Jennifer and Greg Danylyshyn of Pasadena are conscientious parents. They keep proper car seats in their used BMW, organic vegetables in the family diet and the pediatrician's number by the phone.
They don't have access to the group medical insurance offered by many employers. She's a stay-at-home mom. He's a self-employed music supervisor in the TV and film industry. So they buy individual policies for each family member.
As careful consumers, they shopped for the best deals, weighed premium costs against benefits and always assumed they could keep their family covered.
Then last spring Blue Shield of California stunned them with a rejection notice. Baby Ava, their happy, healthy 7-pounder, was born with a minor hip joint misalignment. Her pediatrician said it was nothing serious and probably temporary.
For The Record
Los Angeles Times Friday, October 24, 2008 Home Edition Main News Part A Page 2 National Desk 1 inches; 44 words Type of Material: Correction
Health insurance: An article in Tuesday's Section A about the nation's health insurance crisis said that nearly 46 million Americans have no medical coverage. The figure is a Census Bureau estimate of the number of U.S. residents without insurance; not all are American citizens.
Still, Blue Shield declared the infant uninsurable. The company foresaw extra doctor visits, "the need for monitoring and an X-ray." Ava's slight imperfection "exceeds . . . eligibility criteria for acceptance," Blue Shield said.
"I was enraged, baffled; I just could not understand," recalled Jennifer, 36.
The family's experience is symptomatic of the nation's healthcare crisis. Ineligible for group insurance, millions of Americans are paying more for individual policies that offer less coverage and expose them to seemingly arbitrary exclusions and denials.
The health insurance system has become increasingly expensive and inaccessible. It leaves patients responsible for bills they understood would be covered, squeezes doctors and hospitals, and tries to avoid even minuscule risks, such as providing coverage to a newborn with no serious illness.
At the heart of the problem is the clash between the cost of medical care and insurers' need to turn a profit.
Today, four publicly traded corporations -- WellPoint Inc., UnitedHealth Group, Aetna Inc. and Cigna Corp. -- dominate the market, covering more than 85 million people, or almost half of all Americans with private insurance.
On Wall Street, they showcase their efforts to hold down expenses and maximize shareholder returns by excluding customers likely to need expensive care, including those with chronic diseases such as asthma and diabetes. The companies lobby governments to take over responsibility for their sickest customers so they can reserve the healthiest (and most profitable) for themselves.
Meanwhile, insurance premiums are becoming a heavier burden on employers, many of which say that rising healthcare costs cut into their ability to compete and, in some cases, to survive.
As a result, the percentage of Americans covered by traditional group health insurance has steadily declined. Nearly 46 million have no insurance at all. Medical debt has become a leading cause of personal bankruptcy and a growth business for collection agencies.
Even some top insurance executives agree the system is inefficient and sometimes inhumane.
Bruce Bodaken, chief executive of Blue Shield of California, says that universal coverage is the answer.
Bodaken says government should mandate that everyone obtain health insurance and that insurers sell to all comers regardless of their health -- similar to a plan proposed by Gov. Arnold Schwarzenegger and defeated in the state Legislature last year.
The rationale of universal coverage, the norm in other industrialized countries, is that costs are manageable when everyone is covered because the risk pool includes the young and healthy to offset the older and sicker.
"One of the basic goals of universal coverage should be to change the health coverage business from avoiding risk to balancing health risks and focusing primarily on quality, service and cost-effective delivery," Bodaken wrote recently in the policy journal Health Affairs.
In the absence of such a system, and with group coverage increasingly unavailable, more and more Americans are left to rely on individual health policies. They are more expensive for all but the young and healthy and often provide fewer benefits.
They also are lightly regulated. Unlike group plans, which must accept all qualified applicants and can't base a member's premium on his or her medical history, individual plans in most states (including California) are free to cherry-pick the healthiest customers.
Insurers can reject applicants for even mild preexisting conditions. People have been turned down for individual policies because they have hay fever, have suffered from jock itch or use common medicines such as cholesterol-lowering drugs, records and interviews show. Even those lucky enough to have insurance are uncertain they can keep it or count on it in a crisis.
Sens. Barack Obama and John McCain both have released proposals for curbing costs and broadening access to health coverage, but both presidential candidates would preserve the private insurance industry as the system's backbone.