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HEALTH PLANS: Populist Republican attacks sweet, innocent non-profit

Blue Shield of California, the cuddly non-profit, is going to the mat with the state over recissions. Essentially Shield is saying, “It was fraud, so the recissions are legal.” Everyone else has settled.

This has mightly pissed off California insurance commish Steve Poizner. A Republican, albeit one I voted for:

Calling the allegations "serious violations that completely undermine the public’s trust in our healthcare delivery system and are potentially devastating to patients," Insurance Commissioner Steve Poizner said he would announce today that he would seek a $12.6-million fine.

That’s almost real money.

But what really got me was an interview I heard with Poizner on NPR just now. He said that first, none of the cases he’s raising have any hint of fraud by the consumer. Second, and this is the controversial part, as soon as an insurer issued a policy, it had the obligation to live up to it. Once the policy was issued, he assumed that the insurer had completed its investigation into the application and that was that.

Blue Shield is one of two plans that investigated my application a couple of years back, and the one that did the most thorough job. Healthnet accepted what I said (after I said it twice). Blue Shield accepted what I said and looked at my medical records (which duplicated what I said). But then they decided I was uninsurable.

I suspect that Blue Shield is correct in its interpretation of the law. But in winning that battle it’s helping to lose the “war”, in as much is the war retains the right to make huge profits in the individual insurance business.

And what is most bizarre is that culturally and politically, Blue Shield and its CEO Bruce Bodaken are probably on the side of massive insurance reforms that would eliminate the individual market as we know it. So quite why they’re fighting so hard I don’t know.

But when you lose the support of the Republicans….

 

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AnonKevinR. Garth Kirkwood M.D.Mark Glen-Walkerjd Recent comment authors
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Anon
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Anon

Actually, having lost a home in a natural disaster during the Clinton administration – when FEMA was good – my family (and so many others I know) would have been vastly better off with NO insurance on that day than the supposedly good policy we had through a major carrier, because we would have been eligible for low interest government loans and FEMA grants. The coverage on the face of it wouldn’t have been as good, but the government didn’t have a well-honed machine to try to wear us down and screw us (relentlessly for years), and we could have… Read more »

Kevin
Guest

Um, er, ah…could any person promoting a single-payer federal system name ONE THING the Feds do efficiently? Katrina? The previous administration’s “Welfare” reform? Older Bush’s Tax Package?
Anything? The Feds can’t deliver mail (IE FedEx, DHL, UPS), why do you want them to deliver babies?
Also, countries with socialized medicine are great markets for individual insurance products. The Rich will always find a way. That’s why they’re Rich.

Peter
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Peter

jd, I guess it depends on how big the community is. And why are we wanting to establish any kind of rating in the first place; insurance profits, cost control, better healthcare?. If you establish community ratings by state you may find the poorest states have the highest ratings and the highest premiums, yea the red state south will love that. But this all supports the premise that we need insurance companies and an insurance business model/mindset to make this work. I think that is a mistake. What have insurance companies done for us to this point – nothing useful,… Read more »

jd
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jd

Peter, am I to infer from your response that you’ve never looked into those systems and how they work? Every multi-payer UHC system in other nations and every one I’ve heard proposed by Democrats for the U.S. uses community rating, not experience rating, for the baseline benefits. Community rating generally has tiers so that the young don’t pay quite as much as the old, but the difference is not as large as in experience rating and no one pays more in premium due to illness. What I don’t get is why you think this nation will not be willing to… Read more »

R. Garth Kirkwood M.D.
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A properly-run, federally mandated and controlled single payer could solve this problem and pave the way toward equal health care for all.
R. Garth Kirkwood M.D.
http://www.equalhealthcareforall.com
doctork@equalhealthcareforall.com

Mark Glen-Walker
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I think private insurance companies have every right to make an informed decision about the financial contract they enter with policyholders. They should be able to decide who they accept and who they decide not to do business with. I think after they made their decision they should be very limited on how they can rescind a policy. So, they may be quite guilty in my eyes of wrongdoing. But… we’ve made health insurance out to be the ONLY way to access health care. Maybe this is part of the problem… we’ve all relied on these companies and become comfortable… Read more »

Peter
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Peter

Multiple risk pools? And at what cost to the insured jd? Because I think most people who “fudge” their app. info do it out of fear of a rate quote they can’t afford, in addition to being denied.

jd
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jd

Peter, there isn’t just one answer to the question,
“But guess where the issue of recissions is NOT an issue?”
Another answer is a multi-payer system in which applicants cannot be turned down due to prior conditions. You know, like in Holland, Germany, Switzerland, etc.

Peter
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Peter

I agree that if the insurance company were to investigate every application it would take a long time to get covered. Think if the IRS investigated each tax return. But this problem is one that leaves the insured with no options and the insurance company with all the options and profits. It’s a win-win for insurance. The other aspect to this is the role of commissioned brokers. Do they wink & nudge the questions and answers. These are the same insurance companies we want to run a semi-private universal system. NO THANKS! But guess where the issue of recissions is… Read more »

Jeff
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Jeff

This would mean insurers have but one chance to catch deliberate fraud. That would certainly raise the costs of investigating prospective customers, costs that in many cases would not result in any business. Both those costs and paying for those who pull it off would, to some degree, be passed on to other customers. I think, as long as we have the current structure, where both getting insured and insuring are optional, recissions are a necessary component. But I don’t think the insurance companies should make the call. Rather the process ought to be done by a non-political, neutral third… Read more »

bev M.D.
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bev M.D.

I have learned over the years that the fights that make the least sense are often personal – e.g. maybe the insurance commissioner and the CEO have a vendetta going; who knows who started it. From what I have read in the past, these ego battles have led more than one CEO to make a very bad business decision. Also, government people very much do NOT like having their power challenged. So you see, it’s rarely about the issue at all…..