Junk Insurance, $18.5K in Medical Bills, Forces Them to Leave State In Search of Affordable Insurance

Endicott, New York

As told by Sherry Orestuk:

Three years ago, my husband and I fell for a great sales pitch and bought health insurance that is legalized junk. It left us with nearly $20,000 in debt after a life-threatening illness. In order to get real insurance after that, we had to move from Virginia to New York, abandoning our small business. I’m willing to dredge up these memories only because Congress is moving to expand the reach of this not-really-insurance, known as association health plans. I can’t stand it that thousands more people might go through the same thing.

In 2003, my husband and I were living in Ashburn, Va., a booming town in the D.C. suburbs. Dan’s carpet-cleaning business was growing and I had happily stopped working for a couple of years. When our health insurance under a plan from my last job was about to run out, I started looking for coverage. We were both healthy, but we’d always had insurance.

It seemed like a stroke of luck when I saw an ad in the local paper. There was picture of a nice-looking young fellow and it said something like, "If you’re self-employed, we have good rates for you." I thought he was speaking to me.

We called and the agent came to the house. A very personable young man, he talked about the baby his wife was about to have and his community ties. He said the insurance was linked to a group called the National Association of the Self Employed, and that we needed to join to buy the policy. We sat at the kitchen table and he offered to fill out the paperwork. The policy sounded comprehensive, like our previous group plan. We decided to pay extra for a radiation and chemotherapy rider, since there was cancer in my family. The ultimate premium cost was about $600 a month.

I was taken aback when he mentioned at the end that the deductible was $4,000, but he said to consider that if we were in "a catastrophic car accident, that is all we would pay." It seemed more reasonable when he put it that way and we signed up.

A few weeks later the actual policy came in the mail, a big sheaf of fine print. I read the summary and it all sounded OK. I feel so foolish and naive now, but I’d always been on a group policy through a job. As it turns out, even lawyers have trouble figuring out these association health plans.

I’ve since been in touch on the Internet with other self-employed and small businesspeople who fell for the same thing. Some fell much deeper in debt, even bankruptcy.

It’s bad enough that these nearly unregulated plans fall through a legal loophole in some states because they are sold through "associations" that should — but don’t — protect their members. Now, legislation being sponsored by Sen. Mike Enzi (R-Wyo.) would make it easier for all insurers to sell these policies nationwide, brushing aside state regulations and patients’ rights. Supporters, including President Bush, say they’re making it easier for the self-employed to get coverage. I know the hard way that just because you buy a policy it doesn’t mean you’re covered.

Shortly after the policy arrived I went for my yearly mammogram, which led to a diagnosis of Stage I invasive breast cancer, a fairly aggressive type. I had a lumpectomy and some followup surgery, then had to decide about chemo. Radiation was indicated; chemo was to be "my choice." I did some research through a blur of fear and decided that just radiation, which is not as difficult, was OK. Thank goodness I didn’t pick chemo, which is lot more expensive.

The bills started piling up about six weeks into the treatment. I was distracted and so tired. Luckily, a friend who worked in a medical office said she’d sort them out for me. Soon she asked me to bring over a copy of the policy. Then she called and said, "That policy is something that I’ve never seen. This is not a yearly deductible." She said the full deductible could be charged two or three times a year, even on the same illness, and there was more than one type of deductible. The policy only covered a fraction of many things, including the surgical center fees and radiation prep. The bottom line was about $18,500 in unpaid bills, and I never even stayed overnight in a hospital.

I ended up skipping some of the follow-up appointments and testing because the policy did not cover them, and because I was paying $10 to $25 a month to 17 different medical creditors.

We were now uninsurable in Virginia because of my cancer, and because the state doesn’t require spreading of risk. Agents told me it would be five years at least, probably 10, before any new company would touch me. One offered a small-business policy for both of us. At $3,000 a month.

By the beginning of 2004 we were in touch with some old friends in upstate New York, people I’d known since I was a kid living there. They connected me with a cancer center in Binghamton, N.Y. and I found out that because of state regulations there, we would be able to buy health insurance. It was a wrenching decision to sell our house, close Dan’s business and move, but we had to.

Now we’re in an area where a lot of people are out of work and jobs are scarce. It’s a struggle to get the carpet cleaning company going. But we found good and affordable small-business health insurance and now I have a job with health coverage from day one. Wouldn’t you know it’s with an insurance company! At least I’ll only be dealing with car policies. And I’m certainly better-educated about insurance than on the day we sat down at our kitchen table, thinking we were doing the right thing to protect ourselves.