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The Dumbest Thing I Have Ever Seen An Insurance Company Do

6a00d8341c909d53ef01157023e340970b-pi And, I’ve been in the business for 37 years.First, let me
stipulate we really need a system of universal care where everyone gets
to have insurance. But we don’t yet so certain rules are unavoidable
until we do.

Here are a few separate clips from today’s Los Angeles Times article, “Health Insurers Refuse to Limit Rescission of Coverage:

“Executives
of three of the nation’s largest health insurers told federal lawmakers
in Washington on Tuesday that they would continue canceling medical coverage for some sick policyholders, despite withering criticism from Republican and Democratic members of Congress who decried the practice as unfair and abusive.

“The hearing on the controversial action known as rescission,
which has left thousands of Americans burdened with costly medical
bills despite paying insurance premiums, began a day after President
Obama outlined his proposals for revamping the nation’s healthcare
system.”

“But they would not
commit to limiting rescissions to only policyholders who intentionally
lie or commit fraud to obtain coverage
, a refusal that met with dismay from legislators on both sides of the political aisle.”

“The
executives — Richard A. Collins, chief executive of UnitedHealth’s
Golden Rule Insurance Co.; Don Hamm, chief executive of Assurant Health
and Brian Sassi, president of consumer business for WellPoint Inc.,
parent of Blue Cross of California — were courteous and matter-of-fact
in their testimony.”

“The industry has tried very hard in this
current effort not to be the bad guy, not to wear the black hat,’
Begala said. ‘The trouble is all that hard work and goodwill is at risk
if in fact they are pursuing’ such practices.”

“But rescission
victims testified that their policies were canceled for inadvertent
omissions or honest mistakes about medical history on their
applications. Rescission, they said, was about improving corporate
profits rather than rooting out fraud.”

“Late in the hearing,
Stupak, the committee chairman, put the executives on the spot. Stupak
asked each of them whether he would at least commit his company to
immediately stop rescissions except where they could show ‘intentional
fraud.”

“The answer from all three executives: ‘No.”

For those of you not versed in the details of medical underwriting, let me explain a few things.

Lying on your health insurance application is fraud
and you can lose your insurance when you intentionally do it to gain
coverage. That is good policy and basic to contract law. An example
would be someone who went to the doctor because of severe headaches,
didn’t disclose it when applying for insurance, and a short time after
getting coverage was diagnosed with a brain tumor. Common sense would
tell you not to withhold such information—particularly when the
application makes you attest that you have revealed all.

But
sometimes people forget to put things down. Let’s say you went to the
doctor for a back problem onetime five years ago, didn’t put it down,
and were diagnosed with diabetes a few months after your health
insurance became effective.

It would be an inadvertent and non-material misstatement
to sign your health insurance application having promised you told all
but left something, that in the end did not matter, off of it. It is
always important to be thorough and honest in filling out a health
insurance application but sometimes we forget things.

In all the years I worked for an insurer—from underwriter to COO—we never penalized anyone for an inadvertent and immaterial misstatement. I never knew of a competitor who did either.

Why would you? How could you sleep at night knowing you retroactively canceled (or rescinded) a sick person’s health insurance because of something that really didn’t matter?

Fast
forward to the California rescission controversy. A number of health
insurers have been doing just that. More, they continue to defend it
even in the face of California Insurance Department fines and plenty of
lawsuits.

Then, they do it right in the middle of a national
health care debate the day after the President of the United States
flew to Chicago and told the American Medical Association private health insurers should have to compete with a public health plan that could well run them out of the business if it ever passed.

So
here they sat in front of a Congressional Committee and were asked if
they would stop retroactively canceling sick people’s health
insurance—not for real fraud but—for inadvertent non-material reasons.

Representatives of the three companies each took their turn and said, “No.”

Two things.

I’ve
brought a lot of good folks into this industry over the years. People
who still need this to work so they can pay for their kids’ college
education and fund their retirement plans.

This is the kind of corporate leadership they have to rely upon so that this industry can continue?

The current health care debate turns on who can best make our system work.
My sense is that it will take the genius of individual creativity to
separate the 70% of this health care system that is the best in the
world from the 30% that is waste. Who can do the best job on that?
Government? The private sector?

I believe the private sector.

And, this is the leadership I have to defend?

