Health insurers in California refuse to sell individual coverage to people simply because of their occupations or use of certain medicines, according to documents obtained by The Times.
Entire categories of workers -- including roofers, pro athletes, dockworkers, migrant workers and firefighters -- are turned down for insurance even if they are in good health and can afford coverage, according to the confidential underwriting guidelines of four health plans.
Although Blue Cross of California, the state's top seller of individual policies, does not exclude applicants based on occupation, three others do: Blue Shield of California, PacifiCare Health Systems Inc. and Health Net Inc. Actuarially speaking, they say, certain workers pose too big a risk.
All four health plans look at prescription drug use to decide to whom they will sell individual policies. Dozens of widely prescribed medications -- including Allegra, Celebrex and Prevacid -- may lead to rejection, according to the underwriting guidelines that the health plans provide to insurance brokers but not to the public.
In fact, eight of the 20 top-selling prescription drugs in the U.S., including No. 1 Lipitor, a cholesterol fighter that racked up $12.9 billion in global sales in 2005, make the lists of two health plans.
Such restrictions are legal in California, and state regulators have no authority to stop them. Health plans defend their restrictions as necessary to keep premiums down.
"This is something that has been actuarially determined to keep insurance affordable for a very, very broad range of people," said David Olson, a spokesman for Woodland Hills-based Health Net.
But at a time when Gov. Arnold Schwarzenegger and state lawmakers are seeking ways to expand coverage to many of the 6.6 million uninsured Californians, consumer advocates said such policies were too restrictive.
"This isn't cherry picking; this is ignoring whole orchards of people," said Jamie Court, president of the Foundation for Consumer and Taxpayer Rights.
Underwriting in question
At issue is individual insurance, the type of coverage purchased by people who do not have job-based group health benefits. Unlike group coverage, individual insurance is granted case by case, meaning in effect that health plans are free to choose whom to cover and what to charge them.
The broker guidelines shed new light on the array of considerations that go into those decisions. It had not been widely known outside the industry that occupation and a list of prescription drugs were key determinants in who gets health insurance and who does not -- regardless of an applicant's willingness to pay.
As employers cut back on health benefits, many policymakers view individual coverage as an increasingly important part of the mix. Some states already promote individual coverage by requiring insurers to offer it to all comers through what are known as guarantee-issue laws.
Schwarzenegger, poised to unveil his proposal for expanding coverage today, has not said what role, if any, individual insurance might play in that effort.
"Everything is on the table," said Sabrina Lockhart, a spokeswoman for the governor. "And the governor recognizes healthcare reform is complicated."
Schwarzenegger has said he favors requiring individuals to obtain health insurance in the same way drivers must carry automobile coverage. People familiar with the development of his ideas say he also seems to understand that such a mandate wouldn't work if insurers were allowed to exclude all but the healthiest customers.
Still, the governor also sees affordability as key to expanding coverage, but insurers say loosening their underwriting policies would only drive prices up.
Studies show "guaranteed issue can price people out of the market, and, as public policy, it achieves the opposite goal of getting more people insured," said Shannon Troughton, a spokeswoman for WellPoint Inc., the Indianapolis-based parent company of Blue Cross of California.
One health plan believes that private insurers ought to share the risk and that selective underwriting ought to be abolished.
"We think it's a bad system," said David Seldin, a spokesman for Blue Shield of California, a nonprofit health plan that favors universal coverage but nonetheless currently underwrites based on medical condition, prescription use and occupation.
"We operate the same way as everybody else in the marketplace does, using the same actuarial data that everyone else in the marketplace does, because it's the only way to remain economically viable," he said. "But we would really like to see the system changed."
The Times was unable to obtain the underwriting guidelines of Kaiser Foundation Health Plans Inc., the state's largest health maintenance organization, but those familiar with its practices say the guidelines are at least as restrictive as those of other health plans.
Some state lawmakers and consumer advocates say the health plans' confidential underwriting documents help explain why the ranks of the uninsured have expanded over the last decade.
Health plans are engaging in a form of redlining, said state Sen. Sheila Kuehl (D-Santa Monica), who last week became chairwoman of the Senate Health Committee. She was referring to the now-banned practice by home and auto insurers of refusing customers based on where they live.
"We've seen that in every area of insurance; the companies engage in redlining unless we pass a law that says they can't do that," Kuehl said. "So it's not surprising at all that health insurance companies who have been showing very healthy profits have engaged in very serious risk avoidance."
Kuehl said she planned to reintroduce her bill, vetoed by Schwarzenegger last session, that calls for universal coverage in a so-called single-payer system under which one entity -- a government-run organization -- would collect all healthcare fees and manage all healthcare claims.
Senate President Pro Tem Don Perata (D-Oakland) has proposed a bill that would extend coverage by creating a purchasing pool that would require participating plans to offer coverage to people with preexisting conditions or who are priced out of the market.
