Friday, June 26, 2009

Why We Need a Public Health-Care Plan

NPR: Insurers Revoke Policies To
Avoid Paying High Costs
[3 min 57 sec]

According to a new report by congressional investigators, an insurance company practice of retroactively canceling health insurance is fairly common, and it saves insurers a lot of money.

A subcommittee of the House Commerce Committee recently held a hearing about the report's findings in an effort to bring a halt to this practice. But at the hearing, insurance executives told lawmakers they have no plans to stop rescinding policies of people who submit claims for high dollar medical care.

Former Cigna senior executive Wendell Potter, who has more than 20 years of experience working in public relations for insurance companies Cigna and Humana, said companies routinely drop seriously ill policyholders so they can meet "Wall Street's relentless profit expectations." "They look carefully to see if a sick policyholder may have omitted a minor illness, a pre-existing condition, when applying for coverage, and then they use that as justification to cancel the policy, even if the enrollee has never missed a premium payment," Potter said.

The act of retroactively canceling insurance is called rescission. Insurance companies are, by law, allowed to rescind policies for customers who found to have purposely lied or omitted information from their policy applications. But the subcommittee found some of the rescissions were for seriously ill people who had simply made mistakes on their applications. The process begins after a policyholder has been diagnosed with an expensive condition such as cancer. The insurer then reviews the health status information in the questionnaire, and if anything is missing, the policy may be rescinded.

The omission from the application may be deliberate, to hide a health condition that might have made the applicant ineligible for insurance. But sometimes there's an innocent explanation: The policyholder may not have known about a health condition, or may not have thought it was relevant.

According to Potter small businesses, in particular, have had trouble maintaining their employee health insurance coverage.

"All it takes is one illness or accident among employees at a small business to prompt an insurance company to hike the next year's premiums so high that the employer has to cut benefits, shop for another carrier, or stop offering coverage altogether," he said.

Potter also faulted insurance companies for being misleading both in advertising their policies to new customers and in communicating with existing policyholders.

More and more people, he said, are falling victim to "deceptive marketing practices" that encourage them to buy "what essentially is fake insurance," policies with high costs but surprisingly limited benefits.

Insurance companies continue to mislead consumers through "explanation of benefits" documents that note what payments the insurance company made and what's left for consumers to pay out of pocket, Potter said.

The documents, he said, are "notoriously incomprehensible."

"Insurers know that policyholders are so baffled by those notices they usually just ignore them or throw them away. And that's exactly the point," he said. "If they were more understandable, more consumers might realize that they are being ripped off."

The House Commerce subcommittee study found that three of the major U.S. insurance companies, WellPoint Inc., Assurant Health and United HealthGroup, canceled nearly 19,800 customer policies between 2003 and 2007. The committee found that the companies saved more than $300 million as a result of the rescissions. [ABC News: Retired Health Insurance Executive Blows the Whistle on His Former Industry] [NPR: Insurers Revoke Policies To Avoid Paying High Costs ]

Jay Rockefeller, Chairman of the House Commerce Committee, had this to say about health care in a newspaper interview in his home state of West Virginia: :
"To me, there is nothing that ultimately makes more difference to Americans than health care.

"People often talk about 45 million uninsured Americans, but rarely mention the 25 million Americans who are underinsured."

"At least 100 million Americans face major problems paying for health care today."

"We can't count on insurance companies. They are just maximizing their profits. They are sticking it to consumers."

"I am all for letting insurance companies compete. But I want them to compete in a system that offers real health-care insurance. I call it a public plan..."

"Back in 1993, all our Veterans Administration hospitals got together and agreed to buy prescription drugs as a group. The next week, the costs of those drugs went down by 50 percent.

"Today, the insurance industry runs this whole deal, spending $1.4 million every day to fight health-insurance reform. The government has a lot of power to lower prices"

"We have a moral choice. This is a classic case of the good guys versus the bad guys. I know it is not political for me to say that"

"But do you want to be non-partisan and get nothing? Or do you want to be partisan and end up with a good health- care plan? That is the choice."

NPR: Health Care Overhaul
Opponents Use Selective Stats
[3 min 57 sec]

Republicans, who unanimously oppose Pres. Obama's call for a public health insurance plan, frequently misquote a recent healthcare study prepared by the Lewin Group in their claim that 119 million people would "lose" their private insurance coverage. (The Lewin Group is owned by Ingenix, which is a subsidiary of UnitedHealth Group.)

That "119 million" number does not represent the number of people that "lose" their private health insurance coverage, rather it is the number people that could happily switch from their private insurance to a public plan. The point of the study was to show that the number of people who would eventually join a government-sponsored public insurance plan would vary — dramatically — depending on how that plan is designed.
If the public plan is open to everyone and pays health care providers rates similar to those paid by the government-run Medicare program, which are lower than most private insurers pay, you'd have a lower premiums for the same (or better coverage) and no risk of coverage cancellation or "rescission" when diagnosed with a high dollar illness. Thus, through free (and fair) market pressures many people and small business owners will voluntarily switch to the public plan.
Unfortunately, it is looking less and less likely that blue dog Democrats will allow that good of a public health insurance option to advance, indeed, if they let any advance at all, even though 72% of all Americans want it.

NPR: Doctors Say Current System
Impedes Medical Care
[3 min 56 sec]

President Obama told the American Medical Association that the health care system costs too much, includes too few people and is unsustainable without major changes.

Dr. Nancy Nielsen, president of the American Medical Association, says the biggest problem is when patients don't have health insurance. "Every study that's been done has shown that people who lack health insurance don't go to the doctor for preventive care — they delay care," she says. Nielsen says doctors face other challenges as well, such as coordinating care when patients' insurance plans limit the choice of doctors and hospitals. Doctors often have to pick drugs off a list of covered pharmaceuticals.

For emergency room doctors, one of the big problems with the current health care system is the recession.

"We're seeing newly uninsured patients. We're seeing patients who as they get into greater financial distress are cutting corners and delaying the care that they need," says Arthur Kellerman, professor of medicine at Emory University. He works in the emergency department at Grady Hospital in Atlanta and sees patients who have delayed getting treatment for too long.

"By the time they come to us, they are in legitimate emergency condition with problems that are far more costly and sometimes impossible to treat. And that's heartbreaking," he says.

  • WSJ Opinion: Why We Need a Public Health-Care Plan - Without the government as competition, the private sector has little incentive to improve. By Robert Reich, professor of public policy at the University of California at Berkeley and former Secretary of Labor under President Clinton
  • NYT Opinion: Not Enough Audacity - The big question here is whether health care is about to go the way of the stimulus bill. By Paul Krugman

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