Robert Laszweski has been a fixture in Washington health policy
circles for the better part of three decades. He currently serves as
the president of Health Policy and Strategy Associates of Alexandria,
Virginia. Before forming HPSA in 1992, Robert served as the COO, Group
Markets, for the Liberty Mutual Insurance Company. You can read more of
his thoughtful analysis of healthcare industry trends at The Health
Policy and Marketplace Blog, where this post first appeared.

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28 replies »

  1. I work alongside hundreds of physicians every year and can tell you that a system is only as successful as the adoption of by physicians. Private payers are nervous and so are physicians and they are going to do everything in their power to stop this initiative. Medicare has already proposed a 25% reduction in there physician fee schedule for 2011 and they changed the retroactive billing guidelines which cost thousands of physicians millions of dollars. I just don’t see the support for a nationalized program in this economy. We cannot continue to spend our way into a deeper recession then complain when we can’t find work. The government credit cards are maxed out and they cannot expect the american people to bail them out of this mounting debt.
    NO MORE GOVERNMENT PROGRAMS-It will cost us more jobs and spend us into the grave.

  2. Over the past fifteen years, one of the things you couldn’t discuss was this remarkable set of data—perhaps the most remarkable data-set we know of in the world:
    Total health expenditures per capita, 2003
    United States $5711
    Australia $2886
    Austria $2958
    Belgium $3044
    Canada $2998
    Denmark $2743
    Finland $2104
    France $3048
    Germany $2983
    Ireland $2466
    Italy $2314
    Japan $2249
    Netherlands $2909
    Norway $3769
    Sweden $2745
    United Kingdom $2317
    Those are astonishing data. Over the past fifteen years, they’ve almost never been discussed. Everyone but Krugman understands—you simply mustn’t discuss them.

  3. I have never worked for a health plan, so I cannot say from experience what happens on the inside. However, I spent hours reading the regulators’ reports on the California rescissions and am fairly convinced that the insurers were railroaded.
    And that is what is going on in DC now. If you force the insurer to prove “intentional” misrepresentation, you require the insurer to read the mind of the applicant. The trend today is for the law to demand that the insurer prove the applicant’s misrepresentation, instead of demanding that the applicant prove that he is innocent of misrepresentation when the application contains a substantive error.
    I have heard (anecdotes) that insurers are writing a lot less individual business in California now. Of course, this plays right into the hands of those who advocate government take-over.
    We are going to see a lot of kangaroo-court hearings of private insurers during this summer’s attempted government take-over of health care. They should bail out of this farce immediately, instead of shilling for President Obama.

  4. I don’t know, Wendell. Nate makes me think about angles I never considered, mostly far into right field :-). I know he will not change his opinion, but maybe I can make him think about the left field a little.
    Besides, he seems to be a walking encyclopedia of health insurance history and process, which I find interesting because some of those things he quotes are stuff I wasn’t aware of, and I should have been.

  5. Well Nate, we are going to have to agree to disagree.
    Killing a few 23 year olds, or letting them die, in order to encourage their peers to buy insurance is preposterous. It won’t save thousands of lives, it will just save thousands of dollars, and even that is probably not true. The 23 year old human brain is not really geared to consider mortality (that’s why kids make really good soldiers). This has nothing to do with the decisions the military is faced with, and I would never claim that I would never hurt a person. I sure would, if I had a good reason 🙂 (yes, I did serve in the military).
    As to universal insurance, I am familiar with one system, in a very small country that works rather well. It’s probably not something you can port to the US, but you can get all the care you need for free, from preventive care to organ transplants and psychiatric care, and there’s no more waiting than in the US. There are tons of doctors and hospitals and they are mostly as good as you can get in the US (if not, the free plans will pay for a trip to the US). You can get supplemental insurance for a few bucks that will satisfy all your hypochondriac needs and aversion to generics. There are four major plans and they are funded by taxes and government. Coverage is mandatory. Sort of like what HMOs where supposed to be here. All plans have the same exact benefits and regulations. The system is a mixture of plan owned and private providers. The only thing they all have in common is that with the exception of physicians in private practice, they are all regulated and non-profit, the plans, the hospitals, everything.
    I’m not saying that this is the solution. All I’m saying is that we should be able to come up with something better than what we have now.

