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Tilting at Windmills

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June 18, 2009

RESCISSION.... In light of the current policy debate, it was awfully nice of insurance industry executives to help demonstrate why a public option is so necessary as part of the broader reform effort. (via Kevin Drum)

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. [...]

An investigation by the House Subcommittee on Oversight and Investigations showed that health insurers WellPoint Inc., UnitedHealth Group and Assurant Inc. canceled the coverage of more than 20,000 people, allowing the companies to avoid paying more than $300 million in medical claims over a five-year period.

It also found that policyholders with breast cancer, lymphoma and more than 1,000 other conditions were targeted for rescission and that employees were praised in performance reviews for terminating the policies of customers with expensive illnesses.

The insurance industry -- you know, the one conservative lawmakers and the AMA are so desperate to protect at all costs -- has this unpleasant habit called "rescission." Customers have insurance, and they pay their premiums, but once they get sick and require expensive medical treatment, the companies drop the coverage.

And in testifying before Congress, executives of these insurers not only confirmed the rescission practice, but said they had no plans to change the money-saving tactic.

One executive said rescission is about "stopping fraud and material misrepresentations that contribute to spiraling healthcare costs." So, for example, when a woman in Texas was diagnosed with aggressive breast cancer, her insurer dropped her coverage because the company found an instance in which she visited a dermatologist for acne, and didn't tell the insurance company about it. This, the insurer said, was an example of "fraud and material misrepresentation."

Late in the hearing, [Rep. Bart Stupak (D-Mich.)], 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."

Rep. John Dingell (D-Mich.) added, "This is precisely why we need a public option."

You don't say.

Steve Benen 10:05 AM Permalink | Trackbacks | Comments (43)

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Comments

Well apparently Tom Daschle is out to protect them too.

Daschle:Health Reform::McGovern:EFCA

Posted by: Steve Balboni on June 18, 2009 at 10:22 AM | PERMALINK

Rescission is just fine. I mean, I would much rather have a faceless aparatchik at an insurance company deciding which treatments I can and cannot get based solely on the company's profit picture. That's much, much better than having a government person deciding based on recognized guidelines provided by the medical community.

Posted by: Domage on June 18, 2009 at 10:23 AM | PERMALINK

Here's why making the decision to vote "Yes" for the public option, is to vote "No" on rescission.

Congress, vote "Yes" to 'decision.' "No" to 'rescission!'

Posted by: c u n d gulag on June 18, 2009 at 10:27 AM | PERMALINK

Gosh, when Michael Moore documented these very practices in Sicko, the insurance industry called him a liar and insisted that the real story was that he is fat.

Posted by: shortstop on June 18, 2009 at 10:27 AM | PERMALINK

Seriously, this stuff makes me so furious that I actually have flashes of wishing that the tools who prance around blogs denying this stuff is happening will themselves be denied coverage in the midst of a serious illness. Oh, you said insurance companies have good reasons for this? Then you won't mind going without chemo because you failed to mention you once had an ingrown toenail.

Posted by: shortstop on June 18, 2009 at 10:30 AM | PERMALINK

shortstop:
I don't remember. Was this one of the things Sanjay Gupta tried to snow Moore on? I wouldn't put it past him since Gupta is a corporate whore.

Posted by: Joe Klein's conscience on June 18, 2009 at 10:31 AM | PERMALINK

I don't think so, JKc. I believe Gupta was more concerned with arguing about the cost of health care in Cuba, and offering "corrections" that were further off than Moore's numbers.

Posted by: shortstop on June 18, 2009 at 10:34 AM | PERMALINK

You guys act as though life and health are more important than private profit. How inefficient! I think the GOP is going to disagree with you.

Posted by: Jon on June 18, 2009 at 10:36 AM | PERMALINK

I strongly agree that we need a public option. But I wonder about the following scenario: why wouldn't insurance companies try to shed all their really sick and expensive clients--using rescission, etc--and then follow this up by saying "Look at us, we don't cost as much as the government option," conveniently ignoring the reason why (that the government becomes the last-resort insurer of most everyone with real problems). I would be curious to know how other countries deal with this issue.

Posted by: Chris on June 18, 2009 at 10:38 AM | PERMALINK

Digby had a post up yesterday with the saleries and benefits of the health care CEOs. The CEO of United Health made more in that 5 year period than the companies "saved" over the same period.

