hard. They try to get ahead. They don't ask anyone for help.

And they pray they don't get sick.

Mom and Dad -- a.k.a. Laguna Beach residents Jan and Paul L'Esperance -- sell kitchenware on behalf of various manufacturers. They've just been informed by Anthem Blue Cross that premiums for their health insurance will rise 18% to $985 a month.

That might sound almost reasonable until you understand that Paul, 63, and Jan, 61, each have a $5,000 deductible, meaning that they're on the hook for all healthcare expenses except under the most catastrophic circumstances.

Their daughter, Morgan, 27, lives in San Francisco. She has no health insurance at all. The restaurant where she works doesn't offer coverage. And because of a history of breathing problems, she's unwelcome in the individual insurance market.

They're all healthy enough these days -- no serious medical problems to speak of. But each lives in fear of "what if."

What if I become seriously ill? What if I get into an accident? What if I'm hurt?

"It's scary," Paul told me after receiving word the other day of Anthem's latest rate hike -- a double-digit increase that the insurer is inflicting on numerous individual policyholders. The state Department of Insurance is investigating the jump in premiums.

"I don't know where to turn," L'Esperance said. "Who am I -- just a little cog in the wheel. I'm just your average guy."

That's the scariest thing about the L'Esperances' situation: They are average. Each of us is dealing with ever-increasing insurance costs and ever-dwindling coverage.

Americans spent 5.7% more on healthcare last year than the year before, according to government figures. Healthcare spending now accounts for a record 17.3% of the U.S. economy.

And efforts to reform the healthcare system -- well, I don't have to tell you. It's not looking good.

"What this family is dealing with are not extraordinary circumstances," said Ron Pollack, executive director of Families USA, a healthcare advocacy group. "And what's really unfortunate is that many people don't seem to be aware that the reform proposals would remedy all these problems."

An Anthem spokesman, Jerry Slowey, declined to say how many customers have been hit with rate increases in recent weeks or the average size of the hikes.

He said only that the company "must adjust our rates as needed to cover the costs and risks associated with providing quality healthcare for all of our individual members."

The L'Esperances have been covered by Anthem for about a dozen years. At first they had a $1,000 deductible on their policy, but they had to raise it to keep their monthly premium at a manageable level.

They were paying about $1,250 monthly last year with a $2,500 deductible each. Then Anthem said their premium would rise to almost $1,400.

To deal with that, Paul said he and Jan raised their deductible yet again to $5,000 in return for an $834 monthly premium.

Now that amount's going up to nearly $1,000 -- almost as much as they'd been paying with a deductible half as big. That's a whole lot of kitchenware.

You can see how this will keep going: Premiums and deductibles steadily climbing until their health coverage is insurance in name only. In reality, it's useless.

"But we have to pay," Paul said. "Just in case something terrible happens."

He and Jan are hoping they can stay well for a few more years, until Medicare kicks in. As for their daughter, she's resigned to a life without healthcare.

"None of my friends have insurance," Morgan said. "I try not to ever go to the doctor because I can't afford it. I should probably go to the dentist at some point, but I can't afford that either."

Your typical American family.

Their name, by the way, means "hope."

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