  6. “I am not content with delivering a death sentence to a 23 year old for being a 23 year old. Even for the Hummer guy, that should know better, this seems pretty cruel and unusual punishment.”
    This is where tough decisions come in. millions of 23 year olds do the wrong thing becuase they are never confronted with the consiquences of their decisions. Let even a couple 23 year olds die becuase of their bad decisions and suddenly people take notice and do the right thing. So if letting 10 of them died saved thousands what would you do? It’s a decision our military faces all the time, they never want to kill innocent people, but if killing a couple saves thusands some times you have to. It’s easy to claim you would never hurt a person when your never actually in the position of making the decision and suffering the decision.
    I never discount or disregard something because it conflicts with what I believe. I research it. I would suggest you look up the actual court cases of any of those sob stories you heard and see the opposing testomony and evidence, seldom do you ever see the journalist report both sides.
    “I am looking for any published studies showing that healthcare utilization, and therefore costs, are really higher in developed countries with universal healthcare, like pretty much all Europe, Japan, etc.”
    THere aren’t any Utilization is higher in the US for those with insurance, the vast majority. Other nations ration their care, services are not available so they are not incurred.
    For examples look at the history of Medicare and how utilization spiked when it was passed.
    Look at healthcare cost for UAW employees and non union to see the effect of cost sharing.
    Insured Americans have better care then anyone else in the world and it is cheaper so they use more. Remember a 20% lower tax burden would cover a lot of $20 co-pays. We take more Rx have more office visits and considerably more test done.
    Barry is 100% right about the data the left uses to claim other counties have better healthcare. I haven’t been to Japan but I have never heard of them having nearly the gang problem our cities do. Our drug usage and immigrations is also considerably higher then all the other countres with supposedly better systems.
    Spending as a % of GDP is a meaningless comparison, few if any of those other countries have disposable incomes like we do. Everyone knows a large amount of our care is wasted and friviolous but like our big cars, big meals, and big everything else that is how we choose to roll.

  7. I would also like to offer a few comments about the Japanese healthcare system. Japan spends less on healthcare (about 7% of GDP) then any of the other major developed countries. Yet, it has the longest life expectancy – 86 years for women and 79 for men. Moreover, according to a recent program on Frontline which compared five healthcare systems around the world, a typical doctor-patient primary care encounter lasts all of five minutes or less. From another source, I learned that the Japanese are free to go to any doctor they want, but if they choose one of the more popular doctors, they will often spend up to three hours in the waiting room for their 3-5 minute visit. It’s hard to imagine that Americans would tolerate that. Again according to the Frontline program, the Japanese use one price schedule to pay providers across the entire country. That also would not work here because of the large differences in medical input costs for staff salaries and benefits, office rent, malpractice insurance, etc.
    I cannot help but conclude from this and other reading about the healthcare systems in Japan, Canada and Western Europe that the popular indicators of healthcare system quality, life expectancy and infant mortality rates, have precious little to do with the quality of healthcare we receive or don’t receive. At the very least, the influence of the healthcare system on these metrics is significantly overstated, in my opinion. The much more significant factors are personal behavior such as diet, exercise, smoking, drinking, weight control, etc., genetics, and socio-economic status / living and working environment. On the personal behavior front, I think it’s interesting to note that while over 30% of Americans are obese (BMI above 30), only 8% of Asian Americans are.
    We will probably always spend more relative to our GDP on healthcare than any other country, but we need to evolve a system that works for us yet is sustainable over the long term. I think we need to be looking at cost-effectiveness data to drive coverage and payment policy and move away from fee for service medicine toward bundled pricing for expensive surgical procedures, shared decision making and capitated payments for the management of chronic disease. A more sensible approach toward end of life care including more widespread use of living wills and advance directives would also be helpful as would taking medical dispute resolution away from juries and giving it to specialized health courts which can bring some consistency and objectivity to the process. Robust price and quality transparency tools would also help both patients and referring doctors identify the most cost-effective providers of care.

