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The New York Times
Opinion
Insurance Company
Schemes
EDITORIAL,
nytimes.com on the Web, June 30, 2009
Congressional committees heard a lot
this month about the devious schemes used by health insurance companies to drop
or shortchange sick patients. It was a damning portrait — and one
Americans know from painful personal experience — of an industry that all too
often puts profits ahead of patients.
As health care reform moves forward, Congress must impose tighter regulation of
companies that clearly are not doing enough to regulate themselves.
Creating a public plan could also help restrain the worst practices, by
providing competition and an alternative.
A House oversight subcommittee took a close look at a particularly shameful
practice known as “rescission,” in which insurance companies cancel coverage for
some sick policyholders rather than pay an expensive claim. The companies
contend that rescissions are rare. But Congressional investigators found
that three big insurers canceled about 20,000 individual policies over a
five-year period — allowing them to avoid paying more than $300 million in
medical claims.
The companies typically argue that the policyholders withheld information about
pre-existing conditions that would have disqualified them from coverage.
But the subcommittee unearthed cases where the pre-existing conditions were
trivial, or unrelated to the claim, or not known to the patient. When
executives for the three companies were asked if they would be willing to limit
rescissions to cases where the policyholder deliberately lied on an application
form, all said they would not. This tactic will not be ended voluntarily.
Meanwhile, the Senate Commerce Committee was getting an earful from a former
head of corporate communications for Cigna, a big health insurer. He
charged that the industry deliberately confuses its customers by making it hard
to obtain information about its practices and issuing incomprehensible
documents.
He also charged that the companies “dump the sick,” through rescissions and by
purging small businesses whose employees’ claims exceed what underwriters
expected. They are often hit with huge rate increases intended to force
them to drop coverage.
The Commerce Committee also released a staff report elaborating on how insurance
companies operating in every region of the country have used statistically
manipulated databases to reduce their payments for services provided by doctors
outside their networks. Patients must then pay the often considerable
difference.
Any legislation to reform the health care system, and extend coverage to
millions of uninsured Americans, must stop these practices.
One way to do that is by creating insurance exchanges where individuals and
small businesses could buy policies from insurers that would be required to
accept all applicants without regard to pre-existing conditions and charge them
premiums unrelated to their health status, and would be barred from dropping
them no matter what illnesses they developed.
If health care reform requires virtually all Americans to carry health insurance
— as it should — industry leaders acknowledge that there would be enough healthy
people paying premiums to offset the higher costs of covering the sick and the
need for rescissions and other such practices would disappear.
No matter what happens, strong regulatory oversight will be a must to ensure
that insurers skilled in denying coverage don’t find new ways to evade just
claims.
Competition from a new public plan could provide a benchmark for judging how
well private plans are performing. And clear evaluations of both public
and private plans would be a boon for consumers. Senator Jay Rockefeller has
proposed creating a nonprofit organization to grade all plans offered on a
national exchange based on such factors as adequacy of coverage, affordability,
customer and health provider satisfaction, and transparency of procedures and
decision-making.
The health insurance industry has pledged to assist in the reform effort.
Congress will have to be tough and vigilant to ensure that it does.
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