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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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  1. 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 far better gotten on with our lives.
    Katrina survivors would have fared far better with FEMA if the Bush administration hadn’t gutted it. It isn’t “government” that is incompetent, it’s people who get into office who want to drown government in a bathtub.
    Actually, FedEx, UPS, DHL do not and would not handle letter mail because it isn’t profitable. As a consumer, I benefit from the competition, but there is no competition when it comes to lower-profit mail – the government is the only one willing to do it. And they do a pretty good job for a minimum amount of money – just remember that the price of freedom is constant vigilance, and don’t put people in office who want to prove a point about government by gutting everything it does well.
    The government does a pretty good job at the NIH. There is no way a private entity would protect us the way the USDA and FDA do, faults included. We all rely on so many functions that work pretty well, we take them for granted. (Again, until some idealogue throws a wrench in it to make some stupid political point.)
    I see at work how a knee-jerk belief in private over public results in expensive contracts going to private entities that end up costing government (the people) many times what it would have cost to just have government do the job just as well. I’m not against private enterprise – I’m actually a big proponent – I’m just Conservative in the traditional sense, meaning I believe in honest competition, getting the most for my money, doing things the cheapest way possible to get the best results, I don’t adhere senselessly to some ideology regardless of the outcome.
    The health care problem isn’t really a public versus private conflict anyway. It’s really corruption of overwhelming concentrations of power and money versus the public. Health insurers are functioning like rackets now. It’s more like choosing between the mafia and government, it’s not private v. public.
    Health insurance RACKETS are vastly less efficient than a government administered system would be, there is overwhelming evidence that our blind adherence to this system is wasting hundreds of billions just in administrative costs every year. It’s not that easy to bring real competition back into the system, because the insurers have gotten used to behaving like racketeers.

  2. 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.

  3. 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, except pass on rising costs and create lots of paperwork, with the option of recission thrown in for good measure to keep those profits up and investors happy.
    Certainly the feature in Germany where the rich can opt out of the public system is something I think the rich here will want, just as they want to be able to opt out of public education though vouchers. But I don’t think the rich will also want the same kind of taxation as European countries that will help support any kind of universal health system here. I know the push here is for a two tier system for anything designed so that we can keep the insurance companies in profits and cash starve the lower tier like we do for every other public program then call it a failure. The Dutch I understand went to a one tier, all in, system in 2006. And from what I’ve read Germans don’t really like the system they have and are looking at the Dutch system. But the reason I push, Quioti like, for a single-pay system is the necessary cost control it enables and the important all-in feature that makes it’s success more likely because we all have a stake in it.
    As for redistribution of wealth, I don’t see any to make any system work (single or multi-pay) as long as politics is controlled by those with money and corporations are given the same rights as people. Don’t look for any illusion of cost control as long as we have this politician-for-hire system. Even Hillary has bought into the present system with all the contributions she is taking from healthcare. Another reason not to trust Hillary. But if we get Repuglicans in power in 08 don’t look for any real progress on healthcare, except more of that redistribution of wealth thing, from the lower tier to the upper tier.

  4. 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 engage in the redistribution of wealth necessary to make a multi-payer system work, but will be willing engage in the redistribution of wealth necessary to make a single-payer system work. Single-payer purists continually make this assumption, which is founded on nothing but sheer speculation as far as I can tell.

  5. 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 with copays and benefits that we are insulated to the true cost of health care. When we have health insurance we take it for granted, when we don’t we get upset because we think we’re entitled.

  6. 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.

  7. 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.

  8. 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 NOT an issue – fully government run single-pay systems. Then you can just concentrate on provider fraud.

  9. 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 party.

  10. 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…..

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