* United Health Group
CEO: William W McGuire
2005: 124.8 mil
5-year: 342 mil

* WellPoint
CEO: Larry Glasscock
2005: 23 mil
5-year: 46.8 mil

http://digbysblog.blogspot.com/2009/06/this-is-precisely-why-we-need-public.html

Posted by: Mike S on June 18, 2009 at 10:39 AM | PERMALINK

From the desk of Evan Bayh:

That my wife Susan is being paid $337,000 a year to be on the board of directors of Wellpoint is not a factor when I insist that there be no 'public option' for health care reform.

It is a matter of deep personnal conviction that I believe that if people are going to get sick and require health care, the investor class of our country should be making a profit from it. True reform will be requiring every American to purchase medical insurance thru a for-profit corporation, preferably Anthem or Blue Cross or Blue Shield which are owned by Wellpoint.

Posted by: Evan Bye on June 18, 2009 at 10:40 AM | PERMALINK

Just went to see my MD yesterday, and according to his sources, if we took just the amount of the PROFITS of the health insurance industry, we could fully fund universal coverage for the entire nation with just that amount each year (including current enrollments in Medicare, Medicaid, and all the rest of us combined).

Here's another dodge from Big Pharma (AKA "Let's put local pharmacies out of business")... Medicine "X" will cost me $199 per month out of pocket AFTER my "insurance" pays its (paltry $15) share if I buy from my local pharmacy (which I prefer to do - I believe in supporting local businesses). If I buy direct from Medco (Marek) I can get that same drug for $25 per 3-month supply. $199 x 3 = $597 vs. $25.00 Talk about obscene profits and markups?!! This crap has got to stop.

Posted by: Otolaryx on June 18, 2009 at 10:42 AM | PERMALINK

Rescission can only make sense or be accomplished in an environment where pre-existing conditions have some impact on extension of coverage or determination of a premium. If you couldn't exclude anyone because of a pre-existing condition and your ONLY recourse was adjusting the premium in light of the "undisclosed" medical information, then rescission would be effectively banned. The ONLY penalty would be a retroactive increase in premium based solely on the additional medical risks that were undisclosed.

Of course, if you had to community rate or charge only according to vastly simplified underwriting factors (everyone would be given a risk of 1 through 4 based on age and relatively simple factors, e.g., diagnosis of SPECIFIED diseases like diabetes, that would be uniformly applied by all insurers) then even retroactive increases in premium would be off the table for most people.

How much do you wanna bet that visiting a derm for acne wouldn't have affected the risk profile of the cancelled policyholder much if at all?

Posted by: Barbara on June 18, 2009 at 10:42 AM | PERMALINK

Domage - Great point. This point is getting lost in the debate. We already have rationed healthcare in this Country. However, the parties doing the rationing are for profit corporations, the proverbial fox guarding the hen house. This is not about getting between you and your doctor. The question is, who will be between you and your doctor. Case in point, friend has cancer, doctor tells her I think you should seek this treatment. Insurance company says no, not a covered treatment. She has to go it without health coverage for a treatment recommended by her physician. Multiply that conversation times thousands. This point cannot be made enough. I appreciate the art of political compromise, but Healthcare costs are burying this Country, and its not the trial lawyers but rather the private insurer model that is the real problem. At least with a viable public option, we could inject some real competition into what seems to me to be a fixed system.

Posted by: Scott F. on June 18, 2009 at 10:43 AM | PERMALINK

Someone needs to make a GOP/DINO conservative explain exactly how private insurance will result in cost savings over government funding.

No bullshit slogans. Explain the mechanics. I dare them.

All we are asking is that we pay our premiums to a public source, who then negotiates the fees and distributes the payments to medical practitioners and vendors without taking a 15 - 20% profit surcharge.

It ain't rocket science.

Posted by: bdop4 on June 18, 2009 at 10:44 AM | PERMALINK

After you've paid premiums to the insurance companies for years, shouldn't you be entitled to your money back if your policy gets rescinded? After all, isn't getting financial help when you become sick precisely the point of health insurance?