"The current system is broken and getting worse," Perata said. "Instead of competing on the basis of cost and quality, we're seeing health insurers denying coverage to the people who need it the most. This is scandalous."
Screening out risk
The health plans' underwriting guidelines are designed to help their commissioned sales agents find the right clients for their products. The documents range from a few pages to more than 50.
They all have tables that run several pages long outlining the probable decision -- accept, accept with a premium surcharge or decline -- for scores of conditions, from acne to varicose veins, with caveats for severity and other factors. All include a height and weight table. The under- and overweight need not apply.
Blue Cross, the only health plan of the four that does not make decisions based on occupation, declined to say why.
Blue Shield considers occupation only in applications for its short-term, nonrenewable health coverage sold for periods of a few months or less and aimed at people between jobs or in some other transition. Ineligible occupations include workers in heavy construction, iron and steel workers, telecommunications installers and furniture makers.
PacifiCare and HealthNet include pyrotechnicians, crop dusters and stunt pilots on their lists of occupations that are ineligible for individual coverage. PacifiCare's no-sell list also includes police officers and firefighters.
The problem with adding even one high-risk member to an insurance plan is that the costs go up for everybody, said Tyler Mason, a spokesman for PacifiCare, a division of Minneapolis-based UnitedHealth Group Inc. "It's the whole risk-pool thing, and one affecting the hundreds."
Though many firefighters are covered through their jobs, thousands are volunteers and many work as ranchers, farmers and small-business operators. Some of them have had a hard time finding affordable coverage, said Richard Reed, who is on the board of the California State Firefighters' Assn.
Reed said he was surprised to learn that denying them coverage was a written policy.
Workers' compensation would cover firefighting-related injuries, such as a hernia from carrying someone out of a burning building, he said. Beyond that type of condition, he said, he couldn't understand how a firefighter posed a bigger risk than someone else.
"I'd really be curious to see what the grounds are, why they are denying them," Reed said. "What's the rationale that someone is doing a community service and gets nothing for doing it?"
The health plans' actuarial determinations are not always the same. In the case of firefighters, PacifiCare lists them as ineligible, but HealthNet recently agreed to sell them coverage through the state firefighters association.
"This is one of the features of our polyglot system of health insurance," Health Net's Olson said. Health plans "have different approaches. Our view would be that's a good thing."
Prescription medications used by millions of people also are a potential stumbling block. All of the health plans' guidelines warn brokers that prescription drug use could render an individual uninsurable, and some of the plans list about four dozen problematic medications by brand name.
In some cases, individuals are denied coverage because a drug they are using costs more than the premium an insurer charges for the coverage.
In other cases, a prescription medication -- and even the dosage and length of use -- are clues for underwriters on the nature, persistence and severity of an underlying condition that could result in more-expensive treatment, such as hospitalization. And in other cases, the potential side effects of the drugs themselves are more risk than the insurers are willing to take on.
(BEGIN TEXT OF INFOBOX)
Here are some drugs that could render users ineligible for individual health insurance, according to underwriting guidelines of several health plans.
Eight of the 20 top-selling prescription drugs, ranked by their 2005 U.S. sales:
* Lipitor (cholesterol)
* Zocor (cholesterol)
* Nexium (heartburn, ulcers)
* Prevacid (heartburn, ulcers)
* Advair (asthma)
* Zoloft (depression)
* Singulair (asthma)
* Protonix (heartburn, ulcers)
ALSO ON THE LIST
* Accutane (acne)
* Allegra (allergies)
* Celebrex (arthritis)
* Celexa (depression)
* Concerta (attention deficit)
* Famvir (herpes)
* Imdur (angina)
* Imitrex (headaches, migraines)
* Lamisil (fungal infections)
* Parolodel (menstrual disorders)
* Prozac (depression)
* Ritalin (attention deficit)
* Tagamet (heartburn, ulcers)
* Tapazole (hyperthyroid)
* Topamax (epilepsy, migraines)
Source: Health plans' broker guidelines
Here are some occupations that could render workers ineligible for health insurance under the policies of some insurance companies.
* Air traffic control
* Building, moving
* Chemical/rubber manufacturing
* Circus or carnival work
* Concrete or asphalt work
* Crop dusting
* Furniture and fixtures manufacturing
* Lumber work, including wood chopping, timber cutting and working in a sawmill
* Migrant labor
* Oil well or refinery work
* Police work
* Sports, semi-pro or professional
* Stockyard work, with or without butchering
* Stables, all employees
* Stunt work
* Telecom installation
* Transportation and aviation
* Tree climbing
* Tunnel work
* War reporting
* Window work at heights exceeding three stories
Source: Health plans' broker guidelines