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I first encountered this thirty years ago back in the fall of 1983 when I was managing two field offices in the Carolinas for a large insurance company. The company had been a big player in the individual and small group health insurance market for a long time. But their individual and small group health insurance plans had taken some huge increases on premiums for the previous four years. One year earlier in 1982, the company suspended new sales of their individual and small group health insurance plans.
Then in September 1983, the company inroduced a new individual and small group health insurance plan. The new plan was not radically different than the old plan, but it did incorporate some new features that have become commonplace in health insurance plans since then. The premiums for the new plan were more than 30% lower than the current premiums for the old plan.
I was given a list of individuals and companies that had "favorable claims experience" on the old health insurance plan to distribute to the agents. Those individuals and companies were invited to change to the new plan effective on the first of the following month beginning in October. Agents who contacted those customers and facilitated the switch would receive the full new business commission on policy changes to the new plan. This was like putting candy in front of a baby since who wouldn't want to change health insurance plans with the same company and get a 30% lower premium. In addition since those individuals and companies had "favorable claims experience", there would be minimal medical underwriting of plan changes.
The window closed on December 31 and after that date full medical underwriting would be required for any plan changes from the old plan to the new plan. In addition agents would no longer receive the full new business commission on plan changes after December 31. As one agent said to me; "this was a nice Christmas present" for the agents. As manager, i also made money on this as well since my pay was related to the agent's commissions paid.
Then in mid November the individuals and companies with "unfavorable claims experience" who were not invited to switch to the new plan received a notice that effective on january 1, their premiums would increase as much as 50% for their health insurance on the old plan. I still remember one man literally crying over the phone as he called my office about this premium increase. His wife had cancer and he couldn't afford the new premium for his health insurance and he couldn't afford to drop the plan either. No other health insurance company would touch him as well since his wife had cancer. I told him that I would appeal to the company.
I wrote the company about his dilemma and the company's response was that since his wife had cancer, he was not able to change to the new plan. But since she was terminal and would die within a year; after her death, he would be able to change to the new plan with the much lower premiums. The company did suggest that he increase his deductible from $200 to $1000 (a large sum back in 1983) and that would lower his premium to about what it was the previous year. I suggested that to him and he reluctantly did that. I did not tell him the rest of the company's response.
Then less than a year later the company sent notices that those remaining on the old individual and small group plan would have thier policies cancelled on January 1 1985. Apparently those remaining on that plan were just the old and sick who had nowhere else to go. Most likely those who were affected by this cancellation couldn't get new health insurance anywhere and wound up uninsured.