  8. Margalit,
    While I’m certainly not an expert on the subject, my understanding is that healthcare utilization is an extremely complex issue. Just looking at practice pattern variations within the U.S., you will find that per capita Medicare spending is much higher in the NYC metropolitan area than in the rest of the state. It’s much lower in Northern CA where HMO’s (mainly Kaiser) are widely accepted than in Southern CA where they aren’t. It’s hugely higher in Southern FL than in Northern FL. Within TX, as Atul Gawande’s New Yorker magazine article pointed out, it’s twice as high in McAllen as in El Paso even though the size and demographic makeup of the population is similar and health outcomes are comparable. There are lots of regional differences in the culture of medical practice and, to some extent, differences in patient expectations as well.
    As for other countries, the fear of malpractice litigation is far less than in the U.S. The definition of good, sound medical practice as it relates to end of life care is considerably more conservative than here. Patient expectations, combined with, in some cases, religious beliefs also play a role in driving end of life utilization higher in the U.S. Finally, every system rations care one way or another. From the reading I’ve done in Health Affairs magazine and elsewhere and talking with people in the field who have traveled to or worked in other countries, what I keep hearing is that the healthcare systems in Canada, UK, and Western Europe are very good at primary care and pretty good at emergency care. However, if you need to see a specialist for a condition that isn’t life threatening or you need a hip replacement, MRI, colonoscopy or other procedure that doesn’t have to be done right away, you will likely wait considerably longer for an appointment than here. Doctors elsewhere earn substantially less income than they do here, in part because they don’t exit medical school with huge loans to repay. Hospital stays are longer in other countries but much less happens to you while you’re there. A lot of care that takes place in a hospital in Europe or Japan would more likely be done in a rehabilitation center or convalescent center in the U.S.
    Even if we could import the well regarded French or German system, including their financing, tomorrow, I’m skeptical that we could deliver care for any less than we do now without fundamental changes in practice pattern culture, the structure of provider payments and their implicit incentives, the litigation environment and patient expectations. Moreover, if we are able to extend health insurance to the currently uninsured and underinsured, healthcare costs are virtually certain to rise fairly significantly. I’ve heard it said that we can have our healthcare good, fast or cheap but not good, fast AND cheap.

  9. Great article, it is disheartening knowing that insurance companies have so much power to retroactively cancel policies especially when they have the power to decide what is fraudulent and what is not. A client should at least be able to go in front of an independent arbitrator to determine if fraud was committed.

  10. Thanks, Barry. I can see how it can happen, but is it really happening that way? I am looking for any published studies showing that healthcare utilization, and therefore costs, are really higher in developed countries with universal healthcare, like pretty much all Europe, Japan, etc.

  11. “I find it hard to believe that going to the doctor is such a tremendous fun thing to do that people will just try to get as much of it as possible.”
    Margalit,
    I’ll offer a few examples of how healthcare utilization increases when people are completely or largely insulated from the cost.
    1. I wake up in the morning with a sniffle, sore throat, low grade fever, headache or some other minor problem. If I have to pay for care out of my own pocket, I will usually wait a couple of days to see if I get better. Most of the time, I do. On the other hand, if I can see the doctor quickly and pay nothing or very little, I might be inclined to make an appointment just to get reassurance.
    2. A friend was overseeing his mother’s care in a nursing home and noticed that she was taking several expensive brand name drugs that were available as much cheaper generics. When he asked the nursing home doctor about this, the doctor told him not to worry, that it was all free (covered by Medicaid). My friend told him his mother was a private pay patient. The drugs were quickly switched to generics.
    3. Doctors inclined to practice defensive medicine to protect themselves from lawsuits based on a failure to diagnose a disease or condition find it easier to order the extra tests when they know that the patient isn’t paying anything or, at most, a modest co-pay.
    4. When patients are not insulated from the cost of care, they often don’t care what anything costs, especially the much more expensive services related to hospital based care.
    5. Even referring doctors often don’t know who the most cost-effective specialists and the highest utilizers of services, tests and procedures are in their area. With insurance paying most or all or the bill, they have no reason to find out.
    The bottom line is that incentives matter. It matters how doctors are paid – fee for services, salary, capitation, etc. and it matters if patients are exposed to at least enough of the cost of service to get their attention. This is why I agree with Nate on the virtue of high deductible plans with the most cost-effective preventive services covered in full. I also think it would be useful to track utilization at the individual patient level with a smart card like they do in Taiwan.

  12. OK Nate, I agree that one should critically read any publication, but I cannot agree that if you read something that happens to contradict your opinion, you should go ahead and discard it as being false. I have no reason to suspect that those people testifying at the House Committee hearings were lying and the story seemed to be the same in various media reports.
    Maybe carriers don’t cancel people for acne treatment, maybe they do. This is not the point. People should not be put in a position to have to lie on applications in order to get care when they need it most.
    Also, people should not be able to wait until they are sick in order to buy coverage. If you have money for a Hummer, then you damn right should have money for health care. And if you are 23 and think you are immortal, that’s not a good excuse either. You never know when disaster strikes. That is why paying for health insurance should be mandatory for everybody. Taxes sound just fine to me.
    I am not content with delivering a death sentence to a 23 year old for being a 23 year old. Even for the Hummer guy, that should know better, this seems pretty cruel and unusual punishment.
    On a different note, how do we know that if we offered universal health care to all (I didn’t say single payer) the utilization rates would sky rocket indefinitely? Are there studies showing that pattern in countries with universal health care? I know that utilization is bound to increase initially, because people will start getting the care they couldn’t afford before. However, I find it hard to believe that going to the doctor is such a tremendous fun thing to do that people will just try to get as much of it as possible.