Posted by: pj in jesusland on June 18, 2009 at 10:44 AM | PERMALINK

pj, the insurers are all too happy to give the premiums back. It's the difference between giving back thousands of dollars versus paying out hundreds of thousands.

Posted by: Barbara on June 18, 2009 at 10:49 AM | PERMALINK

Barbara,

First I have heard the insurance companies would give money back. You would do this board a great service by posting the phone numbers and contacts for the various company refund offices.

Posted by: pj in jesusland on June 18, 2009 at 10:55 AM | PERMALINK

Healthcare for profit is healthcare denied. One inevitably leads to the other. Unless and until this benighted country accepts the not-so-radical notion (in other parts of the world) that everyone is entitled to healthcare, greedy corporate types, e.g., the testifying execs, will flaunt their shameless greed, and wear it as a badge of their corporate mentality.

If single payer can't work, then the public option has to become the law of the land.

Posted by: rrk1 on June 18, 2009 at 10:55 AM | PERMALINK

We've had a big problem here in California with rescissions where companies like Blue Cross were illegally dropping people, apparently on the assumption that the patients wouldn't survive to file lawsuits.

My favorite story was the woman who was diagnosed with a hereditary eye disease that she didn't know ran in her family and needed surgery to save her eyesight. The insurance company canceled her policy for "lying" since she didn't tell them that she had a hereditary disease until she was diagnosed with it.

Posted by: Mnemosyne on June 18, 2009 at 11:06 AM | PERMALINK

If you read some of the rescission cases you will find that the rescission notice was often accompanied by a check enclosing premiums already paid. The point is, the refund of premiums is not what the person wants or needs under the circumstances.

Posted by: Barbara on June 18, 2009 at 11:16 AM | PERMALINK

Y'all are forgetting that for profit-insurance companies are one of the cornerstones of the Capitalistic System, dear to the hearts of all red blooded 'mericans.

And anything that the government does to interfer with that system is. . .SOCIALISM!

Posted by: DAY on June 18, 2009 at 11:20 AM | PERMALINK

Someone needs to make a GOP/DINO conservative explain exactly how private insurance will result in cost savings over government funding.

1) Privatize all health insurance
2) ?
3) profit!

-Z

Posted by: Zorro on June 18, 2009 at 11:26 AM | PERMALINK

Chris @ 10:38

I strongly agree that we need a public option. But I wonder about the following scenario: why wouldn't insurance companies try to shed all their really sick and expensive clients--using rescission, etc--and then follow this up by saying "Look at us, we don't cost as much as the government option," conveniently ignoring the reason why (that the government becomes the last-resort insurer of most everyone with real problems). I would be curious to know how other countries deal with this issue.

Well, in countries that have single payer systems and mandatory health insurance it is not an issue. Health insurance truly is an insurance, i.e. everybody pays independent of perceived present need (e.g. young versus old) so that when the necessity of treatment materializes there is coverage.

In Germany, which does have a mix of private and co-operative health insurance organizations, the highest court recently decided that private health insurance companies can not refuse coverage to persons with pre-existing conditions.

Recission has never been an issue because it is not possible, if somebody has coverage the insurance companies can not refuse paying for treatment and the decision on treatment is fully in the hands of physicians.

What the insurance companies do though, is to monitor the treatment practice pattern of physicians and hospitals. And if I have this right (longtime since I used the system myself), insurance companies can curtail payments to physicians and hospitals if they can demonstrate overtreatment.

Posted by: SRW1 on June 18, 2009 at 11:43 AM | PERMALINK

Chris's point, up above is a good one:

I strongly agree that we need a public option. But I wonder about the following scenario: why wouldn't insurance companies try to shed all their really sick and expensive clients--using rescission, etc--and then follow this up by saying "Look at us, we don't cost as much as the government option," conveniently ignoring the reason why (that the government becomes the last-resort insurer of most everyone with real problems). I would be curious to know how other countries deal with this issue.
Posted by: Chris on June 18, 2009 at 10:38 AM | PERMALINK

Essentially we already *have that problem* and its called "medicare" because the insurance companies don't really insure anyone when they get so old that they actually need a lot of medical care routinely. They've shed *all* those clients to the US government and that is artificially propping up their bottom line already.

