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ObamaCare Clusterfuck: In which lambert apologizes for being prematurely EVEN MORE correct [UPDATED]

[UPDATE Here's a separate post on Local 6's retraction. --lambert]

[The Navigator seems to have backed away -- kinda sorta and subject to a report to come, see below -- from their original statement; hat tip Splashoil, and see UPDATE below. Note that although FL is on the Federal Exchange, at least one state exchange, IL, does allow the use of credit scores for eligibility determination; hat tip Teresa. Note that the Federal Exhange form (see here) certainly does not preclude the use of credit information beyond identity. --lambert]

Orlando Local 6 [That URL now redirects to the retraction (not good practice....] Here's a link with the original story, which includes the content quoted just below.)

Credit scores impacting new Affordable Care Act insurance plans
Many people signing up for health care in Florida through the Affordable Care Act have been shocked when they have to give proof of their credit score before they finish the process.

Anne Packham, one of many people licensed by the state to help people navigate the government's website, said on Tuesday that the credit check occurs so providers can make an educated decision about who to insure.

"If someone is defaulting on all of their bills they may not want to have them as part of their health plan," said Packham, the lead Navigator in Florida.

Man, those Navigators sure do know how to extend a helping and, don't they?

Participants with low credit scores could end up paying higher premiums, according to Packham, who said that ultimately the insurance company makes the call.

Lambert [lambert blushes modestly] scooped the world on this, 2013-05-11: ObamaCare Clusterfuck: Feds to use "consumer reporting agencies" to determine eligibility despite penalty for perjury.


NOTE One question: I've heard that if you have bad credit, and apply for a card, you can end up making your credit rating even worse. I wonder if the same is true if you apply for ObamaCare? Seems crazy, I know, but what about this process hasn't been crazy?

UPDATE 3:39PM Here is the video from Local 6:

video platformvideo managementvideo solutionsvideo player

The above video does not say that credit scores play no part in the process of eligibility determination; to find out the full correction, apparently we have to listen to the 7PM news from Local 6 [No link on the site -- lambert]. Here is the paraphrase in the story:

Anne Packham, one of many people licensed by the state to help people navigate the government's website, said on Tuesday that the credit check was put in place so providers can make an educated decision about who to insure.

After receiving numerous emails about the story, Local 6 contacted Packham on Wednesday, and she said her statement was incorrect, adding that users do not need their credit scores to apply for the Affordable Care Act.

Local 6 is investigating how the person in charge of providing information about the Affordable Care Act could make such an error [Nothing yet. --lambert].

First, as Local 6 points out, a gaffe (if it is a gaffe) like this doesn't speak well for the Navigator program. Second, I don't see why a credit score would be required in the first place; if Experian has your identity, it can get your credit scores from its own databases. So WTF?

UPDATE A larval stage Kossack gets in on the act: "Ridiculous Florida TV Station Claims Credit Scores Affect ACA Premium Prices." First, CBS (and not FOX). Second, quoting a Navigator, trained by HHS. So come on. And to me --- yielding to those with local knowledge -- the Navigator doesn't look like a plant: Anne Packham is from the Health Council of East Florida; I looked at their About page, and again subject to correction by locals, I'm not seeing funding or personnel red flags. They also seem to have won a national IT award.

UPDATE Another case where a screen dump would help. But if I can't trust CBS and a trained navigator...

UPDATE The same navigator in a Q&A with the Orlando Sentinel:

Q. Can you be turned down at the exchanges because of your credit rating and be forced to pay a penalty instead?

A. You can apply for an exemption. Bankruptcy, for example, is one of the conditions that qualify individuals for an exemption. It's estimate that less than a half-percent of the American public will have to pay a penalty. That's because most people will either get covered or will not earn enough to pay for a plan.

That'st just not true. There's no exemption from the mandate for a bad credit score. Wowsers.

Average: 1 (1 vote)


Rainbow Girl's picture
Submitted by Rainbow Girl on

(bad credit) that Obama didn't mention could lead to being uninsurable or insured at such high rates as to be -- uninsurable. So if you have pre-existing diabetes ObamaCare makes insurers cover you; but if you have bad credit ObamaCare lets insurers reject or penalize you.

Congrats on spotting this Ugly Easteregg way back!