  13. Nate–
    I couldn’t agree with you more on all points. When are these people going to wake up and look the failed universal systems in the UK and Canada that ration care? Is that considered compassionate?
    Right now if anyone (elderly or young) is diagnosed with cancer in the U.S., treatment begins within days. In the UK, people wait for months often dying before treatment begins. We already know of the awful wait lists for routine procedures in Canada.
    These countries have exorbitant tax rates and still cannot provide sustainable health care. The wealthy come to the US for procedures! My my, where will they go if we socialize our system?
    Free market competition and patient involvement is the answer. I recommend a great book written by Dr. David Gratzer ( a former Canadian physician) “The Cure” . He addresses this issue from personal experience, with an economic perspective.

  14. Peter you are completly clueless sometimes. COme back to reality before you comment, how does single-pay mean affordable? Medicare and Medicaid aren’t affordable. Every other country that has any version of single payor is having a financial crisis. Please explain how you define single-pay as affordable.
    Always available, what does that even mean, insurance is alway available or care is always available? Your speaking gibberish.
    “I wonder if you would agree that insurance companies would rightly expect a court hearing if someone leveled a charge of fraud against them.”
    Have you been sued yet Peter? All the stupid baseless things you have said about insurance companies, easily meeting the criteria for slander, yet you have not been sued so this disproves your point.

  15. “So what your all really upset about is people not being able to receive the free ride they want.”
    As usual Nate you always assume that single-pay means “free ride” to suit your prejudices. It does not, but it does mean that paying for healthcare is mandatory, affordable, and always available. I wonder if you would agree that insurance companies would rightly expect a court hearing if someone leveled a charge of fraud against them. As usual insurance wants one rule for themselves and another for the public.

  16. Margalit,
    It was in high school that I first suspected what you read in the paper and hear on the news might not always be true. Particularly a friend was shot and the guy she was with killed. I was reading the paper to see if there was any news and could even find the story. Someone pointed out to me the paper’s version of what happened. When compared to the version of my friend who was there and shot I didn’t even recognize it. That caused me to start questioning what I read, and from there I quickly learned a couple lessons you would be well to remember;
    1. Papers, magazines, news shows etc are not in the business of spreading news or facts by any means, they sell advertising. They sell what sells ads. The only difference between the Enquirer and New York Times is ego.
    2. Journalists are almost all idiots to clueless to get a real job. There is a rare exception, but as a rule of thumb, journalism students take four years to learn what most of us did in middle and high school.
    3. Everyone has an opinion and motive, news is not unbiased fact delivered for you to make you own informed decision. What they tell you is usually covering up what they don’t want you to know.
    These facts tend to present bigger problems for people such as your self that are moved to feel the way they want you to without questioning them. A perfect example being the poor poor women that lost her insurance because of acne treatment. You read this and immediately feel for her. You don’t question it at all. I read this and immediately get suspicious that the writer is leaving out more then they are telling. Carriers don’t cancel someone for acne treatment. The writer gets no benefits from reporting the full story and all the facts, they only benefit from you feeling for this women and being outraged. If they can write an entire article about this matter why can’t they add one more paragraph saying why acne treatment would cause someone to have their policy cancelled? I assume and hope when you read something like that your first question would be why, why did they cancel this poor women’s policy because she had acne? But you stop there, you assign blame to the insurance company because they did it, you don’t know why they did it but the writer wanted you to be mad at them and you are. I ask why they did it and when not given an answer become suspicious that the writer doesn’t want me to know.
    Think about this, this is way over the top so no one rant with false indignation, if the carrier cancelled her because she was black or gay do you think the paper would have found room for that? Of course they would have, so why couldn’t they find room to tell us why the acne treatment got her cancelled? More importantly why don’t you question any of this? How can you devote so much feeling, positive for her, and negative about insurance companies when you don’t know any facts at all? Where do your emotions come from if not reality?
    Back to your comment; how many studies on the uninsured have you read? How many insurance policies have you sold? How many middle class hummer owners had you quote them a policy but didn’t buy it because the premium was more then they spend on healthcare? At the risk of being an ass I’ll guess your answer to all those is 0. With that on the table how can you say what is likely and unlikely? How is the breast cancer lady typical? Cancer effects only a small portion of the population at any given time, and a very small portion of them are uninsured or had their policies cancelled. Roughly 118 cases per 100,000 people means around 400,000 cases a year? Hummers sold between 50-70K per year, your breast cancer lady doesn’t seem any more common then a hummer owner spending over their means with misaligned priorities. Your basing your beliefs on the few cases you read about in the paper without realizing the paper only prints the exceptions not the norm.
    The bankruptcy study you reference is a great piece of garbage by the way. Medical bills don’t cause half of bankruptcies; it’s not even close to that. Read the study on BKs by Department of Justice’s Executive Office of the United States Trustee (USTP). Another example of you reading something and falling for it without question.
    Realty and education prevents me from seeing the way you do. I know if you offered healthcare to everyone without regard to their ability to pay people would consume it without regard to paying. You’re not morally better then me because you deny the truth. You want to make false promises about the quality and amount of care you will offer then pat yourself on the back for being so nice and compassionate. Social Security is a great example, the left is so proud that they took care of everyone with this great social benefit. I just received my annual statement from SS and it says before I retire SS will be broke and capable of paying less then 70% of promised benefits. And promised benefits suck to begin with, if I invested my SS taxes and earned only 5% I would make out considerably better then SS. Medicare was the same way, the left did the same thing with Medicare, you promised a level of care you can’t deliver, bankrupted the American Health Care Systems and possibly the nation, that does not make you a good person.
    When you can deliver an affordable AND SUSTAINABLE social health care system then question my morality, until then it is really disgusting to make promises you should know you have no way of keeping. Who’s the monster, someone like me who is honest and tells the person upfront they aren’t going to get free care or the person like you who gets their hopes up then can’t deliver?

