Matthew Holt

More bad press for Insurers. Will anyone care?

Jon Cohn notes that Wendell Potter, a former PR executive with Cigna and Humana. will be appearing before a Senate Commerce Committee today. Note the word “former”.

Trudy Lieberman has an interview with Potter where he repeats what we already know:

Lieberman: How do companies manipulate the medical loss ratio?Potter: They look at expensive claims of workers in small businesses who are insured by the company, and the claims of people in the individual market. If an employer-customer has an employee or two who has a chronic illness or needs expensive care, the claims for the employee will likely trigger a review. Common industry practice is to increase premiums so high that when such accounts come up for renewal, the employer has no choice but to reduce benefits, shop for another carrier, or stop offering benefits entirely. More and more have opted for the last alternative.

Lieberman: What tactics do they use in the individual market?Potter: They rescind policies when a review indicates that an individual has filed a lot of expensive claims. They will look for conditions that were not disclosed on the application. Often the policy likely will be canceled and the individual left without coverage. Sometimes people aren’t aware that they have a pre-existing condition. It might be listed in the doctor’s notes but not discussed with the patient.

Lieberman: One way to end this practice might be to regulate it out of existence. Can we count on the industry to submit to more stringent regulation?Potter: The industry says it will accept more regulation, but the evidence is that it flaunts regulation on the books now. Insurers are often cited for violations of many state regulations, and they usually agree to settle with insurance commissioners or the attorney general and pay a fine. Fines are the cost of doing business, and even if the fine is several million dollars, it is inconsequential compared to profits insurers make.

Last week there was a Congressional hearing on recissions that Bob L noticed, Lisa Girion noticed, Karen Tumulty at Time noticed, even Paul Begala noticed and which the rest of America’s media (including the NY Times for which I could not find ONE mention of the word recission in a search for the last 12 months) ignored. But it essentially showed that in the absence of serious regulatory change AND enforcement, plans will continue to behave badly/maximize their self-interest. And screw over insurees.

The real question is whether the Wellpoints and Humanas of the world will behave well if we get the regulatory change we need—and that’s a huge if. Or if the for-profit nature of their DNA means that we need a wholly different structure of plan. And yes, I’m not a single payer advocate, as I am in favor of intermediaries between the universal insurance pool and providers. But I tend to think that cooperatives would be better for that than large health insurers, although I’m not sure we can all move to Seattle!

But aside from Assurant, Golden Rule & Tonik (who are not even saying the right thing), it’s clear that the majority of health plans are saying one thing about the future they want and doing another to maximize profits in the present they’re in. The question really though is, why aren’t we hearing more about how bad they’ve been?

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LoganReal Estate NYCjdNateJohn R. Graham Recent comment authors
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Logan
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Logan

I may be an ass, but at least I’m not a liar.

Nate
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Nate

Logan, Your an ass, the only question is are you an ass because of the faulty assumptions you make or your just generally one all the time? I make my living helping employers reduce the premium they pay to insurance companies so they can afford to offer benefits or continue to offer better benefits. By paying less money to the insurance carrier they can spend more of it on actual healthcare. I cut premiums 30-50% and reduce overall health cost 10-20%. How exactly is that screwing anyone over. Well I am sorta screwing the insurance company is that what bothers… Read more »

Logan
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Logan

Nate, there isn’t a doubt in my mind that you sell or adjust insurance for a living. Which don’t get me wrong, in our current society it’s a necessity, but I couldn’t spend my life screwing others over, sadly it’s not in my nature. 1) They may have not come up with it, but at least in most cases, they have complete control of the process. (Take a look at Peter’s quip) an actual occurrence, not hypothetical “sob story”. 2) Appeals might not have fees involved; but time is money. Maybe the situation would be better if when you are… Read more »

Nate
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Nate

Logan, Please take note of your following mistakes; 1. The appeals system came out of ERISA and the courts, the carriers had no hand in designing it and at the time did not care for it at all. ERISA is the only insurance law that holds plan fiduciaries personally responsible and can send them to jail, that was not of their writing. 2. Appeals process cost no money except the time to write a one paragraph cover letter. 3. By law all appeals are accepted, some are still denied but they are all reviewed. 4. Fraud does not cost millions… Read more »

Peter
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Peter

I was advised prior to getting treatment by BCBS rep that BCBS would pay the claim. The phone conversation was recorded and on file. On submitting the receipts and fighting with BCBS for six months to pay (you don’t want to hear the whole story about repeated lost records having to be refiled and my letters to the insurance commissioner), they partially paid. The appeal was to get them to honor the phone advice I was given. The amount was not large and not a big deal, but they went back on their word. I learned that insurance companies have… Read more »

Logan
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Logan

Peter;
Out of curiousity and if you don’t mind me asking.
What was the reason your claim was denied, and what was the reason it was denied again on appeal?