Rows Ann's picture
Submitted by Rows Ann on

Credit reporting agencies have no obligation to correctly report your score, or to fix errors they have made. Just having your score checked more than once in a given period of time can reduce your score whether you go through with the purchase/loan or not, and before you've had a chance to prove you will or won't pay on time. To add that element to health insurance when it didn't exist before ACA is more proof that it is the insurance industry receiving the most protections through this law, and the current set of lawmakers need to go.

Submitted by Dromaius on

So if you are seeped in bills..say...because you have a serious pre-existing condition and you weren't insured, then you are potentially....uninsurable?

Ah, I see. That's another good way they get around guaranteed issue.

But then if you don't buy the insurance, you are subject to penalty, thus increasing your debt?

Are debters prisons for HAMP foreclosees and people who are ill going to be part of the new wave?

Oh, oh, oh, and wait until the Repubs get power and get their hands on this.

Progress. Brings a tear to my eye.


Submitted by lambert on

You can't go to jail for not paying the penalty (in the Orwellian language of the act, your "personal responsibility payment" IIRC). In fact, the IRS can't even penalize you, making it all the more odd that the Republicans didn't adopt a tactic of tax resistance instead of the defunding thing.

However, that's not to say there wouldn't be other bad effects, since an IRS check that you didn't make your "personal responsibility payment" could end up as an excuse to deny care. (I bet hospitals would love to do that with their ERs).

Alexa's picture
Submitted by Alexa on

tax penalties from taxpayer's "tax refunds."

Excerpt and link below.

Obamacare: Tax Or Penalty? Call It What You Want, But IRS Won't Be Able To Collect It

That leaves only one tool—the IRS can subtract the penalty from any refund it owes a taxpayer. But that applies only if the IRS happens to owe somebody a refund. These days, two-thirds of taxpayers get one, but it is usually their choice.

{My words: Incorrect. We have had business residual commissions and real estate expenses that could only be recouped as part of a tax refund. Unless IRS is not divulging all the avenues to filing for these reimbursements!}

This is primarily affect only a couple groups of people--those fairly affluent with a lot of business deductibles, maybe real estate, etc., and then possibly "low income" Americans (not sure how the "earned income credit" for lower income folks works--just that they receive a lot of their taxes paid, back, after they file)

But it's true that they can't send out IRS agents to seize property as they do in other enforcement situations.

I saw this happen to a fellow federal employee's vehicle, back in the mid-1980's.

That was after his federal paycheck was garnished.

Again, just another example of "uneven" treatment under the ACA.

Submitted by lambert on

I don't get a refund so that never occurred to me. Damn!

Submitted by Dromaius on

Oh, the denial is strong in Progressive Circles. I do agree with their argument that she is wrong on one topic -- medical insurance co's probably can't charge higher rates.

However, they can flat out deny your plan. The ACA said nothing one way or another about being denied for a pre-existing debt condition. These insurance companies have a right not to get screwed out of their money, you know! But, ooops, another loophole. How could they have missed that ;-).

And here's another fun article. Health care providers are racing the uncollected bills to the collection agencies.

So insure
Go out of network for a medical condition, without knowing the cost involved
Dispute the charges, because you thought charges for balance-billing were done in error. The bill is sent to collections before the dispute process is complete.
Denied insurance or worse yet, coverage dropped because you became a "credit risk". And if it's truly possible to deny you because of poor credit, you know the health insurance cos are going to be watching your credit if you truly get sick.

Oh, snowball effct. Snow is so much fun!

Rainbow Girl's picture
Submitted by Rainbow Girl on

ever crafted by a sovereign government against its citizens. That would be ObamaCare.

Great catch re "bad credit" as the Big Honking Loophole around Obama's claim (big lie) about "no more discrimination because of pre-existing conditions."

Submitted by Dromaius on

Ayep. I should mention that the excuse being made is that they are using Experian for identity validation. So why would they need credit score for that?

And I'll pre-empt the othe rationalization -- well once you're on insurance, they can't cancel you for credit!

Well, all they have to do is cancel a policy and issue new ones, which would technically be new contracts. Automagically enroll the "good customers" over to the new policies and credit score boot the ones with poor credit scores. Do insurance policies ever do that? Oh hell yes. I've been through more new Regence plan/contracts than I can even remember. Nothing in the law says that's forbidden.

And this is why insurance companies can't be in the mix. They are masters of the shell game.

Alexa's picture
Submitted by Alexa on

And this may be only "the tip of the iceberg."

