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American Morning

Interview with Trudy Lieberman

Aired August 06, 2002 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: Buying health insurance on your own can be a daunting proposition, especially if you are getting ready to retire. About 16 million Americans buy individual insurance, and there are plenty of traps to be wary of. So, what then are the dangers lurking out there?

The traps and the tips with Trudy Lieberman, director of the Center for Consumer Health Choices at Consumers Union with us here in New York -- good morning, Trudy. Nice to see you.

TRUDY LIEBERMAN, DIRECTOR, CENTER FOR CONSUMER HEALTH CHOICES: Good morning.

HEMMER: I mentioned the retiring folks going out and buying their own insurance, but of the 16 million, who are they?

LIEBERMAN: Well, the retired folks, pre-retired folks are one. Another group are young people moving off their parent's policies. People who are separated or divorced and lose coverage from a spouse, and people between jobs often have to go into this marketplace.

HEMMER: Yes, and if you're buying you're own insurance you know who you are already.

LIEBERMAN: Oh, yes.

HEMMER: I mentioned the traps and the tips. First the traps, and there are four of them that you recommend. Let's put them on the screen for our viewers here. I will read through them and we will talk about them, OK, Trudy?

No coverage for existing illness.

Look out for gaps in state regulation.

Also says underfinanced risk pool is something to be on the lookout for.

And also falling through the cracks.

Let's go back to number one and two and three and four, and take us through these. Define it for me so I can understand.

LIEBERMAN: Well, if you have any kind of serious or sometimes not so serious health condition, you're not going to get coverage for that condition, and you may not get coverage at all. If an insurance company chooses to cover you, it will charge you a higher premium, or perhaps not give you coverage for the particular condition.

HEMMER: What about the state regulation? Does it vary among the 50 states?

LIEBERMAN: Yes, it varies all over the place, and some states don't do very much regulation at all, which means that there are no rate caps on any of these policies. So the rates can go up and up and up.

HEMMER: Do a little bit of research and a little bit of homework there.

LIEBERMAN: Oh, but you also have to be able to afford the rate increases.

HEMMER: So true. Under financed risk pools. What is that all about?

LIEBERMAN: Twenty-nine states have a risk pool, which is like an automobile insurance risk pool, where people in bad health can get health insurance, but often these pools are very underfinanced and the premiums are very, very high.

HEMMER: Falling through the cracks. Define that.

LIEBERMAN: The federal government makes the states come up with a way to provide a policy of last resort for their citizens. But not all of the states are very generous. In fact, only 11 states plus the District of Columbia allow all of their residents to get a policy of last resort. Other states are far more restrictive.

HEMMER: OK. When it comes to buying your own insurance, though, you have a few tips here. Let's put them up for our viewers here. Understand the limitations of your policy. Seems simple. Excuse me, this is a different one actually.

When it comes to buying your own policy, consider the HMOs. You recommend Blue Cross-Blue Shield. Also, if you are a member of a group, consider buying its insurance. Help us through both.

LIEBERMAN: Well, certainly, if you are a member of a group, you should look to that group to see if there is some kind of coverage, and our study found that sometimes the Blue Cross and the HMOs offered better coverage at lower prices.

HEMMER: And also, back on the screen here, ask and re- underwriting policies. You recommend that, and call your state insurance department to check out your chosen policy. Seems simple.

LIEBERMAN: Well, sometimes companies will come in and they will look at your health again, so if you have gotten sick, they are going to raise the prices, and you need to be sure that that may not happen on the policy you buy. HEMMER: Yes, and I mentioned it earlier, got a little ahead of ourselves. You say understand the limitations of your policy, know the co-payments, things like that. Ask about drug discount cards, make sure your doctors are on preferred lists. All this stuff really goes to common sense approach for making sure that you get the right thing that you need.

LIEBERMAN: Well, in the individual market, it's a lot harder, because many of these policies have significant limitations and exclusions in coverage. For example, maternity coverage is not often available, nor is prescription drug coverage. And the prices are very, very high, and you don't always find a policy that has a high price and good benefits. They don't always relate, so that you might find a policy with lower benefits that has a higher price.

HEMMER: OK. You canvassed the country. You know what's good and what's bad. States that offer the best are where?

LIEBERMAN: The northeast states, including New York, are more generous to their residents than states, say, like Delaware or Alabama.

HEMMER: And the worst? Where do you find them?

LIEBERMAN: There's no really worst state. There are four states that are very restrictive in the policies they allow their residents to have, and they are Delaware, Alabama, Arizona and West Virginia.

HEMMER: Most restricted. We'll correct the terminology. Thanks for coming in and sharing with us. You know, 16 million Americans out there. It's a big issue. Trudy Lieberman. Much appreciated.

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