  17. Nate, I am listening to what you are saying very carefully and yes, I do get on a soapbox occasionally to make a point.
    The problem I have is not the very unlikely situation of a Hummer driver that will not waste a few hundred bucks per month for insurance. This guy can probably pay up to a certain extent when the Hummer and big house are gone. After that I would continue paying for his care, but that’s just me and as you know I am a bleeding heart liberal 🙂
    My problem is with the more typical folks like the one lady with breast cancer and acne, or something, that testified in the hearing. Not all folks that go bankrupt due to medical bills are free loaders and many of them are actually insured.
    What is it that prevents you from seeing that availability and cost of health care should not be driven by one’s constitution, nor by their income or lack thereof?
    After all, you are paying for many things that are also enjoyed by poor people that pay nothing and by rich people that pay nothing as well, like highways, police, public education, homeland security, clean water and food supply and much more. Why do you have a problem with health care?

  18. Robert,
    The question posed to them was;
    “Late in the hearing, Stupak, the committee chairman, put the executives on the spot. Stupak asked each of them whether he would at least commit his company to immediately stop rescissions except where they could show “intentional fraud.”
    Do you know what the burden of proof to show intentional fraud in court is? Unless the applicant had a written plan to suppress information and conspired with others to do so an insurer would never win with the bar set this high.
    How do you define unintentional? It is defined as not done on purpose. Again you can never prove this in court, it is an impossible burden of proof to meet. So with endless amount of time for you to formulate a response you completely failed and responded with something that would have lead your legal team to immediately jump off the roof. If you can’t come up with a reasonable respone with no pressure how do you expect the three of them to come up with one when they are put on the spot?
    Being extremely intelligent and having great knowledge of business helps but it is my common sense that prevents me from making legal promises with vague terminology. Fortunately for the companies represented their executives seem to share the same common sense. Only a politician makes such promises when put on the spot, and that is why such promises are worthless.
    Mike Muldoon,
    When you say stupid things in a comment how do you expect people to respond?
    “In good times and bad Health Insurers’ profits are predictably excessive and achieved at our patients’ and society’s expense as well as physician reimbursement.”
    This is stupid on so many levels. First of which I’ll beat you don’t even have the slightest clue what carrier profits are. Being that you have no clue what they are how can you claim they are excessive? Granted this is an argument that can’t be won even though I know what carrier profits are because to save some semblance of respect you will just claim any profit is excessive.
    You might like to read up on BCBS of MA and Partners health, they collaborated to increase fees, so in reality carrier profit actually increased physician reimbursements. Oops
    If you manage to wrap your head around that maybe you can explain how a carrier making fewer than 5% profit is less efficient then a government plan losing 10% to fraud. Are you ok with paying an extra 5% because the crooks are providers in the loosest of terms?
    As to your concern abut lobbying monies being sent that would seem to be an issue of government choosing to intervene in healthcare to collect donations. If the government was not meddling in HC to such an extent there would be no reason for people to pay them off. Your naïve to think lobbying would go away in a single payor or any sort of public plan.
    Gail,
    Do you really believe they were inadvertent mistakes?
    Peter is absolutely right why does it matter if the insurance company rescinds the policy…ah because the provider won’t treat them unless they have it. So what your all really upset about is people not being able to receive the free ride they want. If a person wants to stick an insurance company with a huge bill then cancel their coverage they should be allowed to. Why don’t you clearly argue for what you want instead of fringe arguments like attacking rescissions?
