"Companies also control their risk by using a maneuver known as closing a block or book of business. They stop accepting new customers in a plan, which kicks off a process known as a "death spiral."
The article highlights an Indianapolis lawyer, Jesse Paul, who discovered in August, 2007 at age 59 that his monthly insurance premium would be $4,284. When Jesse took out the $100 deductible Prudential major medical policy in 1980 he paid $25.50 a month. In 2003, the premium increased from approximately $1,200 to about $1,900 a month.
When he inquired with the state insurance department, he learned that the policy had been closed to new entrants for years, that he was one of only 400 to 600 customers left in the state. He also learned that this practice was permissible under Indiana law. When he got the premium notice for $4,284 and decided he had enough he discovered he was uninsurable on the private market because he took medications for high blood pressure, high cholesterol, and allergies.
Jesse is now insured by the Indiana high-risk pool for a premium of $650 a month. The cost for a premium in the high-risk pool is much less but is the coverage comparable to the coverage under the Prudential plan? Unfortunately the question isn't answered in the article.
To read the entire article, just click on the title in the first paragraph.
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