June 19, 2009
On Tuesday, executives from three of the largest health insurance companies in the United States testified before a House oversight committee that they would not stop canceling policies – after the fact – for people diagnosed and treated for serious illness.
The L.A. Times reports that the practice has left thousands of people to foot the bill for their medical coverage despite having paid insurance premiums:
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.
The health insurance industry calls the practice “rescission”. Most people would call collecting money and not providing services “fraud”. Yet the executives say they are the ones trying to prevent fraud – by patients:
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.
[Witnesses] from around the country accused insurers in testimony of gaming anti-fraud laws to take policyholders’ premiums, only to drop people who developed serious illnesses. They testified that they or a deceased loved one had had policies canceled over innocent mistakes and inadvertent omissions on their applications.
A Texas nurse said she lost her coverage, after she was diagnosed with aggressive breast cancer, for failing to disclose a visit to a dermatologist for acne.
The sister of an Illinois man who died of lymphoma said his policy was rescinded for the failure to report a possible aneurysm and gallstones that his physician noted in his chart but did not discuss with him.
The testimony from all sides left both Republican and Democratic members fuming:
“No one can defend, and I certainly cannot defend, the practice of canceling coverage after the fact,”said Rep. Michael C. Burgess (R-Tex.), a member of the committee. “There is no acceptable minimum to denying coverage after the fact.”
It won’t surprise most readers that health insurance companies reward their employees for this practice. WellPoint’s Blue Cross gave employees who could deny the most coverage high marks in performance reviews. One Blue Cross employee, the Times reports, was given a perfect rating for “dropping thousands of policyholders and avoiding nearly $10 million worth of medical care.”
When put on the spot by committee chair Rep. Bart Stupak (D-MI), who asked if the executives would at least commit to stop canceling policies without evidence of “intentional fraud”, the three executives responded, flatly, “No.”
“This is precisely why we need a public option,” said [Rep. John] Dingell (D-MI).
Public Option would prevent these kinds of abuses
In a free market, when a private health insurance company takes your premiums but denies you coverage, you should be able to take your business elsewhere. But there is no free market for health care in this country. In our health care system, private insurance companies are the only game in town, and they have no incentive to put people before profits.
A public option which doesn’t use your premium dollars to pay shareholder dividends and insane salaries to executives, doesn’t deny coverage because of pre-existing conditions, and doesn’t cancel your policy when you need it most will give Americans a real choice and force private insurers to treat you fairly or risk losing your business.
Health care reform without a public option is no reform at all.