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.