    Margalit you have some good contributions until you get on your soap box. Roughly half those insured with carriers are done so by non profit insurers discrediting your entire argument. So why does a non profit do this? Maybe because it is necessary to prevent people from lying on their applications?
    There is no free market in healthcare and you should know that by now, sometimes I think you don’t listen to anything I teach you.
    People don’t have to be rated to see a doctor, they need to b rated when they want someone else to pay their expense of seeing a doctor. WOW look how much it changes when you frame it correctly. Any person can go see a doctor any time and pay for it themselves, it is only when someone doesn’t want stuck with the bill you need to take precautions from fraud, I hope you realize this. You know if you let everyone go to the doctor for free whenever the bill would be unaffordable right?
    Yes I would have no issue at all watching someone, an adult not a child, who refused to contribute to the cost of care be refused that care. This nation was not founded as a welfare state, people gave their life to provide for their family, so when someone wants to enjoy the trappings of our society and its benefits but refuses to contribute to the necessities then they should be denied those necessities. If you can afford to drive a hummer, live in a big house, and take vacations every year but don’t want to “waste” your money on insurance and something happens so you now need that insurance? F you buddy, drive off in your hummer and die for all I care. It’s called personal responsibility and this nation is lacking in it badly.
    Do you know the burden of proof to show intentional fraud in court? Unless the applicant had a written plan to supress information and conspired with others to do so an insurer would never win with the bar set this high.
    How do you define unintentional? It is defined as not done on purpose. Again you can never prove this in court, it is an impossible burden of proof to meet. So with endless amount of time for you to formulate a responce you completly failed and responded with something that would have lead your legal team to immeditaly jump off the roof.

  19. Rescission, justified by insurance companies or not is not what healthcare should be about. Forget or intentionally not disclose, it would only matter to an insurance company. Who cares if you had a prior condition, you still need healthcare. Single-pay would eliminate the need to fill out an app. We won’t have real reform until health insurance comnpanies are taken out of picture.

  20. Read: Yes we do spend twice as much as any other country. Don’t get me wrong. I don’t think that we get twice the value. I’m not arguing that “we’re fine”. I’m merely arguing that the free market model that we have should not be tossed in the trash. I’m also NOT advocating that savings from changing the system be used to subsidize universal care. Universal care is universal outcome. It also means that if there is an entitlement, then there must be a counterbalancing force. Right now that force is over-buffered as the Healthcare consumer is indirectly affected by wide variations in pricing and standards.
    My suggestion is for the Government to work with doctors to develop standards of care for various use case scenarios. These procedures would then be enabled by “hold harmless” laws based on the standards. If the physician follows the more formal standard of care, he cannot be sued for his actions. That would remove some of the tort burden, would provide a justification for prevention of over testing, and provide a better and more consistent quality of care. In addition, the visibility and standardization of charges MUST be brought before the healthcare consumer for a documented understanding of the charges and what they are for. Visibility must be increased at all levels of healthcare along the lines of the recently popular “report cards” on quality of care. Healthcare consumers must understand the costs involved and have incentive to make more frugal choices. It’s only when these things happen that the over-buffering of healthcare costs can be removed and consumers can “take charge” of their care.

  21. If there is a way to make insurance accessible and affordable, the result is going to be less profit to an insurance company. United, Assurant and Wellpoint would much rather rescind coverage for inadvertent mistakes and let the public pick up the pieces. You didn’t really think they would play fair now did you?!

