THE BURNED OVER DISTRICT

McClatchy takes a look at "junk" health insurance policies and explains why they look good until you need them.

Like millions of Americans, Capil thought she had solid individual health insurance. Then she got sick and found that her coverage was woefully inadequate.

The financial problems that followed would aggravate Capil’s health struggles, force her into bankruptcy and trigger a fraud lawsuit over $230,000 in unpaid medical bills against HealthMarkets Inc., the parent company of her former insurer.

The litigation is nothing new for HealthMarkets. The North Richland Hills, Texas, insurer, formerly known as UICI, has a long history of battles with state regulators trying to root out “junk insurance” in the individual market. But numerous sanctions and a host of consumer protections in the Affordable Care Act have put a financial squeeze on the company and forced it to change its business model.

Beginning in January 2014, the health care law prohibits the kind of limitations, exclusions and benefit spending caps that made Capil’s coverage so problematic.

But after falsely promising that Americans could keep their health insurance if they liked it, President Barack Obama bowed to political pressure in November and OK’d a one-year extension on 2013 individual policies – even those facing cancellation next year because they don’t meet the health law’s new minimum standards.

Now Capil, a software project manager, wonders how many Americans will use the president’s canceled-policy “fix” to unwittingly renew another year of “junk insurance” like she used to have.

“It’s sad that there are people who have this insurance who don’t know that they’re going to end up like me if they ever get sick,” she said. “I feel like people are upset that they’re losing these plans and they’re upset because they think their plans are comprehensive. But they aren’t. These insurance companies have been selling Americans coverage that will bankrupt them if they ever have a serious illness.”

And the extra year lets the junk peedlers cheat more Americans and plan their flight into the night at year end.