Here's a link to Bowles-Simpson's "The Moment Of Truth" so readers can refresh their memories.

Between the Democrat's attempt at revamping the government--remember that this Administration created the new position called "United States Chief Performance Officer." Above is a link to the bio of the first "Officer."

It appears to be the Democratic Party's agenda to "remake" government. "The Moment Of Truth" is a rough blueprint of this agenda.

And, of course, there are the ongoing hearings to "revamp" Social Security Disability Insurance--possibly redesign aspects of it to make it more like "VA Disability."

We have experience with VA Disability, but that will have to be a topic for another day, due to time constraints.

[Check out C-Span Congressional Hearing Testimony In Their Video Library.]

Then there are the mandatory "opt-out" (initially, but nothing can probably stop making them "mandatory"--after the precedent of the ACA) Senator Harkin-proposed "personal retirement accounts." Initially, they are to be for only those individuals without a qualified retirement financial vehicle in place. Personally, this makes me queasy.

I think that the question becomes: What are people going to have left to "live on," if the Dems succeed at implementing all these "reforms?"

Or more to the point--"What kind of 'standard of living' will the masses enjoy after all these "reforms" are enacted?"

And so much of this, goes on "under the radar." If we didn't hear hours and hours of C-Span (all the time), we wouldn't have heard of any of this.

From some of the hearings (on C-Span), I am concerned that SSDI is going to be put on a "workfare" track.

The emphasis [if you listen to the hearings] is to get people of "lifetime" disability, and back into the workforce. That's fine with me, if the SSDI beneficiaries aren't forced to work, when they really are not medically able to do so. The intent of the reform is to change the criteria for SSDI. Needless to say, Repubs are delighted with this Dem led "reform" effort, and are very eager participants (I believe that Senator Lamar Alexander (TN) is Harkins's Republican counterpart--but don't take that to the bank. There are so many committees to track, LOL! He definitely heads one with Harkin, though.)

Submitted by Dromaius on

Anecdotal finds in comments and things regarding Obamacare. Yes, I refuse to call people out. However, the pattern is one person points something out and others provide all the reasons why it can't possibly be true (ah, but it is true). But if you don't like how I've stated this, please feel free to delete my comment.

Submitted by lambert on

... it would be nice to have a link. Whether they're right or wrong!

If it's just random denial in random comments, the heck with it; I mean, I'm not going to go over to some comments section and wade in; life is short. For that indeed, move along please, move along, there's no story here.

NOTE Adding, no, I'm not going to delete it. I could count on the fingers of one hand the comments I've deleted over the years (dupes excepted). Maybe an inadvertant personal reveal, for example. I don't want to be reshaping the threads. First, where would it end? And then, why would anybody trust what's read?

Submitted by Dromaius on

I have changed my mind, about the woman in Florida being wrong about increased premium rates due to low credit score.

My speculation:

The Affordable Care Act did nothing to prevent denial based on Credit Score, and if you ARE denied for credit score, they CAN charge you more for insurance. Here's how.

This is Illinois Law, (hey, not a Washington example!). The text at the link addreses insurances other than medical insurance. However, the medical insurance industry did not need this loophole before so they didn't use it before, but they need it now.

YMMV, but I suspect similar laws exist in each state, cuz OH GAWD, they can't expect insurers to get screwed out of their money, can they? From the link:


Underwriting is the process where an insurer gathers information about you and decides whether or not they will insure you. Illinois law allows an insurer to deny you a new policy, or to cancel or nonrenew your existing policy based solely on information obtained from your credit report,

Thus, they deny you for low credit score (because of unpaid medical bills or something).

as long as the insurer offers coverage through an affiliate company, even if the coverages, terms, or conditions offered in the affiliate are different."

BUT, they agree to sign you up for a new (and improved) much more expensive policy.

Thus, even tho the root reason might be a pre-existing medical condition, they CAN charge you more.


Rows Ann's picture
Submitted by Rows Ann on

You are speculating that because this is done in auto insurance it will be done in medical. In the first place, there is nothing concrete to say that is true. I have worked in Life, Health, and currently work in property and casualty. Your comparisons are flawed. However, because the ACA is strictly health, I will not get into a discussion on how other types of insurances determine their rates and why, except to say that credit scores in property (home, auto, boat) play a role for a very solid reason.