Second of all, that's the exact reason why the insurance companies believe that any public option will eventually gut them. They are naturally in the business of turning lots of people (employers and their staffs) away. When those people can simply move to the public option in advance of being sick for fear that they will lose private coverage the insurance company model is over. They believe that 100 million or so will simply migrate right out of private insurance. And they are right. Every sane adult knows they are only temporarily insured and temporarily insurable. Give me a chance to migrate to a secure medical care coverage plan and I'd do it--and I have good insurance right now.

Lastly, one of the provisions that is mooted in discussing health care changes is change to the laws that would force private insurance to maintain coverage for the very ill, or to initiate coverage for people with "pre-existing conditions." Those provisions are meant to make it harder for private insurance to shed sick clients and force them onto the public scheme.

aimai

Posted by: aimai on June 18, 2009 at 11:44 AM | PERMALINK

It's time to make for-profit health insurance companies illegal

Back in the early '80s, when this stuff was just getting started, the strategy of the new owners of these companies was to aggressively break the employee unions that existed, by bringing in "temporary" workers (in the midst of Reagan's Depression), with the result that the clerical workers who did all the work found within two years that their salaries had been cut by 60%m since the union workers had been driven away and the temporaries were maintained as "temporary" even for years - minimum wage, no benefits, etc.

And of course, this sort of "profit creation" led to the first multi-million bonuses to the bastards who did it.

The for-profit insurance industry as it exists - and not just for health care - needs to be destroyed. If you don't believe me, go to Google and put in "delay, deny, defend" in the search. If your blood isn't boiling by the time you have finished reading any three of the stories that come up on the first page (late alone the 100,000 pages to follow), then you are in need of health care.

Posted by: TCinLA on June 18, 2009 at 11:47 AM | PERMALINK

Bloodsuckers.

Posted by: sparrow on June 18, 2009 at 11:47 AM | PERMALINK

Conservatives believe in strict destructivism. When faced with a crisis, recommit to trying harder at it was whatever caused the problem.

Posted by: beep52 on June 18, 2009 at 11:48 AM | PERMALINK

It has been long documented that the people in the most danger under our present system are those who believe they have good insurance. They are also the ones most easily snowed by Republican scare tactics. They don't see the truth until they are on the receiving end of a termination notice.

Posted by: thorin-1 on June 18, 2009 at 11:55 AM | PERMALINK

Rep. John Dingell (D-Mich.) added, "This is precisely why we need a public option."

Mr. Dingell, it appears, might have been misquoted. I believe his exact words, muttered in secret behind the above quote, were "This is precisely why you sons of bitches need to be thrown into the unemployment line."

There. All fixed....

Posted by: S. Waybright on June 18, 2009 at 12:02 PM | PERMALINK

Solution? Go Canadian.

Posted by: Bob M on June 18, 2009 at 12:07 PM | PERMALINK

We should not kids ourselves that a single-payer or public option system is NOT going to result in health care rationing. I know from direct experience that Medicare rations health care all the time. No, they don't rescind coverage, but they come awfully close by denying coverage of hospital days beyond a set limit. Even before the patient reaches that limit, the amount Medicare pays for hospital days scales back at a certain point. I don't remember the exact number of days to that scaling-back point, but the total no. of hospital days Medicare will pay for is 100. And that's not consecutive days, it's cumulative - again, I don't remember the exact time frame during which those days accumulate. I remember that the count resets after something like 180 days spent out of the hospital. I'm guessing it's not all that common for people to reach the 100-day limit, but it does happen, especially with the elderly. And even before that point, with Medicare paying less and less for care after a certain no. of days, self-rationing kicks in as the patient is forced to choose between paying increasing amounts of money out of pocket or moving to a nursing or long-term-care facility where s/he does not get the more intensive care s/he needs. This is exactly what happened to my step-dad who bounced between nursing homes and hospitals for about two years.

I am not saying that I don't want a public plan for the uninsured, but we all need to be realistic about the rationing part of this debate. Health care WILL be rationed, so the question really becomes a moral one, to me. Do we ration health care to protect the profit margins of giant private insurance companies or to keep from breaking the bank with a public plan?

Posted by: carolatl on June 18, 2009 at 12:18 PM | PERMALINK

Good thing Tom Daschle's tax-cheating was caught. He would have been a HORRIBLE HHS secretary.

