Insurance market discriminates against the disabled
August 2, 2001
If you are disabled, chances are you have a hard time getting inexpensive insurance and a job.
As someone actively involved in disability rights, I regularly hear from disabled people who have been discriminated against by insurance companies.
The Rev. Clyde Shideler, who is blind, wrote me, "I have been denied insurance and given rates so high that I could not possibly afford to pay them."
Bruce Robb wrote, "I have been told by some employers that their insurance will be terminated if they were to hire persons with certain types of disabling conditions."
Another person wrote, "I'm in the process of buying a house with my partner. We applied for income protection insurance and because of my epilepsy my premiums are twice as high as my partner's."
Disabled persons bear the brunt of an insurance market that often offers them an inferior or exorbitant policy compared to what nondisabled persons can buy. This, in turn, could exclude them from a job because insurance often comes through one's employment.
Over the last 18 months, disabled persons have been challenging insurance underwriting practices in court.
In February 2000, Howard Chabner, a lawyer who uses a wheelchair, brought a case against United of Omaha Life Insurance for charging him nearly double the standard life insurance premium. Chabner asked the 9th U.S. Circuit Court of Appeals to rule that charging a disabled man an arbitrarily high life insurance premium violates federal and state laws on equal access to public accommodations under the Americans with Disabilities Act (ADA).
The court found that United "irrationally" discriminated against Chabner because it did not rely on experience or data when determining the premium to charge him. If United were to come up with sound actuarial data, theoretically it could charge Chabner more, and this would not be "irrational" discrimination. It would be "rational" discrimination based on the insurers' need to make profits.
Now comes a lawsuit filed by Californians for Disability Rights along similar lines. Attorneys filed suit under the state's "unfair business practices" violation code. They allege that Bank of America advertises free life insurance of up to $1,000 to customers who pass the bank's "Good Health Statement." But to qualify for the plan, customers must verify that they haven not been treated by a doctor in the last five years for a host of conditions.
The plaintiffs allege that the insurance industry is falsely linking low life expectancies with those who have certain disabilities. They rightly claim if one had polio as a child, that does not equate with death at an early age.
But this argument poses problems since a number of disabled persons will still be excluded from insurance protection by actuarial data.
Does everyone need life insurance? Maybe not, but "rational" discrimination spills over into other vital insurance markets like health care and can have dire life consequences. Insurance corporations have found ways to eliminate segments of the disabled population from the insurance pool by making terms unaffordable or inadequate.
The 2nd U.S. Circuit Court of Appeals has held that disabled persons are guaranteed equal access to insurers' goods and services. This bars underwriters from refusing entirely to issue a policy to a disabled person but does not prevent them from issuing inferior goods.
The ADA does not forbid disability benefit plans that provide more generous coverage for physical injuries than for mental disabilities, seven federal courts of appeals found. Employers are free to exercise disparate treatment of mental and physical conditions. Insurers could limit benefits and restrict coverage. They could also cap policies and sell disabled persons a limited selection of a product.
Some courts merged these findings into the general rule that the ADA regulates access to, but not the content of, insurance policies.
It seems that ADA insurance litigation has led us to a stand-off. Those disabled persons who provide no basis for "rational" discrimination could be treated on par with nondisabled persons, but those whose impairments do generate higher risk will just be out of luck.
The crux of the problem is relying on the insurance market to produce a just outcome.
As long as insurance markets exercise "rational" discrimination and exclude disabled Americans from the protections afforded others, government must step in to guarantee disabled persons in the workforce access to decent public insurance programs.
Today, thousands and thousands of disabled persons have to fend for themselves in the workplace. They do not have a fair shot at getting insured.
Isn't this also discrimination? Such unsatisfactory outcomes call for a universal guarantee to health care, one that does not depend on degree of disability or ability to work.
Marta Russell has earned a Golden Mike Award for best documentary for "Disabled and the Cost of Saying 'I Do'" from the Radio and Television News Association of Southern California in 1994. She's the author of "Beyond Ramps: Disability at the End of the Social Contract" (Common Courage Press, 1998). She can be reached at firstname.lastname@example.org.