Rainbow Girl's picture
Submitted by Rainbow Girl on

I'm going to check that out.

However, there's nothing remotely implausible about what she said (particularly in light of (1) the collection of credit score information baked into ObamaCare's application process; and (2) Teresa's mini-precis on how insurance companies have been able (per specific state laws) to deny people policies based on credit scores as part of their actuarial analysis -- which is perfectly consistent and rational from a looting/business model perspective.)

So was the navigator told to "back away" from telling the an inconvenient truth or is she now saying that ObamaCare Insurers CANNOT base any coverage decisions on credit scores?

Alexa's picture
Submitted by Alexa on

Unless the ACA has specifically "outlawed" this practice. Even then it would seem that it would be contestable, and "tied up in court for years." (Of course, maybe it was, and we just don't know.)

Mr. A has been licensed broker (insurance and securities) in four states, meaning he's had to pass four different state insurance and state securities exams. [He also hasn't follow the "ACA," so anything I'm saying is not "speaking for him."]

From his (past) experience, consumers' credit scores are a part of the underwriting process--including for lines of insurance such as home owners and automobile insurance.

I'm not sure if I remember correctly, but didn't "Corrente" reach the conclusion that they (navigators) have no fiduciary responsibilities?

Seems like a question like this one, might be best directed to the State of Florida Insurance Commissioner. Surely he'd be bound to tell the truth.

This "gets worser and worser." ;-(

Submitted by lambert on

.... "Credit scores play no role whatever in eligibility determination on the Federal Exchange."

So far, I haven't heard that. Maybe we will later today when Local 6 has the later report it promised. If so, I'll retract my claim of premature correctness!

Rows Ann's picture
Submitted by Rows Ann on

Credit scores have always been used in part toward auto and other personal insurances because the industry found a correlation between people with bad credit also being more inclined to file claims against their policies. Keeping in mind there's a fairly big difference between an auto/home claim and a medical claim. You have an accident and whether or not you fix your car is up to you, yet you still get a check for damages less the deductible, so for some it is extra cash in their pocket. Health insurance pays post-services, and in most cases pays the provider directly (though, not always).

All insurances want people to pay their premiums, and be frugal about actually using their insurance. The real intent of insurance is to protect us from catastrophic events. Anyone who has ever had a major claim is aware that they had never, and will never pay that amount in premiums.

I'm in the industry. The comparisons between auto/home/umbrella and health insurance are a big stretch.

Rainbow Girl's picture
Submitted by Rainbow Girl on

A. You can apply for an exemption. Bankruptcy, for example, is one of the conditions that qualify individuals for an exemption. It's estimate that less than a half-percent of the American public will have to pay a penalty. That's because most people will either get covered or will not earn enough to pay for a plan.

"Will not earn enough to pay for a plan" -- meaning what? That ObamaCare specifically contemplates that there are, in fact, people in the 15% of Americans that ObamaCare is supposed to help that will be Twixt and Between Buckets -- too "rich" for Medicaid but too poor for subsidies?

I forget, have we discussed here a waiver for People Who Simply Can't Afford ObamaCare insurance who don't have to pay a penalty? And if so was there some objective benchmark in ObamaCare that describes the finances that would qualify one to NOT pay the penalty? Because that category would be pretty much most people between the above two buckets -- especially as the real $$ numbers get communicated to the "Consumers" about costs beyond the premiums.

Submitted by Dromaius on

Yes, If the cost of the 2nd least expensive? silver plan is more than 8% of the magic MAGI when subsidies are factored in, the individual is exempt from having insurance. or something like that. I think this exemption is more likely to hit the folks with incomes right at 400% of the poverty line and not subsidy eligible than it will the poorer folks If they're that poor they're Medicaid eligible. Otherwise, if they're just subsidy eligible, their costs (with subsidies) don't hit the 8% level. But buh-bye disposable income.

Exceptions to the mandate would be the google, maybe. I'm swearing off Googling stuff like that right now in favor of doing something productive to get myself insured so I'm not bothering to post a link.

Submitted by Dromaius on

("Teh Googles" is like a vacuum cleaner that sucks in my brain. Makes me see emus.)

Rainbow Girl's picture
Submitted by Rainbow Girl on

Emus with red wool hats!

