"What's different about today?" asked Debra Ferrier, the real estate group's assistant general counsel. "I believe they probably looked at the plan, probably saw it wasn't very profitable, and they think they found a reason to cancel it. We disagree that they found a reason."
A court hearing on the dispute is set for April 6 in Los Angeles, and state regulators say they are looking into the matter.
Blue Shield spokesman David Seldin said the company noticed the purported enrollment problem only recently. He declined to discuss the finances of the Realtors' health plan, saying "it was not relevant to our decision, which was simply and completely about the fact that they were not in compliance with their contractual obligations."
Industry experts say the dispute may be symptomatic of the difficult economics and market pressures that have crippled and killed association health plans over the last decade. It also "reveals how fragile access to health coverage is and how easily that security blanket can be ripped away," said Cindy Ehnes, director of the California Department of Managed Health Care.
As havens for people with medical conditions, association health plans are especially vulnerable to rising medical costs, said Janet Trautwein, chief executive of the National Assn. of Health Underwriters.
"Costs are going up everywhere in every type of plan," Trautwein said. Associations "not only have the normal costs going up, but they have this adverse selection at the same time. It's a double whammy."
A few association health plans remain open. But they don't have to go belly up for members to be affected. When the International Institute of Electrical and Electronics Engineers' health plan ran into financial difficulties, for example, Ann McCormick of Glendora lost coverage.
The plan dropped McCormick in February when her husband, Bill, a member of the organization, turned 65 and became eligible for Medicare. Until recently, the plan had allowed such members and their dependents to remain enrolled and use the coverage to supplement the federal government's medical insurance program.
But when expenses outpaced revenue, resulting in a deficit of nearly $6 million, the engineers association decided last year that the option was no longer in its members' best interest.
The problem for Ann McCormick, 64, is she won't qualify for Medicare for several months. But recently diagnosed with diabetes, she discovered she was uninsurable in the private market.
"You plan to be financially independent after retirement, and then all of a sudden you have no insurance," said McCormick, a retired loan auditor. "You didn't plan on that. It's really scary."
Cigna, which carries the engineers organization's plan, also underwrites the group plan of an association of performers, writers and photographers known as TEIGIT. Saying that group's medical expenses were exceeding premium revenue, Cigna raised rates in January as much as 254% for members in California, prompting more than 150 of them -- about a quarter of its cadre in the state -- to drop the coverage.
"I couldn't afford it, so I quit," said Randy Dotinga, 38, a San Diego freelance writer whose premium was set to rise to $875 from $262.
*
lisa.girion@latimes.com