Peter
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Peter

“First, in response to Actuary and his/her allusion to the appeals system: The Appeals system that you speak about is basically in place as a request by the insurance companies. It gives them much more of an opportunity to deny claims outright because they have this appeal system in place.” Logan, you are right that the denial of claims comes first, without review and you are still required to pay the provider even though the claim is in dispute. In NC you have a right to appeal BCBS decisions (and probably any carrier) to a “independent” review panel. I did… Read more »

Logan
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Logan

I found this back and forth to be quite honest and truthful from both sides; we see an outlook from an insurer and the insured. But I would like to point out few things that sparked my attention. First, in response to Actuary and his/her allusion to the appeals system: The Appeals system that you speak about is basically in place as a request by the insurance companies. It gives them much more of an opportunity to deny claims outright because they have this appeal system in place. The main issue is (which the insurance companies count on) is that… Read more »

Peter
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Peter

JD, I don’t believe anyone thinks that reducing executive pay/bonuses will make a noticable dent in healthcare costs, but they are a symptom of the larger problem of who healthcare executives should be accountbale to. When people are increasingly loosing insurance, having to take more of their income to pay for coverage, not being able to pay deductibles, and going bankrupt from medical expenses, all while premiums and costs keep rising while their salaries are stagnant or being cut AND they see healthcare executives getting richer and richer, they are understandably angry and rightly smell a rat. If people can… Read more »

Real Estate NYC
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Great Blog

jd
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jd

A few points: 1) The tactics Potter is talking about in the small group market are possible only in states that don’t have community rating for small groups. If you want to solve them, you don’t need a public payer or single payer, you just need community rating. There is simply no way to selectively raise rates to push a company away. That is not a rule you can get sneaky about. I work for an insurer in such a state, New York, and there are downsides to it when there is no mandate for coverage, but it is far… Read more »

Nate
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Nate

Insurance companies occasionally get fined and the left blows it into a daily occurrence. How many insured that knowingly submitted false information have been tried in that time? Have you Matt or anyone on the left every once written about that happening? Why not, for every person that insurance companies rescind thousands lied on their apps to get the policy? Consumer fraud is far more common and you completely ignore it, when the evil insurance companies try to protect themselves from rampant fraud the government ignores you make them the villain. If the law was enforced and the left didn’t… Read more »

Peter
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Peter

Gee John, would you consider a mafia capo who “rats”(whistleblows) on his fellow mobsters one who “betrays”, (for gain) his former employers? You comment as if the actions by Cigna Humana are ethically justifiable – I guess they would be on Fox News.
Whatever you write to justify recissions has nothing to do with healthcare, just insurance profits. In a public system NO recissions would need to occur.
And John, if Medicare and Medicaid generate $600 billion in waste, how much do for profit systems create?

John R. Graham
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It’s easy to find a “whistleblower” to betray his former employers for political gain. I’m sure we’ll see a lot more of this over the summer to keep the momentum for a government take-over moving. I’ve written a lot about the California rescissions over at http://www.statehousecall.org.

Peter
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Peter

Actuary, it doesn’t matter which year you look at: http://www.newsobserver.com/business/story/549291.html http://www.wral.com/news/local/wral_investigates/story/4668082/ You can also read this to see how our legislators deal with BCBS as well as an opinion on “profit margin”: http://pulse.ncpolicywatch.org/2009/03/18/blue-cross-takes-state-to-the-cleaners-in-contract/ Do a search on political donations to NC legislators by BCBS executives to see how the system is skewed. Would for profit hospitals low profit margins then negate the 6 figure incomes by docs? I don’t think you can hide multi-million dollar bonuses behind low profit margins when everyone is having trouble just maintaining coverage – it’s the let them eat cake senario. I’ll bet Madoff’s take… Read more »