"But buh-bye disposable income". Yes, this is another issue. ObamaCare's "affordability" standard (I think it's 9.5% of MAGI for employer-offered policies; I will do the Teh Google on non-employer -- e.g., self employed -- affordability cut off) is anchored to the stupid *premiums* -- the fact of buh-buy disposable income for people who can "afford" the premiums but then had to use food money to actually use the policy (not just "disposable" income) renders the whole "affordability" standard a certain kind of fraud, no?

Submitted by Dromaius on

No, please, no. No red wool hats!

Maybe one of the more "affordable" approaches is to buy insurance for a few months during the enrollment period and dump it later in the year. Lather, rinse and repeat. You have the best of both worlds (kind of). Some penalty (cheaper). Some insurance. The way it works now, you could very well have to file bankruptcy if you have a serious ER visit even if you have insurance. On the other hand, If you get into an auto accident during your non-covered months, in many states (mine included), you're covered by the other driver's liability insurance if the accident isn't our fault.

Oh, now there's a good one too. We have to buy liability insurance, but now it effectively protects...the medical insurance companies because we have to buy medical insurance anyway, but I believe the car liability pays out first in the event of an accident.

Rainbow Girl's picture
Submitted by Rainbow Girl on

How about French navy wool berets and a glass of cassis for the emus?

How would having a policy for a few months and dumping it help -- you'd be starting all over with deductibles every time -- you'd never get an ounce of paid-for coverage!

I have no clue which carrier is primary/secondary in a car accident. Still haven't ever owned a car!

Submitted by Dromaius on

For people with cost sharing subsidies (the ones for copays, deductibles, OOP maxes) it could make sense.

Sign up for insurance for January 2014. Have that shoulder surgery. Have that physical. Have that .

Drop coverage in, say October. Join back up in January.

Some risk involved, but depending on the situation, it may make more sense than keeping insurance all year.

Rows Ann's picture
Submitted by Rows Ann on

And, that's the kind of behavior that implemented the need for a waiting period on pre-existing conditions in the first place.

Do you think that even $1000 a month premium will cover those surgeries, or any surgery? You've just suggested people go out of their way to try to take more out of the system than they put in. If everyone does that, how far do you suppose the premium money goes?

Submitted by Dromaius on

What? No, I've suggested a way that people who want to game the system can do so. I'm not telling them to do it.

You flatter me when you suggest that I can direct people's behavior via an off-hand comment I make on a blog. I wish I was so powerful.

Insurance companies have completely gamed the system. They have narrowed the provider networks to the extent that they've minimized access to the doctors who treat the sickest patients. They've done this with full support of laws designed by Democrats. That is a travesty. The idea that a few insurance customers might use the law to their own advantage doesn't even hold a candle to what the insurers have done.

Also, I don't know that what you're saying about shoulder surgery is true, given the way that insurers pay out. I had abdominal surgery and the "allowed charges" that the insurance company payed the hospital and doctors were literally less than it cost me to have a root canal and crown (without insurance). I recently had an eye doctor's appointment. The doctor billed $80, the insurance company allowed $20. Insurers take in high premiums and pay extremely low payouts.

And I should remind you that insurance isn't about getting back exactly what you put in. The idea of insurance originally was that people pooled money together. Some got lots back, some got a little. Even with my suggested way people could game the system, chances are the insurance companies in the long run would make money off of them. They wrote the law. They knew the faults. They will make money anyway.

You say two wrongs don't make a right. So you're suggesting that the insurance companies and our government can commit egregious wrongs and we should just put up and shut up? Personally, I root for the death of insurance companies. Punish them. Make them go bankrupt. Then and only then can we get true healthcare.

Submitted by Dromaius on


Using the "two wrongs don't make a right" phrase here is a little like saying, we can't punish the Green River Killer for his 49 confessed murders, because jailing people is wrong and two wrongs don't make a right.

Rainbow Girl's picture
Submitted by Rainbow Girl on

Following up on the up-thread exchange with Teresa. I put a limit on the Teh Google time I could invest tonight. Within that limited time frame I found one article that is comprehensible. It's from the Leavitt Group website. LG appears to be a research (lobby?) organization focusing on insurance matters, including health insurance and the PPACA. Here's the list that LG gives for what individuals are exempt from the Mandate Penalty. I italicized the ones that are tied to some sort of income criterion. There are no citations to the statute or the regs. I still don't find it at all clear what financial circumstances qualify one for an exemption from the penalty tax -- and yes, I do understand the actual English words in the sentences below :)

