I tried to sell medical insurance to the self employed in Texas for almost a year. Besides finding out that many self employed people are independently poor, I was also told many things about medical insurance companies, and how they rob self employed people.
You need to understand that insurance companies work on statistical certainties. And they simply design plans to match the prices their marketing people discover. There is no attempt to really insure people at all. The companies are looking for money only. They sculpt their policies to match statistics.
It’s very easy to pay premiums when you’re young. The companies will insure you as long as they think they won’t have to pay any claims. Women get free pap smears. Sounds nice, no? Of course, as soon as some problem appears, they boost your premium until you can’t pay. Or they just cancel the policy altogether. Several times in Texas, companies have come in, set up and run for five years or so, then they don’t pay any premiums and go out of business. If you were on one of their plans and got some disease, you wouldn’t be able to get insurance from any other company. The Texas Risk Pool has premiums like house payments. A few years later, the same people come in with another company or even the same company and do the same thing.
I saw a letter to a self employed woman who had just turned 50. Her premium had just changed from $350/month to $1100. That was more than the Texas Risk Pool wanted. There was no change in her medical condition, and she didn't smoke. Her age had been the problem. Even though they write in the policy that they can’t single out individuals, there are all kinds of things they can do which result in the same thing. They just manipulate the term “class”, and hide the definition. So your “class” could be everyone who had bought a policy the same day in your zip code or on your street. You don’t find out until you use the policy. If a chronic disease is involved, no other company will insure you after diagnosis. Go to Texas Risk Pool, Pay $1000/month, fall into poverty, do not pass “Go”.
Another neat trick is to write a policy with the clause in it that says that the policy won’t cover anything that would be or could be covered by workman’s compensation. Since the policyholder doesn’t have workman’s comp, he things he’ll be covered by his policy, and it makes sense not to be covered twice. It’s only when he gets really sick, like a heart attack, that the company will deny the big claim, since it will be judged “work related” and workman’s comp from the state pays for work related illnesses. Of course, the policy holder bought the insurance for such serious things. What about a serious auto accident during the week. Oops! Work related. Claim denied! The agent never tells the client, by the way.
Now you might wonder what the consequence of these things is. It’s to funnel people into jobs so they can’t be self employed. Figures. Slavery.
Here's a neat exercise to do. Go to your state's insurance website and look at the fines paid by insurance companies. Imagine the client who has to go get a lawyer to sue an insurance company. The companies know they have all the money, and the fines they actually do end up paying are just figured into the cost of business.