Not Really Insuring Anything

gimmemoneyFor a long time, tobacco companies denied the fact that smoking actually increased the chances one could develop cancer, emphysema, lung disease and other sorts of upper respiratory afflictions.  Tobacco companies also spent the better part of two decades trying their best to convince the public and Congress that nicotine was not addictive.

Their public relations campaigns actually worked pretty well on Capitol Hill.

But, the truth about tobacco and its effects on the human body eventually reached a critical level of understanding and acceptance.  The consensus about tobacco is now so broad that Congress voted last week to bring tobacco under the auspices of federal regulation.  The truth was eventually undeniable.

Today’s health insurance companies are kind of where the tobacco companies were 15-20 years ago.  They’re becoming increasingly unpopular because of their profit model – a model that maximizes the collection of premiums and minimizes (sometimes through very dubious means) actual coverage of claims made by their customers.  Like the tobacco industry denials before them, the insurance industry has refused to cop to an open secret about their treatment of consumers.

That is, until now.

This morning’s LA Times describes in stark detail how three of the largest health insurance companies have been systematically denying coverage to patients that develop cancer or lymphoma.  They even deny coverage to women who get pregnant.  The three insurance companies (they’re the only three that have admitted to this practice) routinely pull the rug out from under their own customers when they are most vulnerable.

From the Times…

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.

Despite claims to the contrary, insurance companies are actually looking for ways to back out on commitments to their customers, just so they can increase their profits.  They make money by denying coverage to sick people – sick people that were making premium payments when they were well.

And that’s not the end of it…

But they (insurance executives testifying before the committee) would not commit to limiting rescissions to only policyholders who intentionally lie or commit fraud to obtain coverage, a refusal that met with dismay from legislators on both sides of the political aisle.

Experts said it could undermine the industry’s efforts to influence healthcare-overhaul plans working their way toward the White House…

Rescission was largely hidden until three years ago, when The Times launched a series of stories disclosing that insurers routinely canceled the medical coverage of individual policyholders who required expensive medical care…

Late in the hearing, Stupak, 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.”

-Health Insurers Refuse to Limit Rescission of Coverage, Los Angeles Times, June 17, 2009.  Click here for the full story.

The word hubris keeps repeating in my head, over and over again.  This is shameful.


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