Exemptions from the Mandate or the Tax

The following categories of individuals will be exempt from the mandate to have health coverage:

Individuals who are incarcerated

Individuals who are not lawfully present in the United States (undocumented)

Individuals with a “religious conscience exemption” (applies only to certain faiths)

Additionally, the tax will not be imposed on the following categories of individuals even though they are otherwise subject to the mandate to have health coverage:

Individuals who cannot afford coverage based on formulas contained in the law (e.g., premium for lowest cost bronze policy is more than 8% of household income)

Individuals with income below the federal income tax filing threshold (for 2012 this is $9,500 for singles under age 65 and $19,000 for couples under age 65)

Members of American Indian tribes

Individuals who were uninsured for short coverage gaps of less than three months

Individuals who have received a “hardship” waiver from the Secretary

Individuals who are residing outside of the United States or are bona fide residents of any possession of the United States.

Submitted by Dromaius on

Individuals who are incarcerated

My retirement plan has morphed into my health insurance plan. Whodathunk

lowest cost bronze policy is more than 8% of household income

Oh yeah, bronze plan. The epitome of junk insurance. Subsidy eligible, but not for copays, deductibles or "out of pocket caps". High-high deductibles.

And I hate that household income thing. It's 8% of MAGI. Correct me if I'm wrong, but MAGI does NOT exclude Social Security income reductions (the 7.5% you have to pay) which is a biggie if you're poor (a biggie for everyone else, too, but). People never see that money but it's considered when determining if you can afford insurance. Household income implies that you actually see the money at some point. So it's NOT household income, it's MAGI.

Rainbow Girl's picture
Submitted by Rainbow Girl on

Yes, my understanding is that MAGI is basically pre-tax income. (Just like the 9.5% "affordability" criterion for employed people is *GROSS* pay.) And the "affordability" is of course pegged to the potentially (deceptively) low premiums -- a whimsy if you're not getting any subsidies -- and doesn't take into account the out-of-the-gate ruinous costs of having the policy -- deductibles, co-pays, not-covereds (e.g., by accident the ER doctor is OUT OF NETWORK -- eeeeeek).

Basically the "affordability" definitions in PPACA -- based on premiums and excluding actual real costs besides premiums -- are at best deceptive and at worst -- an "f" word comes to mind but I know that in America that is not a term one is allowed to attribute to any corporate person (i.e., special persons, under the Constitution). I'd also use the phrase "specifically designed to entrap citizens into a fast track to poverty."

Alexa's picture
Submitted by Alexa on

Individuals with income below the federal income tax filing threshold

(for 2012 this is $9,500 for singles under age 65 and $19,000 for couples under age 65)

Sorry! It just blows me away that Americans are not considered "poor" unless their wages a "way below" what should be considered adequate.

I read several years ago that "financial hardship" regarding the ACA (or Mass Health) is VERY narrowly defined.

Homelessness qualified one to be exempt due to "financial hardship."

I believe that this was the only financial exemption.

At least, that's the only one that I recall.

What I do know recall (as I understood it)--it is not enough to say "Well, I make $1000 a month, but my expenses are $1200."

Unless something like "medical expenses" can get waived--and I'm not sure that even they can be waived.

Certainly no bills like student loans, mortgages, etc., were mentioned.

You see, you are expected to get rid of "excess baggage" or costs--lower your standard of living by selling off vehicles, dropping cell phone service, moving into a cheaper apartment or house, etc., etc.

Maybe a Correntian from Massachusetts can illuminate us on MassHealth's criteria (since the ACA is so murky).

Thanks, RG, for all your research!


Rainbow Girl's picture
Submitted by Rainbow Girl on

That's exactly right Alexa -- in this country, the safety net (such as it is/remains) requires a person to have lost everything so they can be kept on some kind of squalid life support. No supports to keep people who are otherwise productive members of society who were whacked with a major setback on track by providing *timely* assistance to *prevent* such persons from falling into the pit of no return.

It's striking how different the safety nets are for the financial sector -- millionaires risk losing their franchises receive immediate 100 cents on the dollar (our dollars and cents) relief to keep them on keel. Can't have Jamie Dimon sliding down the pole to just living on $1 Million a year in a 1 bedroom condo in NYC (that would be Slimin's definition of abject poverty for himself).

Rainbow Girl's picture
Submitted by Rainbow Girl on

From "Insure.Com."

