Wednesday, November 28, 2007

Oversight and Reform of the Health Insurance Industry

Question: What is the value of a disability insurance policy (long term disability, provided by an employer as part of a group plan, or privately purchased by an individual) that limits benefits for mental impairments to just 24 months? My answer: not much.

Here are a couple of other questions. What is the purpose of having such a limitation and how is it justified? Regarding the purpose, the answer is fairly obvious. Insurance carriers want to avoid payouts and they will basically do whatever they are allowed to do to facilitate this goal. Which, of course, brings up the justification issue, which can be resolved to why do we allow it?.

In truth, we don't have to allow it. Limiting disability insurance benefits for mental impairments (such as bipolar disorder, depression, and other mental illness) is simply a cheat, a way to allow carriers who provide policies to consumers to charge premiums for coverage, and skip out on the bill when a claim is filed. And it is, to some extent, a cunning and slippery cheat since many or most holders of long term disability policies are probably not aware of the 2 year limitation for drawing disability benefits based on a mental condition.

How to stop it? The only way that we, as citizens, have: effecting change through our elected representatives. Unfortunately, this is a tough proposition these days considering how much lobbying power is held by industry groups who throw money at Senators and its a solid investment.

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