  22. Nate:
    You said, “Can you link to anyone that had their policy canceled for spelling their name wrong or forgetting about a flu shot 5 years ago?
    “I have never seen one case where a policy was canceled for something that would not have effected the rating. The big one that was just in the news were the family admitted they lied was a perfect example, they hid a pre-existing condition lied about weight, both drastically reducing their premium.”
    Nate, then I have to ask you, why did the three execs sit there and answer the Chairman with a, “No?”
    It seems to me, based upon your knowledge of the business, they should have answered, “Yes, we will agree never to rescind a policy for an unintentional and immaterial misstatement.”
    The insurance industry needs to be smart enough to understand they are in big trouble not when the offend the Dems on the committee, but the Republicans!

  23. The United States is the only major nation state with a predominant for profit health care insurance system. More than any other variable, this explains the disparity in access and perceived quality in our system versus other developed nations. In good times and bad Health Insurers’ profits are predictably excessive and achieved at our patients’ and society’s expense as well as physician reimbursement. It is notable that insurance companies along with other healthcare sector companies have doubled their lobbying efforts to maintain their interests and resist the change desired by voters in the last Federal election. Although the subject of healthcare reform stirs great debate and diverse opinions, few patients and providers are not offended by the predatory practices of health insurers who are accountable first and foremost to boards of directors and shareholders.
    It is clear that there are multiple subsectors of healthcare entering the debate regarding the allocation of limited resources. As the nation and its leaders debate the face and form of health care reform it is imperative that we confront the 800 pound gorilla in the room. There is very vocal backing for a national health care system as well as for a competitive publicly funded alternative to Private health care insurance. While both of these approaches would disrupt the insurance status quo, it will be at an enormous cost to the taxpayer. It is imperative that the coming reforms help align the specific subsectors of the health care industry so that efficiency, efficacy and patient care are appropriately balanced. Properly reforming and regulating the health insurance industry is a less radical and less expensive means of controlling costs, improving access and a very good place to start.

  24. I am not surprised at all. This is very much in line with what for-profit insurance companies are supposed to do. Their responsibility is to provide value to share holders and that’s about it.
    It is the legislators/regulators responsibility to make sure that harming people in the process of padding the bottom line is not allowed. Unfortunately, we, and our elected representatives, are choosing to either ignore this sort of behavior, or act outraged, but do nothing, when confronted with the human casualties of the “free market” in healthcare.
    Nate, maybe if people were not put in a position to have to be “rated” in order to see a doctor, they would not be so tempted to commit fraud.
    Are you serious about denying care to those who “refuse” to join the system? Would you just stand there and watch someone (or their minor child) die from cancer, or HIV, or whatever? Would you, personally, really be able to do that? I know the insurance corporations would, with no problems, but how can an individual work for these companies and sleep at night?

  25. Can you link to anyone that had their policy canceled for spelling their name wrong or forgetting about a flu shot 5 years ago?
    I have never seen one case where a policy was cencelled for something that would not have effected the rating. The big one that was just in the news were the family admitted they lied was a perfect example, they hid a pre existing condition lied about weight, both drastically reducing their premium.
    Maybe if government actually prosecuted people for insurance fraud it wouldn’t be so rampit.
    You don’t need everyone in the system you just need to deny care to those that refuse to join the system.

  26. Medbob.
    We spend at least twice as much per-capita on health care spending than any other country in the world. We do not need to spend more to get everyone insured. (Though the options discussed publicly by the Admin and Congress are appear to take us down that road.)
    More so, there are significant and serious economical arguments as to why we need everyone in so that the system will work.

  27. You start out with “let me stipulate we really need a system of universal care where everyone gets to have insurance.” My question is Why? Health care must be paid for, as even under the best of circumstances, it is and will be somewhat expensive. If someone is not willing to work to provide resources for their care, why should I increase my industry to pay their way? How many hours a day should I work to subsidize them? Should you decide that for me?
    It falls back to the basic fallacy of “equality of outcome” rather than “equality of opportunity”. Should I be responsible for myself, or should I depend on others to provide for me. Universal care is a monster that other countries have, and we refuse to learn the lesson. I agree that individuals need more levers, and there needs to be more feedback in the loop. The free market system that we have is the best way to do that. Don’t throw the baby out with the bathwater, and don’t just swallow that the goal is to make a “better” system. I don’t doubt your good intentions, but there are those who see this as an opportunity that they don’t want to “waste”.

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