John Sellars of Torrance, 62 and a retired TRW executive, has a dilemma.
He has medical insurance through TRW and will be covered by Medicare when he turns 65, but in the meanwhile, what if he should become ill for a long time?
"I'm not covered for long-term illness and nursing homes can charge $70 a day," he said. He may never have a problem, but should he buy insurance protecting himself and his wife anyway, and pay something like $600 a year for it?
"You're betting," Sellars said. "Should you invest the money or not?"
Lorraine Kirk of Rancho Palos Verdes, 59, who is slated to retire from her nursing job in four years, said her insurance basically is good. But she wanted to know about insurance companies that cover what Medicare does not, promoting their policies in television advertisements in which gray-haired celebrities confide that they would want such coverage.
Sellars and Kirk were in the audience at Torrance Memorial Hospital as insurance agent Brian Gray took people through what he termed the "health insurance maze" during a seminar sponsored by a program at the hospital that offers services--including advice on insurance--to people over the age of 55.
He handed out some sample policies designed to supplement Medicare coverage, pointing out that what may look attractive at first glance is not.
There is one that costs less than $12 a month, which seems very cheap. But with waiting periods and deductibles, he calculated, you wind up spending $900 before the policy starts working.
Another covers hospital bills, skilled nursing care and doctors' bills, but only pays part of the charges. The $40-a-day hospital coverage, he said, "would pay for the TV" at today's prices for medical care.
One policy costs $66 a month, but Gray said it is a good buy because it is renewable for life and there is no limit on what is paid for hospital costs.
"We're trying to find something that will keep us from going bankrupt, not to pay the little bills," Gray told the group.
A dapper Englishman who also offers advice on medical insurance at Whittier Presbyterian Hospital, Gray said the most common complaint he hears is that people believe they are paying too much for medical insurance.
"They're probably right," he added.
They also hope that when they get their medical bills, everything will be covered. Often, it is not.
What confuses them most is the deluge of direct mail and television advertising for Medicare supplements, some of it pitched by famous personalities, Gray said.
"People do not know what the insurance says, and we're not talking about dumb people," he continued. "It all looks the same, and seniors don't know where to go to get advice. They trust the names they see and the stuff through the mail looks respectable."
Sellars, who attended the seminar, could attest to the confusion surrounding insurance. "The comparisons--what covers this, what covers that--are hard," he said. "You think you're covered, but you're not."
Gray said it is not unusual for people to have eight separate supplemental policies for Medicare and be paying $3,000 a year for them.
"They buy one policy and they discover it's not good," he said. "So the person's natural reaction is to think if I buy another, it will pay what the first one doesn't. They just keep doing it."
Gray offered the fine print rule of thumb: "The worse the policy is, the more fine print it has. If you have 10 pages of small print, you do not have insurance."
What should the insurance buyer try to find? Said Gray, "The best policy would definitely be the one that is guaranteed renewable for life, that the insurance company cannot cancel. You want a company with a track record for small premium increases, and you don't want payment limitations all over the policy. There are so many that say we'll only pay $5,000 a year. You want a major catastrophic policy."
And what insurance policies should the consumer avoid? Those with too many deductibles and those that pay only 20% of some medical bills other than hospitalization, which is covered by Medicare for up to 60 days. "There are many like that," he said. "On a $44,000 quadruple bypass, you'd pay $15,000 out of your own pocket."
After his seminars, Gray holds court in an office at the hospitals. He does not charge the hospitals for his time and carefully avoids pushing any insurance company, but admits that the service is good business--some of the people later buy insurance from him.
About 80 came out to hear him at Torrance this week. Most were not hospital patients, but people at the age when they had to wonder when the big medical bills might come. Although some seemed puzzled by the insurance options, most asked questions indicating that they had paid some attention to the fine print.
One asked if certain policies cover people when they traveled overseas. Most do not, Gray said.
Another asked if a large number of people would be helped by President Reagan's proposed "catastrophic" insurance for hospital stays longer than 90 days. Gray said that politicians like to win political support by offering improvements to Medicare. But, he said, only 3% of hospitalized Medicare patients stay that long.
Sometimes the answer did not solve a problem.
For instance, the question on Sellars' mind--whether he needs insurance to cover long-term care--was answered with Gray's reply that only a small percentage of people wind up in nursing homes.
Remarked Sellars: "I still have to decide whether to buy insurance."