VOL. 25, NO. 3 AUTUMN 2012
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O n the very day the Supreme Court ruled that the Patient Protection and Affordable Care Act (PPACA) was mostly constitutional, I completed the task of helping a neighbor’s adult daughter choose a health insurance policy. “Jennifer” had coverage through her parent’s employer program, which health care reform had laudably extended, until she turned 26. Now, after completing graduate school but still without a job, she was aging out of the system.
I had assumed that helping her find reasonable coverage would not present much of a challenge for an experienced benefits lawyer.
I began two weeks before Jennifer’s coverage expired, which, combined with the 60-day COBRA election period, gave me two-andone-half months to complete the task. What I found as a consumer searching for coverage on the relatively benign insurance shoals of
New York State was horrifying. The current regulatory regime in New
York is a microcosm of how the forthcoming national and state health insurance exchanges under the PPACA will work once they go “live” in 2014. It looks like Americans looking for insurance are in for a bumpy ride.
Here’s how the process worked—or, rather, didn’t.
The obvious starting place was to consider electing COBRA to keep her excellent coverage, but the premiums were expensive and
Jennifer was healthy and jobless. As a New York State resident, she qualified for “Healthy NY,” a relatively low-cost subsidized health

From the Editor insurance program that requires HMOs in the state to offer a standard level of basic coverage. Ironically, to keep costs in check, Healthy
NY is exempt from covering otherwise state-mandated services such as psychiatric care. Still, for a healthy adult looking for just-in-case coverage, Healthy NY seemed a decent alternative.
To qualify, a New York resident must have been employed at some point within the last 12 months and have a current income of less than 250 percent of the federal poverty level, which for Jennifer meant
$2,327/month. No problem, since she was currently unemployed but had worked last summer as an independent contractor (so the company could avoid offering her health benefits). Doing a Web search of
Healthy NY, I found sites for each of the HMOs in the state and, toward the bottom of the search results, the State’s Web site for its program.
All of the sites emphasized that the various HMOs differed mainly by price as they were required to offer the same level of coverage.
Hogwash, of course: every HMO offers a different network of doctors, hospitals, labs, and the like. Trying to determine the best network for Jennifer, I quickly discovered that none of the sites made it easy to check which providers are in their network. All were poorly organized and most repeatedly sent me to dead links or bounced me off altogether.
As a professional, I’m fortunate to have resources unavailable to the average person, so at that point I called three experts: (1) the manager of a large company’s benefit programs; (2) a health care expert at a leading consulting firm; and (3) the president of a local hospital. All agreed on which HMO had the best network. Since its premiums were in the middle of the pack, I filled out an application, listing Jennifer as unemployed with no income, and supplied as the required proof of past employment, a copy of her 2011 tax return reporting self-employment income.
Several weeks later, the application was rejected as incomplete.
Getting an actual human on the phone was a challenge, but the
HMO rep finally revealed that Jennifer needed to prove her current income was under the $2,327 limit. When I (nicely) pointed out that the application already indicated she has zero income because she is unemployed, the rep agreed to reprocess the application.
Two weeks later, the application was denied a second time. Another round of calls revealed that the HMO now wanted a letter from her previous employer as proof of self-employment—even though both the application and the HMO Web site clearly state a tax return is required as proof. After the week that was needed to obtain and scan such letter and another two more weeks for the HMO to process, we were nearing the expiration of the COBRA election period.
Finally, Jennifer received notice of coverage effective on the following month—EXCEPT that it excluded any preexisting conditions, unless
BENEFITS LAW JOURNAL 2 VOL. 25, NO. 3, AUTUMN 2012

From the Editor she could provide a Certificate of Creditable Coverage. There was no explanation given of what the certificate was or how to obtain it. It would have taken a layman additional calls and delays to obtain and establish full coverage.
Unfortunately, between the first and second Healthy NY rejections, we had an unexpected complication: Jennifer fell seriously ill and needed to see a doctor ASAP. While I knew coverage eventually would be retroactive under either Healthy NY or COBRA, to the medical community right then she was uninsured. Worse, to see any specialist, the Healthy NY HMO required a referal from Jennifer’s primary care physician—which she hadn’t designated since she wasn’t in the plan yet. If she opted for COBRA, coverage wouldn’t kick in until the election was processed and a check for the first two months of coverage cleared, which the COBRA vendor said could take at least two months.
Jennifer couldn’t wait. Very fortunately, her family has the financial means and paid up front for the various doctors, MRIs, blood tests, and prescriptions she needed. Many doctor bills later, COBRA finally kicked in and the family began the laborious paperwork process to get reimbursement.
To summarize, what did it take to navigate the byzantine maze of rules, Web sites, misleading and inaccurate information, plus an unhelpful bureaucracy, to actually get Jennifer medical care? The combined efforts of one long-time employee benefits attorney, one health care actuary, one health care industry consultant, and a hospital president—plus parents who could pay the medical expenses out of pocket while the bureaucratic wheels turned. What would have happened otherwise? Absent professional resources and financially comfortable parents, Jennifer probably would have delayed getting care until she obtained coverage through a plan, gone to an emergency room, or resorted to Medicaid.
The moral to the story is that our health care system clearly needs serious reform. But well-meaning reform without recognizing the limits of government bureaucracy could hurt as many people as it helps.
In terms of rules, red tape, and lack of clarity, the states’ future health care insurance exchanges are likely to resemble Healthy NY, on steroids. Will people be able to find a reasonable policy without a fulltime staff of experts, or will they just click the first link to a low-priced policy and hope for the best? Or will some walk away altogether and risk the penalty (er ... I mean tax) for going without coverage?
I’d like to be optimistic that after the November election is over, our elected leaders will join forces to reform the Reform and make it workable for the “99%” without an emergency cash fund and a team of experts on call. Otherwise, when most of the other rules take effect in 2014, things will really get ugly.
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From the Editor
Postscript: Not wanting to be limited to using the HMO network for a serious illness, Jennifer elected to stick with the more expensive
COBRA plan. She’s on the mend but still unemployed.
David E. Morse
Editor-in-Chief
K & L Gates LLP
New York, NY
Copyright © 2012 CCH Incorporated. All Rights Reserved.
Reprinted from Benefits Law Journal Autumn 2012, Volume 25,
Number 3, pages 1–3, with permission from Aspen Publishers,
Wolters Kluwer Law & Business, New York, NY, 1-800-638-8437, www.aspenpublishers.com
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