Go Sebelius/Dean/Kennedy!

Posted by: Ohioan on June 18, 2009 at 12:25 PM | PERMALINK

So, truthfully, the number of uninsured in this country numbers about 300 million. 255 million of which are paying good money for a false sense of security?

Does that about sum up the status quo?

Posted by: toowearyforoutrage on June 18, 2009 at 12:35 PM | PERMALINK

@c u n d gulag: Catchy slogan, but 'decision' and 'recission' are too close together for Congresspersons to distinguish! They'd end up voting backwards.

Why do you people hate America, anyway? Insurance companies are in the business of making money! Heh.

Posted by: ajw_93 on June 18, 2009 at 12:39 PM | PERMALINK

Oh, and don't you worry that any public option won't include a profit surcharge, @bdop4...that's why God invented cost-plus contracting!

Excuse me, I've got to take my mom to the hospital NOW to make up for the emergency visits (for her blood conditions) that she won't be able to make after the end of the month, when her layoff takes effect and she loses her benefits.

Posted by: ajw_93 on June 18, 2009 at 12:44 PM | PERMALINK
I strongly agree that we need a public option. But I wonder about the following scenario: why wouldn't insurance companies try to shed all their really sick and expensive clients--using rescission, etc--and then follow this up by saying "Look at us, we don't cost as much as the government option,"


Replace the word "government" with "other private", that's exactly what insurance companies do now to compete with each other.

The difference between the status quo and universal coverage with a default public plan is that what happens to the people that get dumped out of the private plans, and whether or not people have an option to avoid that risk altogether.

Posted by: cmdicely on June 18, 2009 at 1:47 PM | PERMALINK

This is horrible! I am so disgusted by these large insurance companies who are greedy and do not care about the people under their care. Everyone in this countries deserves to have some kind of health care that meets their needs. If people have ailments and diseases, they need to be taken care of. It is that simple.

Posted by: Texas Health Insurance on June 18, 2009 at 3:06 PM | PERMALINK

Send the insurance company executives envelopes of dust from Libby, Mt.

Posted by: Razor on June 18, 2009 at 3:13 PM | PERMALINK

Health care WILL be rationed, so the question really becomes a moral one, to me. Do we ration health care to protect the profit margins of giant private insurance companies or to keep from breaking the bank with a public plan?

We're basically choosing our preferred form of rationing: do we want to ration on the basis of need and good medical practices, or on the basis of who can pay the most?

I saw a commenter online (I can't remember where) who, as an example of rationing under universal healthcare in Canada, said that his 80-year-old grandfather with incurable cancer had been released from the hospital and sent home with a home hospice agency to come in (at much lower cost than hospitalization) to make him comfortable until he dies. And my thought was, "Yes, it's terrible for your family to have to face the fact that your grandfather is going to die, but is your need to not have to acknowledge that worth spending hundreds of thousands of dollars to keep him alive and in pain for an extra few days?"

Maybe I'm a horrible person for thinking that. Maybe people should be allowed to continue cancer treatments that aren't working as long as they can pay for them. But it was hard for me to look at that story and see it as an example of hideous, immoral government rationing.

Posted by: Mnemosyne on June 18, 2009 at 3:34 PM | PERMALINK

Even if a person who's had thier coverage terminated in this manner had any type of legal recourse, will they even live long enough to file a lawsuit? Even in the best of circumstances these catastrophic illnesses are tremendous burdens for the patient and thier loved ones to bear. In thier hour of greatest need when they are too sick, too weak, too overwhelmed and too broke to fight back, these people are betrayed in this unimaginable manner. If I were just diagnosed with a catastrophic illness like cancer, I hope I would be able to fight it bravely as so many others do. The moment when I would open the letter from my insurance company cancelling my coverage, however, might be the moment that just breaks my will to even fight on. Insurance companies, who live by the motto "Deny, Delay, Defend" know this.

Posted by: Mark Stein on June 20, 2009 at 11:34 AM | PERMALINK

5daA8O

Posted by: Dendecje on July 15, 2009 at 1:26 PM | PERMALINK

If you have to do it, you might as well do it right.

Posted by: overnight tramadol on July 22, 2009 at 12:59 PM | PERMALINK




 

 

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