For each state there's a blurb about what limitations (if any) the particular state places on uses that Insurance Companies can make of credit reports. With citations to laws/regs.

For fun I looked at New York State. There's a number of provisions. The one provision that seems on point appears to be a not yet codified Senate Bill: "Insurers are not allowed to deny coverage based solely on a credit score or to non-renew or increase premiums based on credit information." This doesn't really tell me if and insurance company can use a credit score to price the first policy they issue to a person. My sense is that this provision would not have been written if there weren't a history of InsCo's using people's credit ratings to deny coverage/increase premiums/end coverage -- in short, to protect their actuarial profits.

Readers can look up their own states if they wish!

Rows Ann's picture
Submitted by Rows Ann on

Insurance companies DO use credit scores, in combination with numerous other criteria to determine premium rates for everyone. They have for decades, it's no secret (read what you get from them), and there is a good reason for it. If it has ever been used to deny coverage in property insurance, it's impossible to tell, and every carrier has different standards. Nothing more irritating than to have a consistent non-pay cancel/reinstate client on the books. Cancel for non-pay, with lapse in coverage, and your new policy absolutely will be at a higher cost. Two or three of those in a year, and you will be non-renewed. Insurance is a business, not a babysitter or collection agency. The administration costs of managing those accounts is huge. I'm not a defender of insurance companies when they are being fairly criticized, but I work in a small 3 person brokerage and we have to put in just as much time and work on these slow-pay/non-pay clients as the carriers do. They cut deep into our bottom line. I'll spare you the descriptions of those who view insurance as free money and take a massive ROI on the premiums they pay (and the ones YOU pay).

Keep in mind, there is a significant difference between property insurances and health insurance, though. Currently, the pre-existing condition stipulation in insurance is because too many people were buying insurance when they needed medical attention, and cancelling it as soon as they were well. So, pre-existing went under a 6 month rule IF the person entering a NEW plan was uninsured just prior. ONLY health insurance is the subject in the ACA and it is a bad idea to confuse the issue by comparing it to any other type of insurance. Except, perhaps, in the user attitudes toward insurance as a whole. There are real problems with the ACA, and with insurance companies, and with lobbyists for the insurance industry. Seems it would be more productive to put energies into the problems that are closer to the roots.

I don't believe anyone can get a clear picture of what is fair and balanced if they don't look at both sides. Insurance carriers have plenty of room where they can improve their costs and services, and the users can learn something about the product they are paying for so they have a less frustrating view of the industry. It's hard to find that happy middle ground if you are only looking at things from your personal point of view.

Rainbow Girl's picture
Submitted by Rainbow Girl on


Thanks for jumping in with the perspective from the broker's side. That's really helpful. Speaking for myself, I've never had to become an expert on things insurance-related except to collect debts from my insurance companies (i.e., force them to pay on clean claims) :)

So it seems that using credit-worthingess as a basis to set the prices of policies is simply a standard thing that insurance companies have always done -- if I read your post correctly? I wonder if the ACA speaks to this long-standing industry practice in any way -- for instance, by limiting it in some way. If you know anything about this issue it would be great if you could educate us with a post!

Thanks again for jumping in with your deep knowledge of the insurance world!

Rows Ann's picture
Submitted by Rows Ann on

Like every single industry - abuse penalizes the honest. We pay higher prices in the stores to off-set losses through theft.

When it comes to health care in this country, it has been years and years that we've been told through the media to be a participant in our own health. Ask the necessary questions of the doctors, and make sure you are satisfied with the answer.

Should be the same with insurance.

When things settle down on the websites, maybe in month, I'll go to the exchange site and talk to our benefits agent to see what the ACA is all about.

My hope is that eventually Medicare for all becomes the norm, but that won't happen until we get the industry lobbyists out of the wallets of our lawmakers. I've always been against the basics in life being available to investments - housing, and medical should never be at the mercy of investors, but REITS pretty much run the apartment rental industry, and many of our biggest health insurance companies are publicly traded -- no one is unaware of how meeting the desires of the shareholders is far more important than the needs of the people.

Rows Ann's picture
Submitted by Rows Ann on

I just don't know. To speculate would be irresponsible. I fear too many are going to have to erase their brains already of all the incorrect and over-emotional information being shared with such snark and insults. Unless I can share what I know to be factual, people should be careful to keep their credit scores as high as they can.